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Administration Anticipates Agricultural Deal With Mexico – Realism or Optimism?

07/05/2018

The USAPEEC MondayLine posted on June 29th quoted Ted McKinney USDA Undersecretary for Trade and Agriculture as opining “I think we’re very near with Mexico. There are some things we’ve got to work through, but I think we’re very near.” He was referring to an agreement to revise NAFTA, generally considered to be dead, given reciprocal retaliatory action by both Mexico and Canada following threatened and imposed U.S. tariffs on products emanating from both nations.

The president of the Mexican Association of Poultry Producers (UNA) has called for retaliatory tariffs on U.S. poultry products imported into Mexico. Cesar Quesada of UNA and also the Mexican Agricultural Council are soliciting support from the Government of Mexico to facilitate expansion requiring investment in the poultry industry. The UNA action is basically a request for protection.

As with all demands by producers over tariffs, the concern of any government is to balance the social, political and economic benefits of inexpensive imports relative to the contribution from protected poultry industries. The situation with respect to India, China and the Republic of South Africa is to favor local production to support employment. In contrast, governments tend to relax protection prior to elections or with prevailing high inflation or an economic downturn. Waivers are granted over import restrictions to support an inexpensive “chicken in every pot” policy, if only as a temporary expedient to placate supporters of the ruling party.

The optimism expressed by the USDA with regard to Mexico may be premature given attitudes expressed by the Administration and future intransigence in negotiations under an Obrador Presidency.