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August 7, 2017

NOTE:  This informative article in Politico's Magazine, has been making the rounds of the liberal media.  It's quite good and even though the impacts of "TPP Withdrawal" haven't actually been felt here yet, it lays out the who's, what's, where's, when's and why's of the whole Trump trade agreements meme.  I've posted a few paragraphs here just to give you a taste.     

On July 6, the EU, which already exports as much pork to Japan as the United States does, announced political agreement on a new deal that would give European pork farmers an advantage of up to $2 per pound over U.S. exporters under certain circumstances — a move which, if unchecked, is all but certain to create a widening gap between EU exports and those from the United States.
European wine producers, who sold more than $1 billion to Japan between 2014 and 2016, would also see a 15 percent tariff on exports to Japan disappear while U.S. exporters would continue to face that duty at the border. For other products, the deal essentially mirrors the rates negotiated under the TPP, which the United States has surrendered, giving the EU a clear advantage over U.S. farmers.
The EU’s deal is all the more noteworthy because American farmers were relying on the TPP — to which the EU was not a member — to give them an advantage over European competitors. But in a further rebuke to the United States, Tokyo decided within a matter of weeks to offer the European nations virtually the same agricultural access to its market that United States trade officials had spent two excruciating years extracting through near-monthly meetings with their Japanese counterparts on the sidelines of the broader TPP negotiations; the United States is now left out.
The EU, which also recently inked a deal with Vietnam, is now moving forward with talks with Malaysia and is in the process of modernizing a pre-existing trade deal with Mexico.
Meanwhile, a bloc of four Latin-American countries—Mexico, Peru, Chile and Colombia, known as the Pacific Alliance—is quickly becoming the leading force for free trade in the region, announcing near the end of June it would commence its own negotiations with New Zealand, Australia and Singapore, heedless of its neighbor to the north.
On its own, Australia, which in 2015 cut a deal to undersell the United States in beef exports to Japan, announced another round of scheduled tariff cuts with Japan. Without the TPP, Australian ranchers eventually will enjoy a 19 percent tariff advantage over U.S. competitors. Australia is also prioritizing the conclusion of trade talks with Indonesia, the largest nation in Southeast Asia by gross domestic product.
The remaining 11 TPP countries have already met two times, with a third meeting planned, to move ahead with the revival of the deal without the United States. The so-called TPP-11 would be in direct response to Trump’s trade policy. Economic forecasts already show projected gains for countries involved. Canada, according to one estimate, could permanently gain an annual market share of $412 million in beef and $111 million in pork sales to Japan by 2035, because lower tariffs would enable it to eclipse America’s position in the market.

As China, which was never a part of the TPP, senses blood in the water, it is moving quickly to assert itself, rather than the United States, as the region’s trade arbiter. China is aiming to close talks by the end of this year on its behemoth Regional Comprehensive Economic Partnership — a trade agreement involving 15 other Asia-Pacific countries.

None of these deals are yet in effect. But already there are signs that competitors are gaining market share over U.S. producers in the post-TPP landscape, as Pacific nations take a closer look at alternatives to U.S. exporters.

In Wright County, a trainload of corn can be in Mexico in three days, tens of thousands of hogs are being raised just for export to Japan and farmers routinely travel to far-flung places like Indonesia and the Philippines to market their goods.
This community roughly 100 miles north of Des Moines, checker boarded with corn and soybean fields and dotted with silos, may seem far from the raging debate over globalism sparked by Trump’s presidency, but it’s actually right at the center.

Exports of chilled pork, which is preferable to frozen meat, are up 2 percent over the previous year. But exports of chilled pork from Canada, a prime competitor, are up 19 percent. Likewise, in frozen pork, U.S. exports are up 28 percent. But exports from the EU, the leading competitor, are up 44 percent.
Eagle Grove’s skyline is already punctuated by feed grain elevators and a soybean processing facility. Now it’s further staking its future on Prestage’s 700,000-square-foot pork processing plant, roughly five miles south of town past the Dollar General, the Family Table restaurant and a Ford dealership.

