Fourth Round of NAFTA Talks Ends

Lighthizer: US Put Forward Perishable Produce, Canadian Dairy Proposals

Jerry Hagstrom
By  Jerry Hagstrom , DTN Political Correspondent
Mexico will host the fifth round of NAFTA renegotiation talks Nov. 17-21 in Mexico City. (Public domain graphic by TheMexicanGentleman)

WASHINGTON (DTN) -- The United States has formally put forward proposals to make changes to Canada's dairy supply management system and to make it easier for U.S. fruit and vegetable producers to file trade cases due to seasonal Mexican imports that they believe are damaging their industry, U.S. Trade Representative Robert Lighthizer confirmed on Tuesday.

Lighthizer made the statement at a news conference he held after he, Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Secretary of Economy Ildefonso Guajardo Villarreal made a joint statement on the conclusion of the fourth round of negotiations on rewriting the North American Free Trade Agreement.

Lighthizer did not provide any details on what the United States has proposed on agriculture, but he did say at one point that agriculture is always a difficult part of trade negotiations due to both economic and social issues.

Canadian dairy and Mexican agriculture officials have said that the U.S. proposals should be nonstarters. The U.S. dairy industry has urged Lighthizer to raise the issue of Canadian dairy policies that keep out U.S. products. U.S. grain and meat producers have also said they fear that the produce seasonality proposal could endanger U.S. exports to Mexico. The United Fresh Produce Association has also said it does not support the seasonality proposal even though its Florida members and some others want the situation addressed.

In their statements Tuesday, Freeland and Guajardo Villarreal each said that the United States had made proposals that make their work more difficult.

In their joint statement, all three trade officials declared the round a success, but said that the challenge of new proposals and "conceptual gaps" have led them to have "a longer intersessional period before the next negotiating round to assess all proposals." Mexico will host the fifth round of talks Nov. 17-21 in Mexico City.

Earlier, the negotiators have said they hoped to finish the negotiations by the end of 2017, but on Tuesday they said additional negotiating rounds will be scheduled through the first quarter of 2018. At his news conference, Lighthizer said that the target deadline of the end of the year was related to the 2018 Mexican presidential elections, but that the view now is that the negotiations could go on until March without affecting the Mexican elections.

Lighthizer also has said that the Trump administration has not conducted any analysis of the economic impact if President Donald Trump should decide to withdraw from the agreement.

"We don't really have a plan beyond trying to get a good agreement," he said, adding that he believes if NAFTA ends, "all three countries would do just fine" because "there are a lot of reasons to trade."

He also scoffed at complaints that he wants to complete an agreement that would please Trump, saying that pleasing the president has been the goal of every trade representative.

Lighthizer said he wants to come up with an agreement that both business and labor would support, and said he believes that is possible.

"Everybody has to give up a little bit of candy," Lighthizer said, adding that if "a little bit of the sugar" is taken away, companies can make money in other ways.

Lighthizer said he is tired of trade agreements gaining congressional approval by thin majorities, and if he cannot get a huge majority, he wants at least a "solid majority" for a NAFTA rewrite.

Lighthizer said he is unsympathetic to the business community's complaints about ending the dispute settlement process that is in NAFTA and about the proposal to include a five-year sunset clause. The dispute settlement process, he said, amounts to political risk insurance that the business community can buy. Businesses can factor a sunset clause into their risk, he added.

The U.S. business community says it wants to make investment decisions based on market forces, but wants political risk insurance paid for by the U.S. government, he said.

Many of Lighthizer's comments at his news conference focused on manufacturing -- particularly the automobile sector. Under NAFTA, Lighthizer said, Mexico has offered "artificial incentives" to U.S. investors on the assumption that the United States will be the export market. That situation, he said, has resulted in the large U.S. trade deficit with Mexico.

Lighthizer said he had no evidence that either Mexico or Canada is willing to "rebalance" this situation. Freeland said on Tuesday she doesn't think trade deficits are a good way to judge an agreement, but pointed out that the United States enjoys a surplus in its trade with Canada.

Rep. Sander Levin, D-Mich., said in a news release late Tuesday that "renegotiation of NAFTA must include addressing boldly its most flagrant flaw -- the impact of the shift of manufacturing and its jobs to Mexico through its rigid structure not only of very low wages, but wages suppressed by a pervasive lack of labor rights. Doing so is in the interest of workers and consumers in all three countries."

Sen. Heidi Heitkamp, D-N.D., said in a release that she is concerned about news reports that have indicated agriculture is getting pushed to the backburner during NAFTA renegotiations.

"Our farmers and ranchers need access to foreign markets to export their goods -- otherwise, rural economies suffer and good American jobs are lost," she said. "We can and must support American workers and level the playing field for manufacturing jobs, but not at the expense of farm jobs."

Noting that she was at a bipartisan dinner Tuesday evening at the home of Ivanka Trump and Jared Kushner, Heitkamp said she emphasized to Trump administration officials that Mexico and Canada are two of the biggest markets for U.S. food products.

"I reinforced how any renegotiation of NAFTA must not leave agricultural states like North Dakota behind. When 95% of consumers live outside the U.S., if we aren't exporting, we're losing," Heitkamp said.


Jerry Hagstrom