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Trumpís ultimatum poised on gap between NAFTA, USMCA


WASHINGTON, D.C. ó In less than a week, President Donald Trump reassessed his position about the Mexican border, telling reporters he will now give Mexico a year to fix the immigrant and drugs issue or shut the border and add tariffs to the auto industry.

No one knows how this ultimatum may impact the pending U.S.-Mexico-Canada Agreement, or USMCA. Attempts to reach the USDA and U.S. Trade Representativeís office were not returned before press deadline. Agriculture groups are still strongly in support of maintaining trade agreements with Canada and Mexico.

As recently as last week, Trump made threats that he would withdraw the United States from the 25-year-old North American Free Trade Agreement (NAFTA). If that happens before the replacement USMCA pact is signed, trade between the U.S. and Mexico and Canada would see tariffs increase.

At the same time, government officials of other countries Ė such as Japan Ė are watching the uncertainty between the U.S. and its closest trading partners, said Veronica Nigh, economist with the American Farm Bureau Federation. Canada and Mexico are the closet trading partners for the US by proximity and also economically, with billions of dollars of product and goods crossing the borders each year.

"If you're unable to reach an agreement with your closest trade partners, why should other countries trust you can make an agreement work with them?" she said.

Shutting down the border with Mexico would impact trade routes, she said. Last week, at the El Paso, Texas, border crossing, customs agents were reassigned to work with immigrants seeking asylum. As a result, normal traffic between the two countries was delayed for hours.

Nigh said the border crossing is only open during certain hours and if a truck has to wait until the next day to make a delivery, goods could potentially start to spoil. El Paso is one of two border crossings that transport about 80 percent of dairy products from the U.S. to Mexico. It is one of only three ports responsible for the majority of fruit and vegetable trade.

If delays continue, the agriculture industry will have to find another way to transport goods, by ship or rail. It would add to the transportation time and increase costs, Nigh said.

The USDAís Agricultural Marketing Service did not respond to requests for comment regarding transportation concerns.

VP travels home

The same day Trump backed off his immediate threat to close the border, Vice President Mike Pence met with farmers in Indiana about the USMCA and other trade issues. About 35 farmers met with him at Lamb Farms in Lebanon, where they were separated into smaller groups by commodity type.

Pence went to each group and listened to their concerns. Randy Kron, president of the Indiana Farm Bureau, acted as host. He said his office was contacted about a week before the visit to arrange for farmers from a variety of commodities to meet with Pence at a farm in central Indiana that had space for everyone.

Kron said the former Indiana governor really listened to what the farmers had to say. "It was like he wanted to know what was going on Ö he said he'd relay those things to the President," Kron said.

Farmers focused on the importance of getting the new USMCA agreement finished and of more markets. Kron said NAFTA was a good deal for agriculture and the three countries have come to rely on one another Ė Canada and Mexico are among the largest importers of U.S. ag products, and the U.S. pork, dairy, poultry, and soy industries rely on exports to Mexico.

Soybeans and corn have seen excellent yields for the past several years and that has caused prices to drop, even before tariffs were put in place, Kron said. More markets need to be opened for U.S. farmers to sell their supply.

The farmers also discussed border security and immigration, he noted. Farmers need migrant workers to harvest the crops. They acknowledged Trump's concerns about border security, but said something needed to be done to provide more assistance in fields.

The trade war with China was brought up briefly, Kron said. Farmers understand China has been taking advantage of the U.S. by stealing intellectual property, but the longer the dispute takes to resolve, the harder it will hit farmers.

"They want it done, but they want it done quickly," he explained.

Kendell Culp, a member of the Indiana Soybean Alliance board and a pork producer, said he felt like Pence really heard the farmers. Every time a farmer spoke, the VP acknowledged it with a short comment, but for the most part he let the farmers talk.

The soy growers talked about China turning away from the U.S. soy market. It imported less than half the value of soy from the U.S. last year than in previous years. In addition, African swine fever has killed more pigs in China in the last nine months than the total number of pigs in the U.S. It will impact China's need for soy Ė but it might also open the country to import more pork products.

Culp said he was reassured by Pence's attention that the issues would be brought to Trumpís attention, but trade is still a concern. The aluminum and steel tariffs were suppose to be removed from Canada and Mexico after NAFTA was renegotiated, but those remain in place.

With Canada being the single largest importer of U.S. agriculture and Mexico in the top five for almost all ag products, "We cannot afford not to ratify the USMCA," he added.

The threat to put tariffs on Mexican machinery didn't seem too concerning for farmers right now, he reported. Most farmers haven't been able to afford new machinery in the past four years. Everyone is waiting as long as possible to buy new equipment and hoping that before anything on the farm breaks down, the relationship with Mexico is repaired.