Source: Rita Jane Gabbett, MEATINGPLACE, 8/28/18


Livestock markets reacted positively to news that the United States and Mexico had agreed to the framework for a new trade agreement on Monday. Today the question becomes, when will it go into effect?

The answers from officials briefing reporters indicate a lot of variables will impact the timing, which could be months away, according to multiple media reports.  

U.S. Trade Representative Robert Lighthizer told journalists that while the hope is that Canada will now rejoin the new agreement, the administration plans to officially inform Congress by Friday of its intent to sign a new deal, a step required before Congress votes on a trade pact. Under the U.S. Trade Promotion Authority law, President Trump must wait 90 days to sign an agreement after notifying Congress of his intention to do so.

“If we don’t have Canada involved, we will notify that we have a bilateral agreement that Canada is welcome to join,” The New York Times quoted Lighthizer as saying. 

Speeding the process for both Mexico and the United States are the results of Mexico’s July election, won by Andrés Manuel López Obrador, who takes office in December. A deal would have to come before then for current President Pena Nieto, who has been a key part of moving the negotiations forward, to sign it.

While Mexican Foreign Minister Luis Videgaray Caso signaled on Monday that Mexico might be willing to move forward without Canada if necessary, some members of Congress and industry groups are already balking at voting for any deal that does not include all three original North American Free Trade Agreement members.

Groups including the Alliance of Auto Manufacturers and the National Retail Federation were quick to point out they need a trade deal that includes both Mexico and Canada.

Chrystia Freeland, the Canadian foreign minister, is traveling to Washington today to continue negotiations, according to her spokesman, Adam Austen.

Sen. Patrick Toomey (R-Pa.) noted that since NAFTA is a trilateral agreement, it would take new legislation to change it. The New York Times quoted Sen. Lamar Alexander (R-Tenn.) as saying no one “is envisioning” a revised NAFTA that does not include Canada.

The U.S. pork industry is anxious for a deal with Mexico, which in July raised tariffs on U.S. pork from 10 percent to 20 percent, resulting in immediately lower bids for hams and other products.

“Despite the short covering rally that we saw in the October (hog futures) contract yesterday, U.S. pork producers will continue to deal with the 20 percent Mexico tax for a bit longer,” according to the Daily Livestock Report, published by Steiner Consulting Group.

As for pork processors, “While a normalization of trade with Mexico will bolster pork demand and is a positive for the processing industry, we expect a volatile path to normalization within packer margins over the coming weeks,” Mizuho Restaurant and Proteins analyst Jeremy Scott wrote in a note to investors.

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