O’Rourke considers Trump factor

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News and insight for North America's fresh produce buyers
John Hey

BY JOHN HEY

@john_asiafruit

O’Rourke considers Trump factor

Agricultural economist says itís too early to tell what impact Trumpís election might have on the US produce trade, but warns it could have major implications across the globe

O’Rourke considers Trump factor

Editor of the World Apple Report and global fruit trade expert Des O'Rourke

Analysis

  • MARK POWERS

    MARK POWERS

    Executive vice president, Northwest Horticultural Council
    11th November 2016 10:48

    It is still early and there are plenty of unknowns regarding what the Trump administration’s approach will be toward current and future free trade agreements.

    We’ll need to see how President Trump puts his team together, especially who gets appointed to the US Trade Representative office as well as at the USDA as they are the people who drive agricultural trade policy.

    But rural America played a significant role in Trump’s election, and that matters. My guess is that he will listen to agriculture’s concerns as international trade is vital not only to the health of the fresh produce industry but also to other, far larger sectors such as feed grains, cotton, dairy and meat to name just a few. So I'm remaining positive in my outlook at this early date.

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How do you see Trump’s presidency influencing the US fresh produce trade?

Des O’Rourke: It's too early to tell at this stage, particularly as he has not been very consistent in his policy proposals. In addition, he has made virtually no comments on how he might help agriculture.

What are some of the potential benefits for the US industry?

OR: On the positive side, he has promised tax reform, and reduction of regulations. Both could benefit the produce industry if implemented.

Tax reform could be a huge deal for the US economy if the corporate tax rate is lowered to 15 per cent, and companies like Amazon and Microsoft get a one-time tax break to repatriate the huge troves of money they are holding overseas. One proposal was that their tax rate would be lowered to 10 per cent on the repatriated money if they invested the money in job-creating enterprises. In any case, repatriation is expected to bring a major boost to the US economy. Trump is also said to be contemplating special tax breaks for smaller businesses. However, until we know the details, it is uncertain how produce firms (which are mostly small to medium-sized) would be affected.
 
Reduction of regulations could be of immediate benefit to the produce trade if the demands of the Affordable Care Act (Obamacare) were reduced and the reach of the new Food Safety Modernization Act was trimmed. Trump has made it clear that one of his first actions will be to repeal Obamacare. However, reform of the Food Safety Modernization Act may not be high on his priority list.

Farm labour and international trade are two priority issues for the horticulture industry. The Trans Pacific Partnership (TPP) agreement is a huge deal for US-grown produce as tariffs would be slashed on a raft of products. With production ramping up across many of these products, expanding markets is vital. Yet Trump has been very vocal in his opposition to TPP. What are the potential threats to the industry given his anti-trade and anti-immigration rhetoric?

DO: If he took a hard line on illegal immigrants, it could seriously damage the labour supply for the produce industry. He needs to be quickly educated about the realities of farm labour.

If he continues to oppose trade agreements, such as TPP, that could also hurt the US produce trade, especially in the western states that are so heavily dependent on exports to Asia.

Speaking of Asia, we have no idea how he will attempt to reset relations with China, Taiwan, Japan, the Philippines and other key trade partners. The Obama administration's influence on Asia was slipping dramatically. We do not know what Trump can or will do to restore US influence.  

Trump has called for dramatic changes in US trade policy, and repeatedly threatened to pull out of the North American Free Trade Agreement (NAFTA) if Mexico and Canada don’t negotiate with the US and offer more favourable terms. How do you see things here?

DO: On the repeal of NAFTA, I'm a little puzzled since almost all the provisions of NAFTA have become embedded in normal North American commerce. What base situation would Trump wish to return to? The conditions in 1994 (22 years ago)? I believe Trump was using NAFTA as a symbol for past trade deals that worked against US interests. He is more likely to strike down the TPP, although I believe he would be misguided if he did so. Hopefully, his economic team will persuade him that this would harm, not help, US interests.

Are there any points you’d like to add?

DO: As Trump selects his key department heads and begins to set priorities for action, we will have a better idea of how he might affect the produce industry. He needs to build a top-class support team if he is to be effective as a national and world leader.
 

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