The plant represents an opportunity not many Midwest towns the size of Eagle Grove are afforded given today's economic realities.
McGrath said the plant will bring much-needed jobs to the area, which has had a dwindling population for years. From its 1970 height of 4,489 people, the town suffered a 31 percent decline in population to 3,427 in 2016. Now Eagle Grove is expecting at least 200 of the 900 workers the plant will initially employ to find housing in the town. This would give a sorely needed boost to retailers and service providers, as well.
But the plant’s success will depend largely on export opportunities. More than 26 percent of the pork produced in the U.S. in 2016 was exported to foreign markets. And more than $1.5 billion of the nearly $6 billion in U.S. pork exports in 2016 headed for Japan.

“At the time those investment decisions were made, the U.S. had never turned down a free trade opportunity,” said Dermot Hayes, an agricultural economist at Iowa State University, referring to the Prestage plant and other pork-industry investments.
Hayes said the livestock industry had in its sights a future of expansion amid soaring export growth. After Trump’s withdrawal from the TPP, “that has pretty much disappeared,” he said.
Most in the industry expected a coming boom from exports as a result of TPP, with continued strong sales made possible by NAFTA. Vietnam, another growing market where U.S. producers were set to expand sales of organ meat and other items not easily sold domestically, was prepared to eliminate its tariffs altogether under TPP.  Now, the tariffs remain and Prestage—and all of Eagle Grove—are holding their breath.
For Grant Woodley and the 4,800 hogs he is raising for export to Japan, that uncertainty is worrisome.

Woodley and his wife, both Lutheran ministers, moved back to Wright County from Des Moines a few years ago to help with his family’s farm. They made a major investment two years ago in a state-of-the-art livestock facility, knowing that the margin on soybeans and corn alone wouldn’t provide a sustainable source of income to keep the farm, which has been in his family for more than 100 years.

His current contract has him raising hogs for the Japanese market. That involves feeding the animals a diet free from certain additives and following more restrictive guidelines on antibiotic use. He knows any profit he might get on futures contracts for any hogs raised for export will largely depend on whether the trading relationships tilt in favor of the United States.

“The world is going find it wherever it’s cheapest,” said Woodley, who made clear he did not support Trump in the election.

Stability and predictability were two key principles for Woodley. So far, he doesn’t see any of that coming out of the Trump administration when it comes to his trade policy and ability to strike new deals.

“Creating instability is not good business practice when there are fierce and competitive producers around the world,” he said. “Stability and predictability are tremendous to me as I seek out business partnerships, so why would it be any different for any other country we work with?”

The much longer full article is below.  It's an excellent yet down to earth analysis of international trade and how it affects real people here in the U.S. beyond catchy campaign slogans and angry epithets against Mexico and Canada.    

As Trump blindly dicks around in foreign trade with the top notch advice of uber-international-trade specialists, the "Twin Steves" (Bannon and Miller), I'm betting that all this puling out is going to be just as effective at actually achieving results as wearing a condom while trying to get your spouse pregnant.  Even from the couple of excerpts I've included here, it's pretty clear that international trade stuff isn't just tit for tat transactions.  Or maybe this is just what it is.  Japan has any number of countries it can import "chilled pork" from and if the U.S. choses to tariff Japanese imports here to the U.S., Japan can respond (retaliate) by buying pork from elsewhere. It really is this simple.  But there goes all those Midwest farmers' livelihoods down the tubes.  Same goes for the U.S. made and grown products Mexico imports from us which is exactly the same for any other country around the world.  Few if any products are available from only a single nation in today's highly interconnected world.   No question the ins and outs of negotiating a trade agreement like the Trans Pacific Partnership - both the overall framework of the agreement as well as the sub-agreements between individual signatories - are complex. And the future impacts on workers is unclear.   But when the U.S. is not at the table (and we are not in this case) we are very much more likely to be left out in the cold and our farmers and manufacturers will suffer as a result.  

The Trump Effect At Work!


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