Ongoing negotiations between the office of the U.S. Trade Representative and a Congressional working group aimed at bringing the U.S.-Mexico-Canada Agreement to an approval vote in the House of Representatives is a step in the right direction, says USMEF president and CEO Dan Halstrom.
“We feel like progress is being made towards a vote and hopeful implementation of USMCA. Things are working fine at the moment under NAFTA, but in order to assure stability and a go-forward path where we don’t have to worry about any interruptions in the supply chain getting USMCA is definitely a priority for the beef, pork and lamb industries,” Halstrom says. “We ran many years in a row setting record after record on pork to Mexico. Unfortunately, from mid-’18 to the middle part of 2019 we had a 20% duty and from my days when I was an exporter myself, it’s always harder to get a customer back the second time versus the first time. This is what we’re dealing with right now. It’s going to take us some time to get that lost share back, but this just highlights the importance of getting USMCA passed and implemented so that our customers know that we’ll be there 52 weeks a year every year to supply pork to them.”
With respect to beef exports, Halstrom says USMCA will complement the new U.S.-Japan trade agreement, which will soon be considered for approval by the Japanese Parliament. He notes that the mix of cuts exported to Mexico differs significantly from the products that appeal to Japanese buyers and consumers.
“We have avoided having duties implemented on beef, but still I think there was some fallout from the pork side because a lot of these buyers in Mexico handle both beef and pork and there was some concern during that year when we had the pork duties on it, that it could spill over into beef. It never did, but just once again highlights the importance of this agreement,” Halstrom says. “Mexico is our largest market volume wise for pork and lamb and No. 3 on beef. However, it’s even more important in terms of the product mix with the Japan-U.S. agreement hopefully being implemented soon. This would complement that nicely because the product mix to Mexico is different from Japan, so they complement each other. From a carcass utilization standpoint, you get a lot of the middle meats. A lot of the plates, beef tongues, things like this going in Japan, and in the end, cuts like rounds, those go to Canada and Mexico.”