The world’s two largest economies, the U.S. and China, have been meeting in an effort to negotiate a trade truce. With a looming deadline of March 1, both countries are focused on trying to reach an agreement. If an agreement cannot be reached by then, President Trump could officially raise tariffs on more than $200 billion in Chinese goods. Following an agreement reached at the G20 Summit in December, President Trump and President Xi agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. If unable to reach an agreement by March 1, President Trump will implement the planned tariff hike raising tariffs from 10 percent to 25 percent.
Source: U.S. Meat Export Federation
The U.S. Mexico Canada Agreement (USMCA) set to replace the North American Free Trade Agreement (NAFTA) and signed by President Donald Trump, Mexican President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau, awaits ratification by each country. The impact to the U.S. pork industry and the status of retaliatory duties imposed in response to U.S. tariffs on steel and aluminum imports from Mexico and Canada remain in place, but negotiations continue in an effort to resolve this issue. The U.S. House Ways and Means Committee recently issued a letter to the U.S. Trade Representative requesting the resolution of the dispute with Mexico and Canada over steel and aluminum tariffs. The letter notes, “American farmers, manufacturers, workers, and consumers will continue to be harmed, especially by the retaliatory measures, until an agreement is reached to lift the tariffs.”
The U.S. Meat Export Federation is one of the more than 50 food and agricultural organizations communicating with the U.S. Trade Representative and emphasizing the importance of including agriculture in any trade agreement between the U.S. and the European Union. The U.S. Trade Representative office also released its negotiating objectives for a bilateral agreement with Japan in December. A bilateral trade agreement is crucial for the viability of U.S. pork’s market share in Japan and imperative to restore competitiveness as Japan implements the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Japan-EU Economic Partnership Agreement (EPA).
Source: U.S. Meat Export Federation
Strong demand for U.S. pork in Korea, South America, the Philippines, and Vietnam led November pork exports. For January – November 2018, pork and pork variety meat exports were up 41 percent by volume and 44 percent by value for Korea. This past November, South America again showed strong growth led by Colombia and Peru. Exports to the region were up 24 percent by volume and 17 percent higher by value so far this year. Exports to the ASEAN region were 46 percent higher by volume and up 33 percent by value in the report, with Vietnam leading the increase of U.S. pork exports to the region. Exports to China/Hong Kong remain slow with a 29 percent decrease by volume and a 19 percent decrease by value for January – November 2018.
U.S. Pork Highlights:
The year ahead could again be very impactful for U.S. pork trade. The ratification of the USMCA by all three countries and subsequent removal of retaliatory duties on U.S. pork could allow trade to resume without negative implications. The negotiation of a trade agreement with China may be beneficial for all trade between the two countries. Optimism and a necessity for negotiation of trade agreements with Japan and the E.U. also takes center stage. Looking back on U.S. pork exports from January to November 2018, tremendous value and opportunity for U.S. pork exists specifically for emerging markets like South Korea, Colombia, and Vietnam. U.S. pork has continued to diversify its export opportunities to ensure the long-term success of U.S. pork despite the challenging trade environment of 2018.