Farmers move to defy Trump on NAFTA
Farmers move to defy Trump on NAFTA
After trusting that the president would have their backs, many agricultural advocates now feel a sense of betrayal.
By ADAM BEHSUDI
11/09/2017 10:24 PM EST
After spending nine months indulging President Donald Trump’s desire to renegotiate NAFTA, agricultural groups representing farmers in Trump-supporting states across the heartland are now moving aggressively to save an agreement they consider crucial to their industry.
The once-powerful agricultural lobby was somewhat muted in its warnings about losing a significant portion of the $17.9 billion worth of agricultural products exported last year to Mexico, the U.S.’ third-largest trading partner, believing that the Trump administration would reach a settlement on other aspects of NAFTA while leaving agricultural trade alone.
Now, with Trump threatening to issue a formal intent to withdraw from the deal, farming groups say it’s clearer than ever that their pleas to save the pact are barely registering with a president intent on its destruction.
“I’ve come to believe this administration is determined to end NAFTA,” said Gordon Stoner, a fourth-generation Montana wheat farmer who leads the National Association of Wheat Growers.
The fearful tone now coming from many of the nation’s farm groups has only amplified as America’s agriculture sector confronts the loss of its main profit driver — foreign exports. Many are now mobilizing behind the scenes to stave off what most believe would be a disaster for American farmers.
A reversal on NAFTA would be a clear measure of the industry’s lack of influence over Trump and his administration. There’s also a growing recognition that the agriculture industry, while united on the importance of NAFTA, may have failed to coordinate an effective strategy to counter the threat that Trump posed to the trade pact since his first day in office.
“The importance of trade to economic growth in the food and ag sector is so fundamental that there tends to be an assumption that everyone understands that,” one association leader told POLITICO. “We can get lazy about our meeting our educational challenge in explaining that part of our industry to others.”
But the newly energized, growing frustration of the agriculture industry has hit what some are calling a milestone after it recently released a letter directly challenging Commerce Secretary Wilbur Ross after he publicly disputed the idea that a NAFTA withdrawal would lead to a serious drop in exports.
“Unless countries are going to be prepared to have their people go hungry or change their diets, I think it’s more of a threat to try to frighten the agricultural community,” Ross said during an public event on Oct. 11.
The letter also responded to a threat Trump has been amplifying both publicly and privately to lawmakers in recent weeks: He would send notice that the United States would withdraw from the pact in order to pressure Canada and Mexico to agree to U.S. demands.
But agriculture groups say even that action would be cataclysmic and render meaningless the administration’s continuing promise to “do no harm” to agriculture through the NAFTA talks. Mexico has also said with no uncertainty that it would walk away from the talks if Trump resorted to that tactic.
“Contracts would be canceled, sales would be lost, able competitors would rush to seize our export markets, and litigation would abound even before withdrawal would take effect,” more than 80 associations wrote in their letter to Ross, which they made public soon afterward.
The six-page missive was meant to be an unequivocal recognition there was little expectation that the Trump administration would be helpful in trying to preserve NAFTA’s benefits for U.S. agricultural producers, according to sources who helped organize the effort.
“It was a huge departure,” said one strategist involved in the effort. “I see this as a major sea change of people saying the administration is not going to be helpful on this.”
The letter was in fact a culmination of what many agriculture groups had sensed for months: The Trump administration viewed agriculture’s benefits from the deal more as a bargaining chip rather than something that needed to be defended at all costs.
Ross "told aggies straight up that they’ve just got to get used to the fact that they’re a minor part of the economy and that trade policy isn’t going to be constructed around their interests,” said one industry consultant.
In numerous meetings between Ross and industry groups starting last spring, he said he believed the United States held all the leverage based on the volume of food and agriculture products it sold to Mexico. He argued that if the United States wanted to press Mexico into making concessions on issues such as auto-part imports, Mexico would agree rather than risk losing inexpensive access to U.S. farm products, according to people briefed on those meetings.
“All the ag groups looked at him and their mouths dropped open and said, ‘Don’t you get it? The leverage is in their hands. We are completely dependent on them as this major export market,’” said one person who received the briefing.
“If you try to twist Mexico’s arm to give in on rules of origin [on autos], they’ll just stop buying,” the person added. “That’s just an inconvenience to them because there are so many other places they can go. Sure, consumers might pay a little more, but it’s not as if they can’t get it.”
