Out of Trade Conflicts Hafemeister Sees Opportunity

2019 GAC, Jason Hafemeister stands at podium next to screen with text "NAFTA and Public Opinion"
Feb 14, 2019
WASHINGTON, DC – One would be hard-pressed to find a bigger supporter of U.S. agriculture than USDA Secretary Sonny Perdue.  His Trade Counsel, Jason Hafemeister, is probably the biggest booster for ag trade, and last week in remarks to USA Rice’s Government Affairs Conference here he explained why.

Hafemesister said the importance of trade cannot be understated; every sector exports, and most have a trade surplus.  He said the current climate of trade conflicts is hurting the ag sector, but that as always, these conflicts also present great opportunities.

“The positive potential for this whole trade situation is that we are bringing people to the table in a way that we haven’t in the past, and we have a chance for them to consider making reforms that will make it easier for us to export there,” Hafemeister said. “We’ve driven countries to the table in a serious way.”

But there is no question that the trip itself, hurts.  A growing and important market for U.S. ag products since 2007, China had been the top destination for U.S. ag products since 2010, but trade dropped precipitously in 2017 and is now behind Canada, Mexico, Japan, and the EU.  Of course U.S. rice is not exported to China at all, however, that is something that could change at any moment given the legal and technical hurdles that continue to be cleared by the Chinese and U.S. governments.

Hafemeister shared his thoughts on trade with the EU and Japan, both important markets for U.S. agriculture, but spent most of his time discussing the importance of trade with our two closest neighbors, and the number one and number four markets for U.S. rice – Mexico and Canada, respectively.

He explained that while the replacement for the North American Free Trade Agreement (NAFTA), U.S. Mexico Canada Agreement (USMCA), will be a boon to U.S. agriculture, the current retaliatory tariffs in place as a result of U.S. tariffs on steel and aluminum are a drag on trade that will offset any gains made under USMCA.

Hafemeister presented analysis that showed USMCA has the potential to grow U.S. ag export revenue by more than $450 million, but if the retaliatory tariffs remain in place even with USMCA, ag revenue would drop by more than $1.7 billion.  And depending on the level of tariffs imposed by Mexico and Canada, those losses could approach $8 billion.

He also stressed that NAFTA should remain in place until USMCA is ratified, less ag export revenue decline more than $9.3 billion.

“Counselor Hafemeister’s analysis confirms our own and we appreciate him not only coming to share that with us, but also being a strong voice for agriculture trade in this Administration and around the world in existing and potential markets for U.S. rice,” said Betsy Ward, president & CEO of USA Rice.

Go here to view the one-on-one interview with Hafemeister.

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