President Donald Trump has never hidden the fact that he does not favor multi-country trade deals and acted quickly upon taking office to pull the United States out of the Trans-Pacific Partnership negotiations. He also threatened to pull out of the North American Free Trade Agreement (NAFTA) between the U.S., Canada and Mexico, but instead, in May, called for the deal to be modernized.
The deal, which has been largely favorable for agriculture since taking effect in 1994, is on an unprecedented pace for review, with the fourth round of talks set to begin Oct. 11 in Washington, D.C. Seven rounds of talks are scheduled with an expected conclusion by early December.
The third round wrapped up Sept. 27 in Ottawa, CN, and although the countries have jointly claimed significant progress, public details are still lacking. This is because the countries agreed that the information exchanged in the context of NAFTA negotiations, such as the negotiating text, proposals of each government, accompanying explanatory material and emails related to the substance of negotiations must remain confidential. Because of this agreement, the U.S. Trade Representative Robert Lighthizer has classified the materials.
As noted the deal has been ag-friendly with a number of U.S.-based ag groups repeatedly calling on negotiators to “do no harm” to the ag sector as they work on a revised agreement. In visiting with WLJ, Dave Salmonsen, senior director, congressional relations for the American Farm Bureau Federation (AFBF), said keeping ag in the right place is important, saying that before NAFTA the U.S. had $8 billion of ag exports with Canada and Mexico and since then that number has grown to about $40 billion per year. “Getting rid of tariffs makes a difference in opening up economies, so we’re exporting so much more,” he said.
Salmonsen went on to explain, “Canada, depending on the year, is our No. 1 ag export destination and Mexico is usually No. 3. China is vying with Canada for No. 1 or No. 2, so that’s a big part of our overall ag trade which is about $135 billion a year in U.S. ag exports. It’s a big chunk of that and it’s been an efficient trade.” He added, “It’s always most efficient to trade with the neighbors; it helps to keep the logistics costs down.”
The NAFTA agreement contains 28 chapters, and Salmonsen said AFBF is closely watching the entire agreement. As one of the groups calling for “do no harm,” he said it is important to watch what is happening in other sectors too, making sure that in order to benefit a different sector ag doesn’t lose anything.
Salmonsen said, from what he knows, there hasn’t been much talk yet in the ag sector regarding market access. Instead, discussions have involved updating sanitary rules and food safety standards. He noted those rules date back to 1993, saying, “It’s about making sure we have better science-based, better risk assessments, making sure all of the countries are on the same level playing field there.”
As for market access, Salmonsen told WLJ that an issue at times is moving grain into Canada. He noted there are often questions if it has been graded properly, which affects pricing. Canada also has high tariffs on dairy, poultry and egg products going into the country, which the U.S. would like to see lowered. But, he noted, no text or language has been released, something he is hopeful for during the talks this week in Washington.
Salmonsen said he hasn’t heard anything directly related to beef. “I think from the livestock industry, they just want to keep things going as they are and make sure there are no new impediments, like no new tariffs, and no new requirements that would do anything to slow down trade among the three countries.” He did note that there are proposals to make border crossings easier. “It’s always about regulatory harmonization and paperwork, and issues that can be better and make it quicker when moving across borders, which will have an impact on the beef industry.”
At the end of the third round in Canada, Lighthizer made note of the hundreds of people from all three countries who are working on the agreement. “I think it’s important for everyone to realize just how big this is. This is hundreds and hundreds of pages of very technical, technical work that covers really almost the entire of all of our economies in one way or another.”
Lighthizer echoed remarks from Canadian Foreign Minister Chrystia Freeland and Mexican Secretary of the Economy Ildefonso Guajardo on closing the chapter on small-and medium-sized enterprises, saying, “They are the engines that drive each of our economies.”
Additionally, Lighthizer said, “We continue to push for ways that will reduce the U.S. trade deficit. We are committed to a substantial renegotiation that reinvigorates U.S. industry and ensures reciprocal market access for American farmers, ranchers and businesses.”
After concluding talks in Canada, the three nations issued a joint statement, saying, “NAFTA partners continue to be guided by a shared desire to create jobs, economic growth and opportunity for the people of our countries. Canada, the United States and Mexico remain committed to an accelerated timeline for negotiations. Ministers from all three countries have reiterated the mandate to the chief negotiators to continue on an accelerated path.”
A provision in the Trade Promotion Authority (TPA) sets timelines for congressional notification after trade deals are made. The TPA rule requires a 180-day notice to Congress before the new agreement could be signed. On this timeline, even if an agreement is reached in early December, as expected, the revised NAFTA agreement may not be signed until late March 2018.
If an agreement is not reached, Salmonsen said the current NAFTA agreement will remain in force. — Rae Price, WLJ editor