Trump’s threats to withdraw from NAFTA and the U.S.-Korea Free Trade Agreement have “generated a response that I don’t think that he fully expected,” said Kent Bacus, the international trade director at the National Cattlemen’s Beef Association.
“It’s been difficult, to be honest with you, because even though we have a lot of support from people within the Trump administration, President Trump has made statements that obviously have caused us a lot of concern,” he said.
Bacus said his group’s lobbying effort had “evolved" from simply reminding the administration of the positive benefits of trade to strongly opposing the administration’s positions.
“People are just shocked and kind of angry that the [ag] sector is not being taken very seriously or that these administration officials who prided themselves on understanding business and being business-friendly are dismissing the massive costs [of NAFTA withdrawal] at a time of low commodity prices and a really hurting ag sector,” said another agriculture industry consultant.
Agriculture Secretary Sonny Perdue — one of the industry's few allies in the administration — recently acknowledged Trump’s “bombastic” statements on trade during a meeting with farmers in California, but he still predicts a positive outcome from the NAFTA talks.
“The president is determined to get a better deal for American agricultural producers. At the end of the day I think he will achieve that,” Perdue said in a statement to POLITICO.
Still, the Agriculture Department is actively engaged in developing contingency plans if a NAFTA withdrawal actually happened.
"We're talking with the administration and Congress about some mitigation efforts if that were to occur; about how we could protect our producers with that [farm] safety net based on prices that may respond negatively to any kind of NAFTA withdrawal," Perdue told reporters this week.
Perdue acknowledged that pulling out of NAFTA could have "some tragic consequences" for U.S. producers, but added that he believed that farmers could adapt to changes in the market.
Mexico’s ‘Plan B’
Mexico, meanwhile, is moving forward with its “Plan B,” which involves accelerating trade deals with other countries and establishing new buyer-seller relationships with commodity powerhouses in Latin America like Argentina and Brazil — a specter that both shocks and haunts U.S. farmers.
The Mexican government announced last month that it would import 30,000 metric tons of Argentine wheat in December. That’s a drop in the bucket compared to the 3.3 million metric tons of wheat U.S. farmers exported to Mexico last year, but many farmers saw it as a testing of the market in anticipation of a U.S. withdrawal from NAFTA.
Stoner, the Montana wheat farmer, said his own bottom line has yet to be affected, but it would only be a matter of time once NAFTA’s benefits are gone.
“We all know the story of the little Dutch boy that had his thumb in the dike, trying to plug the leak,” he said. “This Argentine wheat is just the first trickle of water in the dike, and the dike may break loose.”
U.S. grain producers are heading to Jalisco, Mexico, to tend to their seller-buyer relationships during a conference this week, where there is sure to be talk of alternative sourcing, said Tom Sleight, head of the U.S. Grains Council.
The uncertainty over NAFTA has made many buyers in Mexico, who purchase grain for animal feed or milling for human consumption, wary of entering into months long contracts. As a result, Mexico buyers are turning more to the spot market, Sleight said.
“Obviously, South American sellers have been more aggressive in this market where in the past they might have said, ‘We can’t compete with that U.S. sourcing as vigorously as we want to,’” Sleight said. “Over the past six to eight months, yeah, you’ve seen a greater presence of South American sellers.”
U.S. farmers have a natural advantage over other sellers in Mexico because of low tariffs under NAFTA, lower transportation costs and 23 years of relationships between buyers and sellers. But Sleight said agricultural goods from South America, where farmers in Brazil and Argentina now produce on the scale of U.S. growers, can be cost-competitive depending on the time of year.
“Plan B is very much alive and being talked about in Mexico,” Sleight said.
Struggling to find a voice
As the agriculture industry has struggled to find its voice on NAFTA with the administration, even those champions of agriculture in Congress and in Trump’s cabinet are having little sway.
“There is sort of a pervasive view that NAFTA might be terminated, and they feel that basically that is a means to an end, but … I think that’s the wrong message,” Senate Agriculture Chairman Pat Roberts told reporters outside a Chamber of Commerce event on Oct. 31, referring to the Trump administration. "I think that’s the wrong way to approach it, and I think we have an awful lot of support in farm country to make that case."
