Ag Policy Blog

Trump Administration Details Goals of NAFTA Talks

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The Trump administration on Monday rolled out its objectives for renegotiating the North American Free Trade Agreement.

The 17-page report released by the U.S. Trade Representative focuses on President Donald Trump's push to reduce the trade deficit with Mexico. The president tweeted Monday, "It is my privilege to bring Nafta up-to-date through renegotiation. I believe that the end result will make all three countries better and stronger."

The full report can be viewed at https://ustr.gov/…

Getting out the objective on July 17 will allow the actual negotiations to begin as early as Aug. 17.

"The new NAFTA must break down barriers to American imports," the document states.

That would include eliminating unfair subsidies, market-distorting practices by state-owned enterprises and restrictions on intellectual property.

Regarding agriculture, the goals state to "maintain existing reciprocal duty-free access for agricultural goods."

The report also states the goal of expanding market access for some agricultural goods still facing tariffs as well as eliminating non-tariff barriers such as quotas, cross-subsidization, price discrimination and price undercutting.

Yet the administration would call for setting "reasonable adjustment periods for U.S. import-sensitive goods."

NAFTA accounts for about $1.23 billion in annual trade between the U.S., Canada and Mexico. The U.S. had a $46.1 billion net trade deficit in 2015 under NAFTA, which equates to about 8% of total U.S. export volume of $575.6 billion last year.

U.S. ag exports under NAFTA totaled $42 billion in 2015 while ag imports under the trade deal accounted for $43 billion. So the U.S. has about a $1 billion ag-trade deficit, mainly due to imports of both fresh and processed fruits and vegetables from Mexico.

While grain, oilseed and protein farmers in the U.S. largely support NAFTA, fruit and vegetable producers argue it is difficult to compete with Mexico when it comes to products such as tomatoes or strawberries. Mexico not only has a longer, earlier growing season, but also cheaper labor.

As the New York Times reported, some of the objectives laid out in the NAFTA report also focus more on countries such as China than Canada and Mexico. The report highlights issues with state-owned enterprises - taking language from the Trans-Pacific Partnership, as well as pointing to currency manipulation.

The NAFTA objectives also tries to eliminate using dispute settlement panels -- the kind of panel that rejected U.S. country of origin labeling for meat, for instance, by ruling that COOL discriminated against Canadian and Mexican livestock. The White House wants to scrap those dispute panels.

House Agriculture Committee Chairman Michael Conaway, R-Texas, issue a statement applauding the NAFTA plan. “As the administration looks to highlight American-made products this week, there is no better way to do so than by charting a path to economic advancement for America’s farmers, ranchers and foresters. The administration’s objectives for renegotiating NAFTA clearly demonstrate a commitment to protecting existing market access while outlining several ways to level the playing field. I’m looking forward to working closely with the administration to achieve the best deal possible for American agriculture.”

The National Association of Wheat Growers and U.S. Wheat Associates issued a statement that they were encouraged by the administration's priorities. The wheat groups want to maintain the duty-free access for agricultural products, as well as challenge the way Canada grades U.S. wheat.

“We believe wheat should be allowed to cross the border and be treated equally,” said Mike Miller, chairman of U.S. Wheat Associates. “Today Canadian wheat can move into our handling system freely, but U.S. wheat farmers don’t have the same opportunity in Canada. NAFTA renegotiation is a good context with which to address this issue.”

The National Cattlemen's Beef Association also said the administration's overall goals are beneficial to the meat trade. NCBA said it would continue to work to ensure mandatory country of origin labeling does not return.

“As we learned from history, MCOOL failed to deliver higher values for producers or a safer food supply,” said Craig Uden, president of NCBA. “It did, however, result in further consolidation in the U.S. beef industry and the potential for $1 billion in retaliatory tariffs from Canada and Mexico. We must learn from the mistakes of the past, not repeat them.”

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