In this file:
· As the world turns: Politics, trade and exports
· USMEF Chair sees great benefits for U.S. beef in new agreement with Japan
As the world turns: Politics, trade and exports
Things are seldom quiet in politics and trade. Here’s an update on exports and trade deals.
Steve Dittmer, Opinion, BEEF Magazine
Nov 07, 2019
Dittmer is executive vice president of the Agribusiness Freedom Foundation
Before we discuss trade and exports, keep one political detail in mind.
Congress has not passed the 12 appropriations bills that it was supposed to have passed by the end of the last fiscal year, Sept. 30. Its effort to stall—known in D.C. parlance as a “continuing resolution”—expires Nov. 21. That calls into the realm of possibility two specters worthy of fear/disgust to the average citizen/taxpayer: the game of chicken on a government shutdown and the omnibus monster; thousands of pages of spending in one giant bill no one will ever read in total. Keep your eyes open and your pocketbook hidden.
As for trade, there is activity on USMCA, developing factors on the China front, new political goings on in the U.K. and mostly quiet on the Japanese front.
Many months ago, U.S. Trade Representative (USTR) Robert Lighthizer anticipated objections the Democrats in the House might have and built some features into the USMCA treaty to smooth the process. This summer and fall, he has met multiple times with a House Democrat working group to resolve issues they have with the treaty.
Not surprisingly, the AFL-CIO conglomeration of labor unions has not been shy in telling the Democrats why they oppose the treaty. Their complaint has been about ensuring enforcement of labor provisions in the treaty regarding higher wages and work rules.
A certain percentage of Mexican workers are supposed to make higher wages under treaty requirements. Mexico passed legislation months ago enabling them to comply but has balked at demands that inspectors be allowed into Mexican factories. They prefer the government certifying compliance, as is more typical in these agreements.
House Speaker Nancy Pelosi said weeks ago that passing the USMCA was important to American workers, more important than denying a political win to President Trump. That, however, was before she allowed an impeachment inquiry to go forward. And before the Trump/Pelosi tiff at a White House meeting that had her theatrically walking out of a meeting with Congressional leaders and the President.
The president and Vice President Mike Pence have been putting pressure on Democrats to bring the USMCA to the floor and pass it during political trips around the country.
It is interesting that no text of the implementing bill has yet been released by the Trump administration, something some Democrats have complained about. Lighthizer is likely planning to release just one version, one that is meant to satisfy as much as possible the objections from Democrats, so as not to invite delays over multiple versions.
It will continue to be important for cattlemen who favor the treaty to keep the pressure on their Congressional members, especially House Democrats, to pass a treaty so important to American agriculture.
Then there’s China
The “phase one” China agreement is still being negotiated, with even Chinese foreign departments sounding optimistic that an agreement will be finalized soon. The international meeting that was supposed to provide a sideline meeting venue between Chinese President Xi Jinping and President Trump to sign the deal vanished when host Chile cancelled the meeting. Chile is one of a long list of countries dealing with protests and riots and could not provide the security necessary.
Trump has not been bashful in offering a site in the U.S. if the deal gets done, including possibly Iowa, where the Chinese cancelled a scheduled farm trip weeks ago.
Expected features of the agreement are still expected to be some currency manipulation prevention, some intellectual property protection and a large commitment of ag commodity purchases. It was hoped that enough concessions from the Chinese would be included to head off tariffs on more Chinese goods scheduled for Dec. 15.
However, the Chinese have been lobbying and creating expectations along with some U.S. businesses for some reduction in tariffs already in effect on Chinese imports, especially direct consumer goods.
There is no doubt that events are putting pressure on the Chinese. The very fact that they are hoping for tariff relief is not just saving face. There are economic and essential reasons. Economic growth continues to drop each quarter.
A U.S. Meat Export Federation (USMEF) news conference this week revealed some interesting additional pressures. CEO Dan Halstrom noted that due to a shortage of pork, U.S. exports to China in July and August set records. Joel Haggard, USMEF’s Asia Pacific representative based in Hong Kong, noted that U.S. pork exports could grow a lot faster if they were not saddled with a 72% tariff vs. 12% for the competition. The U.S. has still carved out a 13% market share under the circumstances.
Observers and analysts are projecting that the Chinese have so far made up a little over 1 million metric tons (mt) of pork, from a projected deficit of 10 million mt. The deficit didn’t really begin to hit until August.
Since then, pork prices have spiked 80% in China. Daily pork slaughter has dropped from 4,000 head per day to 1,600. Haggard said the full demand for pork will really kick in during 2020. The EU is the primary competitor for American pork producers.
USMEF estimates are that the U.S. has the ability to supply 1.6 million mt of pork, compared to the 220,000 mt it sold to China in 2018. Politico reported that 2019 pork imports up to Oct. 24 had already totaled 241,000 mt. The publication also noted the National Pork Producers Council is estimating half of China’s hog herd is now gone.
What about beef? ...
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USMEF Chair sees great benefits for U.S. beef in new agreement with Japan
Assuming the U.S.-Japan trade agreement is implemented soon, and reduced tariff rates are in place for the full year, USMEF projects U.S. beef exports to Japan to reach $2.3 billion in 2020 and to approach $2.8 billion by 2025.
Source: U.S. Meat Export Federation (USMEF)
via BEEF Magazine - Nov 07, 2019
"Visiting Sendai (Japan) was especially interesting because the city and surrounding region have an insatiable appetite for U.S. beef tongue. We had the opportunity to visit a tongue processing plant and see the product making its way into commercial channels. Having the ability to export tongues to Japan adds more than $12 per head to every fed steer and heifer slaughtered in the United States, so as a cattle feeder this was a great experience."
That’s just one of Cevin Jones’ reactions to his recent visit to Japan. Jones, a cattle feeder from Eden, Idaho, begins his one-year term as chair of the U.S. Meat Export Federation (USMEF) on Nov. 8. Jones has a long history of involvement with USMEF, dating back to his leadership roles with the Federation of State Beef Councils and the National Cattlemen's Beef Association.
Jones takes the helm at USMEF at an exciting time for the cattle industry, bolstered by the recent announcement of a new trade agreement with Japan. Though the agreement still requires approval by the Japanese Parliament, it is expected to take effect in early 2020.
Jones' most recent visit to Japan was with the USMEF Heartland Team – a delegation of 31 U.S. beef, pork, corn and soybean producers who spent a week in Tokyo and Sendai, meeting with importers, distributors and other buyers of U.S. beef and participating in USMEF promotional activities. He returned from Japan more enthusiastic than ever about the benefits delivered by the No. 1 destination for U.S. beef exports.
In addition to his experience in Sendai...