The fourth round of negotiations to rewrite the North American Free Trade Agreement (NAFTA) concluded last week with calls of success, but acknowledged obstacles.
The U.S. 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 last Tuesday.
Canadian dairy and Mexican agriculture officials have said the U.S. proposals are nonstarters. In their statements last Tuesday, Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Secretary of Economy Ildefonso Guajardo Villarreal each said that the U.S. had made proposals that make their work more difficult.
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.
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. Mexico will host the fifth round of talks Nov. 17-21 in Mexico City.
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.”
U.S. concerns
At his news conference, Lighthizer expressed irritation over both business and Congress. He 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.
He added that 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 were 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 last Tuesday she doesn’t think trade deficits are a good way to judge an agreement, but pointed out that the U.S. enjoys a surplus in its trade with Canada.
Sen. Heidi Heitkamp (D-ND) 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 last 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 percent of consumers live outside the U.S., if we aren’t exporting, we’re losing,” Heitkamp said. — Jerry Hagstrom, DTN
[Editor’s note: This article was edited for length from its original form.]
