The flurry of activity that usually occurs with any new presidential administration is not a big concern to farm organizations. That’s to be expected as a new president tries to put his agenda into place in his first 100 days.
What is of concern is when the new president begins to make good on items that some considered to just be “campaign rhetoric,” including his pledge to “tear up” the North American Free Trade Agreement or NAFTA.
“Obviously, we have a problem with that,” said Betsy Ward, president and CEO of the USA Rice Federation and a speaker at the Arkansas Rice Annual Meeting in Stuttgart. “It’s worked out pretty well for us. Mexico is our No. 1 market. (Canada, the other NAFTA member country, is No. 4.)”
Mexico has gone from importing zero U.S. rice before the advent of NAFTA in 1994 to more than 600,000 metric tons of U.S. rice in 2016. U.S. rice holds an 88-percent market share in Mexico and 75 percent market share in Canada.
“These are important markets for us so we have to watch what happens with NAFTA,” Ms. Ward noted. “I don’t think he’s going to tear it up, but we do need to watch what happens in any negotiations.”
Rules of origin issue
One of the administration’s concerns centers around NAFTA’s “rules of origin” provision, which allows manufacturers to build parts for cars and other products in one of the member countries and ship them duty-free into the U.S. The president has complained that such provisions have cost the U.S. jobs.
One of the remedies suggested by administration officials is a 35 percent tax on Ford cars made in Mexico and sold in the U.S. Comments like those and Trump’s promise to have Mexico pay for a wall on the U.S.-Mexico border by imposing a 20 percent tax on Mexico’s imports to the U.S. make commodity organization executives nervous.
Mexican officials, for their part, have indicated a willingness to revisit NAFTA provisions that they feel disadvantaged Mexico’s farmers.
The Trans-Pacific Partnership, another trade agreement that involved the U.S and Mexico, was generally given up for dead on election night but received its final send-off when Trump issued an executive order formally withdrawing the U.S. from the agreement on Jan. 23.
“All of agriculture supported TPP, except for rice. We never took a position because we had concerns about what it meant for Southern long grain rice, frankly,” Ms. Ward said. “We don’t know what’s going to come in its place – probably some bilateral agreements. Mexico and Vietnam were also part of TPP so we want to watch that space as well.
Not a priority - yet
“Our conversations with officials in Mexico indicate such bilateral agreements are not a priority right now – they’re more concerned about NAFTA. We think they would be more likely to negotiate a bilateral agreement with a larger country like Japan before they would with Vietnam.”
Cuba is a major concern for the U.S. rice industry because it appears the new president plans to roll back some of President Obama’s overtures aimed at normalizing relations with the Castro government.
“So we really need to get in there and understand what the administration’s goals are on Cuba,” Ms. Ward said. “It’s not very clear right now. It’s a potential short-term negative, but hopefully we can get in and appeal to his business side that this is a good market for Ag and a good market for rice.”
Ms. Ward gave the Arkansas Rice Council and Arkansas Rice Federation members a “fun fact: 76 percent of the counties with Cracker Barrels in them voted for Donald J. Trump while 22 percent of the counties with Whole Foods in them voted for the new president in the 2016 elections.
“I think that tells you it was rural America that got him there, and we need to remind him of all the issues we have,” said Ms. Ward.
She also showed a video produced by the P.F. Chang restaurant chain that featured several rice industry members, including former USA Rice Federation Chairman Dow Brantley and rice farmers Jennifer James and Marvin Haire and their families.
The P.F. Chang Restaurant Group spent more than $300,000 producing the video, which examined the roll of family and the conservation ethic of U.S. rice farmers. The film is centered in Arkansas, which is the largest U.S. rice-producing state.
For more on the USA Rice Federation, visit https://www.usarice.com/