U.S. Pork Exports: October Trade Update

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The U.S. Mexico Canada Agreement (USMCA) set to replace the North American Free Trade Agreement (NAFTA), was signed by President Donald Trump, Mexican President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau while attending the recent G20 Summit in Buenos Aries, Argentina. Though signed, the agreement now awaits approval and ratification by each country. President Trump has since expressed his intention to formally terminate NAFTA within the next six months in an effort to expedite the approval of USMCA. The USMCA agreement would ensure long-term duty-free access for U.S. pork, beef, and lamb into Mexico and Canada. Retaliatory duties imposed in response to U.S. tariffs on steel and aluminum imports from Mexico and Canada remain in place, but negotiations continue in an effort to resolve this issue.

Also on the sidelines of the G20 Summit, President Trump and China’s President Xi Jinping struck an agreement to hold off on administering further tariffs for the next 90 days. In an effort to defuse trade tensions between the world’s two largest economies, this temporary deal will allow for additional trade talks without further tariff escalation from 10 percent to 25 percent on $250 billion of Chinese imports. In a statement from the White House, “China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately. President Trump and President Xi have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent”.

In mid-November, the U.S. Meat Export Federation (USMEF) submitted comments to the U.S. Trade Representative (USTR) on the proposed bilateral trade agreement with Japan. Comments emphasized the urgent need to restore competitiveness of U.S. red meat products as Japan moves forward with implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Japan-EU Economic Partnership Agreement. Separately, the USTR published notices in November seeking comments on negotiating objectives for upcoming trade negotiations with the European Union and the United Kingdom.

October pork exports were again led by strong demand for U.S. pork in Korea and South America with exports to Korea up 27 percent and over 17 percent by value from last year. For January-September, pork and pork variety meat exports were up 41 percent by volume and 44 percent by value for Korea. The Korean market continues to excel and has proven to be an incredibly successful market in 2018. In October, South America again showed strong growth led by Colombia and Peru. Exports to the region were up 25 percent by volume and 19 percent higher by value so far this year. Exports to Japan were up 2 percent by volume and 3 percent by value for the year. However, Japan’s imminent trade agreements as part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Japan-EU Economic Partnership Agreement that are set to be implemented in the coming months, U.S. pork will be at a disadvantage in its leading value market. Exports to China/Hong Kong have declined by 27 percent by volume and 16 percent by value for January-October 2018. As the leading destination for pork variety meats, exports to this region have certainly suffered. U.S. pork to Mexico has rebounded slightly and has remained resilient despite added tariffs.

Caption: U.S. Pork and Pork Variety Meat Exports to China and Mexico

Source: U.S. Meat Export Federation

  • African Swine Fever (ASF)
    • African swine fever (ASF) continues to spread rapidly through commercial pig farms across almost the entirety of China, including the major production areas of Henan and Sichuan provinces. There continues to be a slow trickle of positive sites – more than 80+ positive sites to date—the whole eastern two-thirds of China. Perhaps worst of all, China’s Ministry of Agriculture and Rural Affairs has confirmed that the disease was found in a dead wild boar in Baishan city, Jilin province in north-eastern China. A recent Reuters article suggests that China may be considering stockpiling pork to support farmers affected by ASF. Meanwhile, in Europe, ASF continues its slow spread primarily via feral pig populations. The virus remains very limited in Belgium, but other nations have wider infections, including Poland, Ukraine, Czech Republic, Moldova, Hungary, Romania, the Baltics, Bulgaria, and points east. Belgium has expanded the region in which they are eradicating feral swine. Of course, Africa remains the origin of the virus where herds remain infected. Keeping trade limiting foreign animal diseases (FADs) like ASF out of the U.S. is critical to pork producers along with taking steps necessary to elevate the level of FAD preparedness in the industry.
    • NPB recently submitted a proposal termed “Secure Pork Supply – Ag View” under the Agricultural Trade Promotion (ATP) program. This project would allow for the complete build-out of a spatial database that will enable Animal Health Officials (AHOs) in the event of a finding of a foreign animal disease (FAD), to facilitate the successful movement of pigs from uninfected farms into commerce, both domestically and internationally. Notification of awarded ATP funding will occur in early 2019.
    • NPB remains committed to this effort and has multiple educational resources available to pork producers to help address these topics. Stay up-to-date with all things related to FAD here.

U.S. Pork Highlights

Caption: Total U.S. Pork and Pork Variety Meat Exports for 2018 Source: USMEF

 

Looking Ahead

The recent signing of USMCA allows the proposed trade agreement to move forward for approval by the U.S. and Mexican congresses and the Canadian parliament. The U.S. pork industry remains focused on achieving free trade with its two closest trading partners and removal of retaliatory tariffs on U.S. pork. The short-term agreement reached between President Donald Trump and Chinese President Xi Jinping also brings new optimism to resolving U.S.-China trade tensions and a continued focus on securing a mutually beneficial trading partnership between the two countries. Addressing key issues related to intellectual property, technology transfer, and cyber intrusions remain the biggest topics of negotiation.

Looking back on U.S. pork exports from January to October 2018, there were some tremendous bright spots including the expansion of exports to emerging markets like South Korea, Colombia, and Vietnam. Despite the challenging trade policy environment that has impacted some of U.S. pork’s biggest markets, the U.S. pork industry has remained resilient and continues to diversify export opportunities that will ensure the long-term success of U.S. pork. Even more importantly, looking ahead to 2019, continuing efforts on restoring trade agreements with Mexico, Canada, and possibly China are important, and coupled with diversification of export opportunities, will ensure U.S. pork’s place globally.

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