There have been concerns in the US around the potential for renegotiating ongoing trade agreements or establishing new ones. We caught up with John Stewart, manager of governmental affairs at the American Feed Industry Association (AFIA) at the International Packaging and Processing Expo (IPPE) in Atlanta to hear more about those trade issues and other topics the association is addressing.
The US administration announced a review of the North American Free Trade Agreement (NAFTA) early in 2017. Since that point, the US, Mexico and Canada have met several times to discuss elements of the agreement.
“We’re hearing progress is slowly but surely being made on some issues,” he told us. “But it is important for us to realize that this is a tri-lateral discussion, and there are three big economies involved. Obviously, the US is a major player in that, but we’re just a piece of the puzzle.”
“We originally thought that the KORUS agreement was going to be a few technical negotiations, but now it seems a little broader than that,” he said. “There is a little more involved, but again it is an area of the world that is growing, where income levels are high and where the US has a great opportunity.”
Ongoing discussions on elements of NAFTA have generated some fears about the possibility that the US would withdraw from the trade agreement, however, some of those are being allayed by the ongoing process, he said. “I do think there is some concern, but I think some of those concerns have diminished as we continue those discussions and we start to see some progress made,” he added.
“We’re cautiously optimistic about those conversations and we like being involved in that process,” he said.
There also is an understanding in the industry that a 24-year-old agreement could need some updating, said Stewart. Areas that the AFIA are particularly watching include sanitary and phytosanitary regulations, improving cross-border regulations and dispute settlement.
There was some discussion that the effort could finish this spring as both the US and Mexico are heading into a period of political elections, however, there is not a specific timeline for wrapping up the NAFTA discussion process at this point, he said. “I encourage folks to be patient, but I also understand the need for expediency and to get that completed,” he added.
“We want to see that progress made quickly because it brings a lot more certainty to the marketplace – it’s hard to plan a business, especially when you’ve got your own products going overseas and domestic customers who depend on those markets as well,” he said. “It’s hard to plan long-term when you’re uncertain about that, so we want to see that wrapped up as quickly as we can, but we also want to see it done right.”
NAFTA is not the only trade agreement up for discussion at the moment, as talks on the free trade agreement with South Korea start.
South Korea has become a major trading partner for the US, said Stewart. Continuing the free trade agreement there, KORUS, offers industry members access to a growing economy.
TPP revival and the US
Although initially a member, the US decided to walk away from the Trans-Pacific Partnership (TPP) last year.
“TPP would have been a landslide victory for agriculture, it would have been great for the animal food industry,” he said. “That’s a growing market, the Pacific Rim, the countries that are involved in the TPP agreement are areas of the world where population is growing, income levels are rising and it really would have been a huge victory for agriculture.”
That trade agreement includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
However, in recent weeks there has been discussion that the remaining countries may be interested in moving forward with the trade agreement, said Stewart.
There are some concerns that the remaining countries are at the table and will be able to make decisions for a large part of the world economy, he said. “The US not being a part of that certainly does put us at a disadvantage, if for no other reason than to know what else is going on in these other countries and kind of having an idea of what’s going on in a growing part of the world,” he added.
It is exciting to watch the plan move forward for the countries involved, he said. But, it would have been a “win” for the US animal feed industry to have been a part of the process.
There has been some talk from members of the administration that the trade deal might again be of interest if elements were altered, however it is unclear if that is an option, he said. “The president mentioned a few weeks ago that he would be interested in a better deal for TPP,” he added.
“As we see other countries, whether it be Canada or Japan or other areas where we really want market access, are part of this TPP agreement I think it kind of puts the US in an awkward spot,” said Stewart. “Because we walked away from that and then we want to start bi-laterals or we’re trying to renegotiate a current agreement. When we had so much progress made and we were such a big part of something and then to walk away – I think it puts a little bit of a bad taste in people’s mouth.”
Future bi-lateral trade agreements
The ability of feed producers and users in the US to export their products is a critical one, said Stewart.
“We just can’t consume it here, quite frankly,” he said. “But, there is a whole lot of world outside of the United States that does want American products.”
Regions where a bi-lateral trade agreement would be of interest include Japan, the UK, and parts of Africa, he said.
Japan remains an opportunity there for exports of animal proteins, he said. The UK also is an interesting position as it continues to navigate having pulled out of the EU.
“Bi-lateral conversations are starting to happen with countries in Africa,” he said. “These are again places where people have more disposable income and it’s important for us to be able to tap into those markets.”