Despite strongly signaling that he would proceed with his withdrawal tactic, Trump sought to assure Republican senators during a conference lunch in the Capitol in late October that he already saw the need to protect agricultural interests, Roberts said.
“He was telling people, ‘Everything’s going to be alright, I understand the value of trade, don’t get excited,’” the Kansas Republican said. “That’s when I stood up and said, ‘I’m excited.’ So I think he understands that.”
Still, Roberts said ag groups and others who support the industry are doing everything they can “to change the attitude, which I called very troubling.”
Make it personal, Roberts exhorted the crowd during his speech at the Chamber.
“Everybody talks about numbers in Washington, and so it just seems to me that we can make a better point if we make it very personal,” he said, referring to the expected job and income losses up and down the export chain.
On Capitol Hill, farm groups are trying to push the right buttons with lawmakers.
Industry groups met with members of the House Agriculture Committee on Tuesday where they told lawmakers they expected Congress to play an aggressive role to retain NAFTA's benefits for farmers.
“They were pretty candid; actually, they were very candid in their comments to the members about … how they’d like to see the administration move forward,” Chairman Mike Conaway said during a somewhat impromptu press briefing where he was flanked six industry officials representing the interests of grain, dairy, produce and pork farmers.
But from his vantage point in Outlook, Mont., Stoner said it was still a challenge to get his fellow farmers to stand up to Trump on trade.
“We need a groundswell from the country, quite honestly from folks that put this administration in place: Rural America tipped the scale and placed Trump in office,” he said. “I don’t know how to accomplish it.”
There is some effort being put toward mobilizing grass-roots protests, but it’s unclear yet if it is having any effect. A new campaign called Farmers for Free Trade, headed by former Democratic Sen. Max Baucus of Montana and former Republican Sen. Richard Lugar of Indiana, was set up earlier this year to counter the administration’s trade threats.
“For the administration, it’s especially important that farmers and ranchers who are Trump supporters are weighing in as well,” Baucus said. “If we’re going to rebuild bipartisan support for trade, it has to be done on the ground, with farmers and ranchers demanding trade policies that give them improved access to foreign markets.”
But without a well-coordinated and clear messaging campaign across the sector, “farmers don’t feel armed and ready and comfortable making this argument,” said one industry consultant.
“I don’t think the individual ag groups have been as vocal as they could be because a lot of their members voted for Trump and they don’t want to seem anti-administration, even though they are quite scared and concerned about the trade agenda,” the consultant said. “And I think there is the real fear of retaliation — being tweeted at, being frozen out of conversations on future topics. You have a farm bill coming up.”
The Perdue card is played
Earlier this year, Perdue was hailed as NAFTA’s savior when he persuaded Trump to stand down from issuing a notice to withdraw from the deal in April. Perdue was able to make his case armed with maps showing Trump’s deep red base spread across a rural American heartland that has grown dependent on agricultural export revenue.
But that strategy may carry less water now that Trump has a chief trade negotiator in place, Robert Lighthizer, who shares an equally dim view of NAFTA’s overall worth to the American economy.
Farmers are feeling increasingly alone in the trade battle, doubting whether Perdue can or will do much to change the trajectory of the talks.
“I’m not sure he’s as effective as he was when it was a little bit of a wake-up call to say, ‘Look at your electoral map, look at where the costs of NAFTA are, proceed with caution, please,’” said an agriculture industry lobbyist. “I think that was a little bit revelatory, but OK, now that you’ve been heard, what else do you have up your sleeve other than the facts, which are highly inconvenient to some of the people at the table?”
Industry officials say Perdue will have to be selective in asserting his priorities, especially before an anticipated fight over the 2018 farm bill in which he will have to defend a tangled web of crop insurance and subsidy programs that are easy targets for budget hawks.
“I think he needs to pick his battles with care to stay highly effective,” said an association executive. “It’s very appropriate his first priority is being supportive of the president. I just think his work has to be seen in that context.”
And Perdue may have only limited options to stand up to a president who doesn’t shy from publicly shaming his Cabinet members.
“Clearly the secretary is a champion for agriculture, but he’s one voice,” said Stoner, the wheat farmer. “As we’ve seen in this administration, if you cross the president, if you disagree with the president in public, the reality of his reality show is you’re fired.”
Megan Cassella and Catherine Boudreau contributed to this report.
https://www.politico.com/story/2017/...rs-defy-244769
