Billings, Mont. – In comprehensive comments submitted yesterday to the Office of the United States Trade Representative (USTR), R-CALF USA states the 24-year-old North American Free Trade Agreement (NAFTA) benefited transnational meatpackers at the expense of the majority of U.S. cattlemen, meaning all those who sell exclusively U.S.-born and -raised cattle.
The group explained that NAFTA gave transnational packers access to cheaper-priced cattle and beef from Canada and Mexico that are direct substitutes for U.S. cattle and beef. And, because packers do not have to disclose the origins of imported beef to consumers, bringing additional supplies of cheaper cattle and beef into the domestic market lowers the price for domestic cattle.
It acknowledged that a minority group of cattlemen, those whose business models include buying cheaper imported cattle and later selling them to packers at prices comparable to domestic cattle, have also benefited from NAFTA. The group explains the reason imported cattle can later be sold at domestic prices is because the origin of the resulting meat is not disclosed to U.S. consumers.
The group stated that in 2016, slaughter-ready cattle from Canada averaged more than $60 per head cheaper than comparable U.S. cattle and Mexican feeder cattle averaged more than $70 per head cheaper than comparable U.S. feeder cattle.
This price disparity, according to the group, is why the U.S. amassed a cumulative, value-based deficit with Canada and Mexico in the trade of cattle, beef, beef variety meats and processed beef of more than $31 billion. The group states this deficit has weakened both the U.S. cattle industry and the rural economies the cattle industry supports.
“During the past three years, each time the U.S. sold Canada and Mexico about $2 billion in cattle and beef, Canada and Mexico turned around and sold the U.S. about $4 billion worth of the same commodities. It should be clear that Canada, Mexico, and the multinational packers that benefit from exploiting the U.S. market will continue playing this game until the United States quits.”
The group’s comments recommend that NAFTA be modernized by: 1) reinstating mandatory country of origin labeling; 2) changing the rules of origin so beef from imported cattle cannot bear a USA label; 3) including special rules to protect the perishable nature of cattle; 4) designating cattle and beef as like/kind products so beef supply surges that depress cattle prices can be addressed; 5) reinstating tariffs to offset the price differentials between the three countries; 6) reversing weakened U.S. food safety standards; and 7) restoring import restrictions to better protect the health of the U.S. cattle herd.
To reinforce its concerns about the current trajectory of the U.S. cattle industry, which was marked by declining domestic production and increasing imports under NAFTA, the group asserts the U.S. sheep industry portends the future of the U.S. cattle industry if NAFTA is not modernized.
It states that in the early 2000s rising imports began displacing U.S. sheep production and by 2006, the U.S. sheep industry became the first U.S. livestock industry to be outsourced, with the majority of lamb consumed in the U.S. now supplied by foreign sheep industries.
“We now have the opportunity under President Trump’s leadership to modernize NAFTA so that it properly addresses the cattle industry’s unique structural and biological characteristics. Doing so will restore opportunities for current and new U.S. cattlemen and will help to rebuild the nation’s weakened rural economy,” the group concluded.