Trump, Trade, and Food

Shortly after assuming office, Trump signed an executive order withdrawing the U.S. from TPP, a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam that had been seven years in the making under the Obama administration.

While noting that Congress was unlikely to ratify TPP in any case, the United Fresh Produce Association urged the Trump administration to “move past anti-trade rhetoric” and begin building consensus for key portions of TPP that would have benefited U.S. growers. These include rules that prevent countries from imposing protectionist measures in the form of sanitary and phytosanitary barriers. Without these, “countries can simply choose to block imports without scientific justification,” said Tom Stenzel, president and CEO, United Fresh.

Most U.S. food-industry related worries, however, surround Trump’s repeated calls to renegotiate NAFTA and impose tariffs of 10 to 20 percent on imports from Mexico and possibly other countries, with revenues to be used, in part, to build a wall along the southern U.S. border. When it went into effect in 1994, NAFTA removed most remaining trade barriers and tariffs from the U.S., Mexico, and Canada. The pact has long been controversial due to concerns of job losses, declining wages, and companies shifting manufacturing to Mexico. Indeed, Trump called NAFTA “the worst trade deal in the history of the country.”

While continuing to bristle over the concept of a border wall (and any suggestion that they should help pay for it), Mexican officials agree that NAFTA needs updating. “NAFTA is a 23-year-old agreement. We need to bring it up to modernity,” said Mexico’s Economy Minister Ildefonso Guajardo at a meeting hosted by the Detroit Economic Club in March. He disagreed with Trump that NAFTA has led to a “massive” trade imbalance, noting that Mexico’s exports to the U.S. in 2016 totaled $294 billion compared to $231 billion in U.S. exports to Mexico.

According to USTR, Mexico was the second-largest supplier of imported agricultural products to the U.S. in 2015 (the most recent year available), with goods totaling $21 billion. Leading categories included tomatoes and other fresh vegetables ($4.8 billion), fresh fruit including strawberries and avocados ($4.3 billion), wine and beer ($2.7 billion), snack foods ($1.7 billion), and processed fruit and vegetables ($1.4 billion). Any border tax or tariff would be imposed on U.S. importers, adding to the cost of products as they crossed the border, which would either lead to reduced company profits or passed along to consumers.

With much at stake, more than 130 U.S. food and agricultural organizations have urged Trump to not abandon NAFTA but to upgrade and modernize it, thereby preserving and expanding its gains. In a Jan. 23, 2017 letter to the president, the groups, organized as the U.S. Food and Agricultural Dialogue for Trade, noted that NAFTA has been a “windfall” for U.S. farmers, ranchers, and food processors, with agricultural exports to Canada and Mexico more than quadrupling in value, from $8.9 billion in 1993 to $38.6 billion in 2015.

“With the productivity of U.S. agriculture growing faster than domestic demand, the U.S. food and agriculture industry…relies heavily on export markets to sustain prices and revenues,” said the letter, whose signatories included such trade and industry groups as the American Soybean Association, the Fresh Produce Association of the Americas, the U.S. Dairy Export Council, and Western Growers, as well as major food processing companies, including Archer Daniels Midland, Cargill, and Tyson Foods.

Regulatory, Hiring Freezes

While FSMA itself is unlikely to be affected by the administration’s temporary freeze on new and pending regulations or the two-for-one rule, some FSMA-related issues might be. They include pending FDA rules for food lab accreditation standards, the posting of recall notices, and traceability regulations for high-risk foods. Other potentially affected actions include a USDA final rule on adding new requirements to the National Organic Program for livestock handling and avian living conditions, and an FDA proposed rule to remove GRAS affirmation for partially hydrogenated oils, according to an analysis by the Covington & Burling law firm. Finally, FDA guidance documents related to the Nutrition Facts Label final rule could also be delayed.