Mexico and Canada on the lookout for new friends

Adecoagro

14/07/2017 15:24

(The author is a Reuters Breakingviews columnist.  The opinions 
expressed are her own.) 
    By Anastasia Chacon Gonzalez 
    WASHINGTON, July 14 (Reuters Breakingviews) - Mexico and 
Canada are on the lookout for new friends. U.S. President Donald 
Trump will soon present his administration's demands for a 
revision of NAFTA. Uncle Sam's size gives it enormous leverage 
in the discussions, but its neighbors have been seeking out 
trade partners in South America and Europe. This could benefit 
firms like Adecoagro  AGRO.N  in Argentina and Germany's Oetker 
at the expense of American rivals. 
    U.S. Trade Representative Robert Lighthizer will release a 
summary of U.S. objectives in the NAFTA renegotiation on Monday. 
Trump has called the 1994 pact "the worst trade deal" and 
threatened to impose a 35 percent tariff on cars imported from 
there. Trump has already imposed higher levies on imported 
Canadian softwood lumber. The United States had a $63 billion 
goods trade deficit with Mexico in 2016, and a $12 billion 
shortfall with Canada. 
    Both countries look to be fighting back. Last year nearly 
all of Mexico's imported corn came from the United States, with 
a total value of $2.6 billion. Recently, Mexican officials have 
traveled multiple times to South America for trade talks with 
Brazil and Argentina. In May, Mexican livestock groups signed a 
deal to import 60,000 tonnes of corn from Brazil in August, and 
Adecoagro is aspiring to match that from Argentina. 
    (See graphic: U.S. vs. Brazil corn exports http://tmsnrt.rs/2uVy9pe) 
    Separately, Canada's trade agreement with the European Union 
will go into effect in September. The pact removes more than 75 
percent of Canadian tariffs on prepared-foods products, the top 
U.S. agricultural export to Canada. European food and beverage 
exports to Canada are expected to increase by around 30 percent, 
according to the Canadian parliament. Companies like Germany's 
Oetker Group, maker of Die Ofenfrische pizza dough, could have a 
lot to gain. 
    American maize exports to Mexico are already down nearly 7 
percent through May compared to the same period last year, 
according to the U.S. Department of Agriculture. Canada's 
increase in imports of European foods may come at the expense of 
U.S. companies like Cheez Whiz producer Kraft Heinz  KHC.O  or 
General Mills  GIS.N , maker of Lucky Charms breakfast cereal. 
    As the world's largest economy, the United States has the 
most say in the NAFTA talks. But Canada and Mexico are also 
America's two biggest export customers. With both exploring 
other options with gleeful trading partners, Trump can only push 
so far without hurting the interests of American enterprises. 
    (See graphic: Canada/Mexico alternative trading partners http://tmsnrt.rs/2un3aFQ) 
    On Twitter https://twitter.com/achacong13 
              
    CONTEXT NEWS  
    - On July 17, U.S. Trade Representative Robert Lighthizer is 
scheduled to release a summary of objectives and demands in the 
North American Free Trade Agreement renegotiation with Mexico 
and Canada. NAFTA talks are set to begin after Aug. 16. 
    - On July 8, Canada and the European Union announced in a 
joint statement after the G20 summit in Hamburg that their trade 
agreement, CETA, is set to come into force on Sept. 21. CETA 
removes almost 75 percent of Canadian tariffs to European 
prepared-foods products, which were Canada's No. 1 agricultural 
import from the United States in 2016. 
    - Separately, Mexico has been accelerating trade deals with 
Brazil and Argentina, with a special focus on the yellow-corn 
market. In May, Mexican livestock groups settled a deal to buy 
60,000 tonnes of Brazilian corn in August and plan to buy a 
total of 300,000 tonnes by the end of the year. On July 6, the 
U.S. Department of Agriculture reported that American corn sales 
to Mexico through May totaled $1.04 billion, down 6.7 percent 
from the same period last year. The top U.S. agricultural export 
to Mexico is corn. 
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    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
EU, Canada agree start of free trade agreement     urn:newsml:reuters.com:*:nL8N1JZ0RU 
Mexico buys cheaper Brazil corn as NAFTA talks loom -official    
 urn:newsml:reuters.com:*:nL2N1IK00R 
Breakingviews graphic: U.S. vs. Brazil corn exports    http://tmsnrt.rs/2uVy9pe 
Breakingviews graphic: Canada/Mexico alternative trading 
partners    http://fingfx.thomsonreuters.com/gfx/breakingviews/1/532/647/NAFTA.pdf 
Canada-EU statement    http://europa.eu/rapid/press-release_STATEMENT-17-1959_en.htm 
BREAKINGVIEWS TV: Trumping NAFTA     urn:newsml:reuters.com:*:nRTV1Z6ky8 
BREAKINGVIEWS -Wreckage of TPP could help fix NAFTA    
 urn:newsml:reuters.com:*:nL1N1FT0RQ 
BREAKINGVIEWS-Mexico's greatest defense against Trump is time    
 urn:newsml:reuters.com:*:nL1N1DC0RR 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Editing by Gina Chon, Rob Cox and Martin Langfield) 
 ((Anastasia.Chacon@thomsonreuters.com)) 
 
Keywords: USA TRADE/BREAKINGVIEWS