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Trump and the Dance with NAFTA and TPP

The fate of the North American Free Trade Act (NAFTA) is resting on the edge of a Midwestern rusty knife edge. The fate of another trade deal may be a predictor of NAFTA's fate. Within days of his election, Donald Trump pulled the US out of the Trans Pacific Partnership.

Three weeks ago, President Trump spoke in Arizona about his thoughts on a new NAFTA. At that rally, he expressed doubt that any new trade agreement could be reached.

"Personally, I don't think we can make a deal, because we have been so badly taken advantage of," Trump said. "They have made such great deals--both of the countries but, in particular, Mexico--that I don't think we can make a deal. So I think we'll end up probably terminating NAFTA at some point. Probably."

If NAFTA Trade Agreement and the Trans Pacific Partnership (TPP) fail, it will be American farmers who voted 3 -1 for Trump who will suffer the most.

NAFTA Trade Facts

(1) During 2016, farm exports exceeded imports by $20.5 billion.

(2) Since it took effect in 1994 and eased tariffs, annual farm exports to Mexico have jumped nearly five-fold to about $18 billion. Mexico is the No. 3 market for U.S. agriculture, notably corn, soybeans and pork.

TPP Trade Facts

(1) Fourteen nations: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (until 23 January 2017) and Vietnam worked out a trade deal.

(2) The deal was viewed with dismay and suspician by American manufacturers and blue collar workers.

(3) Almost immediately upon his election, Donald Trump pulled the US out of TPP.

(4) American agriculture took a hit:

"The promised bump of $10 billion in agricultural output over 15 years, based on estimates by the U.S. International Trade Commission, won't materialize. But Trump's decision to withdraw from the pact also cleared the way for rival exporters such as Australia, New Zealand and the European Union to negotiate even lower tariffs with importing nations, creating potentially greater competitive advantages over U.S. exports." Trump TPP Deal Withdrawal Roils Rural America Politico Magazine

What this may mean for Hickman County, Kentucky

During the 1990's and early 2000's Hickman County was known as the chicken farm capital of Kentucky. The county saw some 200 large industrial chicken barns built. These barns were 60 by 200 feet.

Tosh Farms of Tennessee is a part of the American pork industry that has enjoyed a major market expansion under NAFTA TRADE agreement. Pork has been a big money maker up until 2017.

According to the U.S. Meat Export Federation: "The United States is the world's largest pork exporter, and is expected to dominate the global pork market over the next 10 years. This promising outlook comes as no surprise to the U.S. Meat Export Federation (USMEF), which works in international markets to increase demand for U.S. pork.

"Pork is the most widely consumed protein in the world, and U.S. pork has quality advantages that set it apart from the competition," USMEF President and CEO Phil Seng said.

The latest Agricultural Outlook, produced each July by the Food and Agricultural Organization of the United Nations (FAO) and the Organization for Economic Co-operation and Development (OECD) reports that the U.S. share of global pork exports will approach 30 percent by 2016, and one in every 3.4 pounds of pork traded in the world will originate from the United States.

The past 15 years of record-breaking U.S. pork exports have supported growth in the industry, and this trend is expected to continue through the next decade. Tremendous efficiency gains, resulting in a 55 percent increase in pork production per breeding hog over the past 15 years, helped position the U.S. industry as the leading global supplier.

Canadian exports in 2016 are expected to be 2 percent lower than its 2006 export volume, with exports falling from 46 percent of production to 38 percent over the next 10 years. Canada's share of global exports is expected to fall from 20 percent in 2006 to 15.6 percent in 2016 as the industry is not expected to recover from recent losses due to the strong Canadian dollar and high labor and feed costs.

"Under NAFTA, U.S. pork trade with Canada has increased," Seng said. "Canada currently is our third largest market for pork exports, as U.S. exporters are using the weak U.S. dollar to their advantage."

Now, Tosh Farms has targeted Hickman County as its latest battlefield to construct large industrial hog farm operations. If Tosh is successful, there will be upwards of 20 new hog farm operations.

There currently is a cap on the number of hog farms in the county which has been reached. Requests to increase the number of allowed farms have not been granted. The Hickman County Fiscal Court has not taken up the issue. Proponents and opponents showed up at meetings of the Court this summer to find the matter not on the agenda.

Whether Tosh will continue to pursue more farms in this second smallest Kentucky county may depend more on international and national events than local support or objections.

With America's withdraway from TPP, other deals are getting made.

"The remaining TPP countries are exploring ways to implement the deal without the United States. The National Pork Producers Council, which was a strong supporter of the TPP, has warned that the U.S. pork industry will lose market share in the Asia-Pacific if the United States doesn't conclude bilateral free trade agreements with countries in the region." National Hog Farmer August 25, 2017

Looking at imports, Japan is expected to remain the No. 1 pork-importing country, accounting for one-quarter of global pork imports. With the US out of TPP talks, Japan is now in negotiations with Australia and Brazil for pork, chicken, and beef imports.

If America is thrown into a trade war with Canada, Mexico, China, South Korea and Japan, vast rural farm areas will lose market shares to competitors eager to take American farmers' places.

The move to please one segment of his base is threatening another in the heart of Trump country.


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