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U.S., Mexico Reach Agreement On Key Trade Provisions
SARA WYANT
WASHINGTON, D.C.
Farmers and ranchers have been anxiously watching the Trump Administration go back and forth with our top two trading partners – Mexico and Canada – to renegotiate the North American Free Trade Agreement (NAFTA), while bearing the brunt of retaliatory tariffs.
Now, it looks like there is some very positive news – at least for two of the three countries.
President Donald Trump said the U.S. and Mexico resolved key obstacles to a renegotiated NAFTA – with a different name – while suggesting that Canada may be left out of a final agreement.
"We're going to call it the U.S.-Mexico Trade Agreement. ‘NAFTA’ has a lot of bad connotations. It was a rip-off,” he said.
Trump called the agreement in principle "something that is very special for our manufacturers (and) for our farmers.
Now, the “ball” is clearly in Canada’s court, to see if they can join the new agreement. Discussions are expected to heat up with our northern neighbor very soon.
There’s plenty for the U.S. agricultural sector to like in the U.S.-Mexico deal and plenty to put pressure on the Canadians.
The biggest win for farmers and ranchers is the agreement to continue zero tariffs on farm goods between the two neighboring countries.
“This is nothing short of a great victory for farmers and ranchers, because locking in our access to Mexican markets is critical to supporting farm income and strengthening rural communities,” said USDA Secretary Sonny Perdue.
The U.S. exported about $35 million worth of corn to Mexico in 1993, the year before the trade pact went into force. Twenty-three years later, long after Mexican tariffs fell to zero, the U.S. sold $2.6 billion worth of corn to Mexico in 2016.
Mexico has been buying more corn than normal from Brazil as fears grew that the U.S. would pull out of NAFTA and negotiations dragged on, but Mexico is still the largest foreign market for U.S. corn farmers.
“NAFTA has been an unequivocal success story for American agriculture, dramatically expanding market access for all parties, integrating supply chains and providing economic opportunity to farmers and rural communities,” said National Corn Growers Association President Kevin Skunes.
The U.S.-Mexico deal also contains a win for the U.S. dairy industry, which has grown increasingly concerned about how the European Union has tried to convince Mexico to protect the names of cheese and other food through the use of geographical indications.
For the first time in NAFTA, the United States and Mexico agreed to geographical indication standards that: enhance transparency for opposition and cancellation proceedings for geographical indications (GIs); establish a mechanism to consult on GIs pursuant to international agreements; and allow for additional factors that may be taken into account in determining whether a term is a common name instead of a GI, noted the U.S. Trade Representative in a statement.
“In addition, for the first time in a United States trade agreement, Mexico and the United States agreed to not restrict market access in Mexico for U.S. cheeses labeled with certain names.”
For the wine and liquor industry, the United States and Mexico agreed to labeling and certification provisions that will help the countries avoid barriers to trade in wine and distilled spirits. Mexico agreed to continue recognition of Bourbon Whiskey and Tennessee Whiskey as distinctive products of the United States. The United States agreed to continue recognition of Tequila and Mezcal as distinctive products of Mexico.
Secretary Perdue also said the agreement "specifically addresses agricultural biotechnology to keep up with 21st century innovations, including new technologies such as gene editing. Specifically, the United States and Mexico agreed to provisions to enhance information exchange and cooperation on agricultural biotechnology trade-related matters.
While these provisions were viewed favorably by many agricultural groups, most realize that there is still a lot of hard work ahead on the international trade front and potentially, in Congress.
Rob Larew, who serves as National Farmers Union Senior Vice President of Public Policy and Communications, describe the news as a “positive step” to put family farmers and ranchers on an even playing field with multinational corporations” but noted “there is still much work to be done.”
American Farm Bureau Federation President Zippy Duvall said his organizations was excited about the announcement but was still reviewing the details, including some concerns expressed by fruit and vegetable growers.
“This is the kind of trade news we have been waiting for. In a time when the U.S. economy is booming our farmers have been left behind. Open markets and good trade agreements will give American agriculture the opportunity to be a part of this booming economy,” Duvall said.
He also wants the Trump team to keep moving forward with Canada to “address their anticompetitive milk pricing provisions. We need negotiators to convince Canadian officials that they, too, will benefit from a revised treaty. We are hopeful that the value of a continued and improved NAFTA for all will bring everyone back to the negotiating table,” Duvall added. ∆
Agri-Pulse Senior Trade Editor Bill Tomson contributed to this column.
SARA WYANT: Editor of Agri-Pulse, a weekly e-newsletter covering farm and rural policy. To contact her, go to: http://www.agri-pulse.com/
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