Agricultural News
Steve Dittmer Offers His Thoughts on "Free Trade Trump Style"
Sat, 13 May 2017 17:34:28 CDT
Steve Dittmer is the Executive Director for the Agribusiness Freedom Foundation- and he regularly blogs on trade and regulatory issues related to agriculture- especially as it relates to modern animal agricultural production. Today, he offers the following thoughts about the announcement this past week that the US and China are moving closer to US Beef being allowed entry into China- Dittmer calls his blog, which follows, "Free Trade Trump Style":
There are lots of things we can learn from yesterday's announcement that beef would be arriving in China by the front door by July of this year.
For one, never underestimate the power of the personal, especially if those personages involved have incentives. The U.S. has been beating on China's front door for 13 years, with nothing but long negotiations and well documented roadblocks to show for it. We got approval but no plants were ever approved to ship product.
Donald Trump becomes president and bellows for all the world to hear -- most notably China -- that he is very unhappy with nearly all trade agreements America is party to. Canada and Mexico express displeasure but call Trump at the eleventh hour when word leaks out he is drafting a withdrawal document. Please, please negotiate, don't terminate is their message.
Even before that, China's President Xi Jinping has beaten them to the punch. With much of his country's economy at stake, Xi wrangles a personal visit with Trump, relying on his personal charm to convince Trump not to start a trade war. Person to person, the numbers one and two world economies within 90 days of one's inauguration -- not too common.
Underlying all, of course, is the world's most sinister figure, North Korea's Kim Jong-un. Trump's message is simple. Let's work out some trade deals economically beneficial for both our countries -- now, not later -- and you have to rein in your wild young protégé -- or the China trade is going to suffer - hugely.
In a matter of roughly 30 days, issues that have simmered for years and years suddenly practically melt -- or so it appears. We're not counting our chickens yet, whether they are raised and cooked here or in China. But when the top guys say, "It shall be done," negotiators and diplomats hop to.
Another thing likely from the Chinese affair: this will only boost Trump's belief in the power of negotiating with one country at a time, rather than multilateral trade agreements. It will also boost his belief in the power of powerful personalities. He started the ball rolling and then handed off to Commerce Secretary Wilbur Ross and Treasury Secretary Steve Mnuchin. Ross has done business in China for years. His collection of Chinese art would fill a big city museum. When big things are at stake, send in the big dogs. They worked things out with Chinese Vice-Premier Wang Yang, no less.
Of course, good luck comes to those who work hard. NCBA and USMEF and other groups have been keeping the heat on our government negotiators for years. Those negotiators, under several presidents, have been laboring to satisfy Chinese negotiators. The last word before Trump was that traceability could be handled if we put together some kind of voluntary traceability program that would give additional transparency suitable to the Chinese. Because of internal Chinese past history with clenbuterol, ractopamine was likely to be a no-go, no matter what. The safety of our beef product was not scientifically an issue but nearly a cultural one, given China's past history.
That is why the "Joint Release" specifying that U.S. beef would be allowed in "on conditions consistent with international food safety and animal health standards" is a big deal. There is to be another round of "technical consultations" and then we are in, "as soon as possible but no later than July 16, 2017." To American beef industry people who have waited so long and saw negotiations crawl so slowly, it seems likely Disney magic to have it happen so quickly. But such language appears to preclude any last minute hedging. Barring Kim Jong-un blowing things up before then.
Of course, we don't know what else the two leaders at the top have said to each other. These accelerated trade deals are kind of a series of tests of friendship, reliability, trust and mutual defense. We don't believe the Chinese would be doing all this unless they were certain whatever tough talk Trump delivered on North Korea would be backed up, creating tough global economic disruptions at best and a regional war at worst. The Chinese know Trump has generals behind him at every flank in the White House and missiles and planes they can summon if necessary. Only North Korea's crazed leader seems oblivious to that.
And what of the 100 days? We think Xi knows it's going to take him longer than 100 days to resolve the North Korean issue once and for all. Getting all these long-waited trade deals done quickly, buys him some time to finish what he needs to do.
What can we learn about upcoming NAFTA negotiations from all this?
If this is to be the normal Trump Template, it means rattle your negotiating partners ahead of time, make sure they know you are willing to walk if you are not getting enough of what you want, set deadlines and list the goals you want to reach and then send in the top lieutenants to wrap things up in short order. None of this years and years of shuttle diplomacy among hordes of trade diplomats.
Will it work? Right now, it appears to be working for beef, bank cards, liquified natural gas, biotech seeds, etc. in China.
We haven't read the whole interview, but The Economist came out of lengthy interviews with President Trump convinced he puts more stock in trade deals to boost the economy than he does tax cuts. The beef industry wants both, but trade deals like this could do wonders for it and all the U.S economy.
Source- the Free Market Carnivore's Blog
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