As the U.S. and China continue trade talks and call a tariff truce for the next 90 days, the U.S. agriculture industry is buzzing with speculation. On the AgriTalk Radio Show, host Chip Flory talked with Nick Giordano, vice president of global government affairs for the National Pork Producers Council, and John Heisdorffer, president of the American Soybean Association, about Saturday’s discussions at the G20 meeting in Argentina and the possibility of new trade partners in 2019.
“The pork industry has been very negatively impacted by the trade dispute with China to the tune of $8 per animal, that’s a billion dollars collectively this year according to Dr. Dermott Hays of Iowa State,” Giordano says. “So, we'll take any good news.”
The demand for pork in China is high. Giordano says anything that gets the U.S. out from under their punitive tariffs and back to moving U.S. pork to China is great news for the industry.
“But we're not we're not popping the corks to the champagne here yet,” Giordano says. “This is positive, but let's see how it plays out.”
Push the Process Forward
Even though the ag industry thinks they know how the 90-day pause will play out, Flory says it’s important for commodity groups to keep the momentum moving forward and do what they can to push the process ahead.
“NPPC is very hopeful that a lot of progress will be made in the talks and that things start to wind down so we can get out of trade war mode,” Giordano says.
Heisdorffer is hopeful about the pork industry’s progress with China.
“I have hogs myself and soybean meal is part of feeding those hogs. Every hog that we can produce here and send meat over or send soybeans to China to raise hogs there, that’s definitely good for our soybean farmers,” Heisdorffer says.
Troublesome Tariffs on Pork
Giordano is concerned about the tariffs weighing heavy on U.S. products, and expected metal tariffs to be lifted by Nov. 30 when the deal was signed.
“We’ve got to get the 20% punitive tariffs on pork off and I'm sure folks in other sectors, both inside and outside of agriculture, that are under retaliation feel that way,” Giordano says.
Giordano says they aren’t happy this hasn’t happened, but they are pleased that negotiations are ongoing between U.S., Mexico and Canada. However, the metal tariffs can’t be lifted fast enough.
“We're getting hurt badly in the China market,” Giordano says. “We want to be the biggest advocate for USMCA, but right now we're unfortunately spending a lot of time on defense. We want to get on offense – not just for USMCA, but also for Japan.”
Soybean farmers have spent hundreds of millions of dollars over the last 35 to 40 years developing trade markets, Heisdorffer says.
“That's the reason we’re so livid about getting it back,” Heisdorffer adds. “We’ve got a lot of new places we're working in. The United States Soybean Export Council has feet on the ground around the world and they're continuing to get those new markets and work on our old markets to increase.”
The Search for a “New” Mexico
Pork holds strong as the number one meat consumed in the world. Giordano says Asia and Europe hold a lot of opportunity for U.S. pork exports.
“In Asia, our biggest opportunity was China and then Japan,” he says. “It was a very big deal for us that they announced trade talks with Japan.”
So, what about new markets?
Both Vietnam and the Philippines have become key markets for U.S. pork.
“We shipped about $100 million there last year, and we’re just scratching the tip of the iceberg,” Giordano says. “We are delighted that the administration is looking hard at initiating FTA (Free Trade Agreement) negotiations with the Philippines. NPPC would be a staunch supporter.”
Exports within our own hemisphere are growing exponentially. With record pork production this year and being placed on China's retaliation list and Mexico's retaliation list, other FTA countries like Colombia and the Central American countries have been a lifesaver for the pork industry, he says.
Water Under the Bridge
“Could we have solved those issues with developing countries like the Philippines, Vietnam, etc., if we would have stayed in the Trans-Pacific Partnership (TPP)?” Flory asks.
Giordano says it’s water under the bridge.
“You’d be hard pressed to find a sector in the United States or in those 12 countries that was more engaged in TPP than the NPPC,” Giordano says. “We had a lot at stake but having said that, the President's first executive order when he entered office was to pull us out of TPP.”
The name of the game became bilateral FTAs, he says. NPPC was the first organization in the private sector to go public urging the administration to commence bilateral trade negotiations with Japan.
“This administration has taken a different look at how the United States should lead in that region in the world,” Giordano says. “We have no choice but to be with the program.”