We were surprised to see announcements early this month that U.S. Secretary of Agriculture Sonny Perdue would be arriving imminently in Mexico at the head of a major agricultural trade mission. Surprised, for one, because we hadn’t heard a peep about such a large-scale, high profile mission, which was announced only the day before the group arrived in Mexico City. And two, because the U.S.-Mexico trade relationship – particularly in agriculture — has been nothing if not fraught with conflict during the Trump administration.
The mission reportedly included over 100 participants, including six state secretaries of agriculture and other state officials, federal government officials, representatives of agricultural commodity organizations and 28 individual private companies. The delegation included exporters of products such as soybeans, rice, seafood, plums, dairy products, nuts and wine, among others. Secretary Perdue and Mexican Agriculture Minister Víctor Villalobos flashed their toothiest smiles and gushed optimism over the future of the relationship as flashbulbs popped during their joint press conference.
Ostensibly the purpose of the mission was to explore new business opportunities in anticipation that the U.S. Mexico Canada Agreement (USMCA) free trade pact will be ratified soon by the United States. The Trump administration, however, has repeatedly used trade as a weapon to pursue other policy goals despite the existing NAFTA agreement. In May of this year Trump announced plans to implement import tariffs on all Mexican goods unless Mexico stopped the flow of migrants into the United States. Administration officials also suggested the tariffs would fulfill the president’s promise to make Mexico pay for his desired wall along the southern U.S. border. The tariffs were avoided at the last minute, but the U.S. did apply import tariffs on Mexican tomatoes this year, and the two countries have grappled over trade in avocados, sugar and dairy products in recent years.
Mexico needs the U.S. market badly, as the United States is by far the largest buyer of Mexican agricultural goods. Mexico, though, has been willing to use the tools available to it to apply pressure. Mexico slapped retaliatory tariffs on selected U.S. agricultural products in 2018, and has carried out highly publicized trade missions to Brazil and Argentina to seek alternative suppliers of feed grains. With the Chinese market unstable due to the ongoing trade war, U.S. soybean and corn exporters would be loath to lose even a portion of the important Mexican market due to future retaliatory tariffs. Perhaps, wethinks, Secretary Perdue’s recent flamboyant, all-smiles mission to Mexico could be in part a response to a perceived need to demonstrate symbolically that the United States still cares about the Mexican market. He even sweetened the deal with a commitment to expediting the inspection of tomato imports from Mexico, although this is needed only because the U.S. imposed inspection of 95% of Mexican tomato imports as part of an August agreement to remove the existing compensatory duties.
Ultimately, despite the threats, tariffs and name-calling, everyone on the business side surely wants to keep the bilateral trade relationship running with a minimum of disruptions. Even Democratic U.S. House Speaker Nancy Pelosi, who has held up ratification of the USMCA this year, suggested Nov. 14 that agreement on a deal was “imminent”. Dare we dream of finding a sparkling new trilateral free trade pact under the tree this Christmas?