Both Canada and Mexico have long been solid beef trading partners with the United States.
Frédéric Bastiat is given credit for having said, “When Goods Don’t Cross Borders, Armies Will.” And he was right. If there is any one “key” to peace on earth it is free and open trade. People are reluctant to fight the people they trade with.
But be very careful as to what you accept as “free trade.” Trade “agreements” (like the purposefully miss-named NAFTA, for example) are NOT “free” trade. They are “managed” trade–not the same thing by a long shot.
With respect to international trade, the most important news of recent weeks revolves around the WTO country of original labeling (COOL) decision. WTO has ruled for the final time; the organization upheld previous decisions that COOL is in violation of international trade law.
However, given the law’s history and avid support, doing so might prove somewhat difficult (never mind the WTO ruling). The fallout from here remains to be seen.
Nevertheless, perhaps some perspective around beef trade with our NAFTA partners might inject some important data to the discussion. As such, this week’s illustration highlights annual beef imports and exports with Canada and Mexico.
Following BSE in 2003, our trade balance with our trading partners turned sharply negative in 2004 and 2005. Getting export activity started again proved very challenging and time consuming across the globe.
However, that wasn’t necessarily the case with Canada and Mexico; by 2006, beef trade balance had turned positive with the two countries—the U.S. was exporting more value than it was importing.
And before the dollar’s bold run beginning in 2014, thereby hampering exports, beef’s trade balance with Canada and Mexico was approximately $600 million annually for three years running.
That level is equivalent to adding approximately $30 to $35 per head for every fed steer and heifer slaughtered in the U.S. Given those perspectives, what’s your overall perception of beef trade with Canada and Mexico?
If the U.S. doesn’t repeal COOL, what impact might that have on the market? Where do you see beef trade with our NAFTA partners headed in the year(s) to come? Leave your thoughts in the comments section below.
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