The Trump Administration formally notified Congress of its intent -- as required under the fast-track Trade Promotion Authority requirements -- to renegotiate the North American Free Trade Agreement (NAFTA). The notification starts a 90-day consultation period with Congress and stakeholders, with published comprehensive summaries of its specific goals for the renegotiation presented 30 days before it can begin formal negotiations.
“We intend to initiate negotiations with Canada and Mexico as soon as practicable but no earlier than 90 days from the date of this notice,” newly sworn-in U.S. Trade Representative Robert Lighthizer wrote in a letter to House and Senate leaders with jurisdiction over trade.
Lighthizer said the aim is that “NAFTA be modernized to include new provisions to address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary (SPS) measures, labor, environment and small and medium enterprises.”
Senate Finance Committee chairman Orrin Hatch (R., Utah) said he looks forward to working with the Administration hand in hand to achieve a high-standard trade agreement. “I'm confident that through close consultation, we can chart a course that not only strengthens this vital trade pact but also preserves our strong economic partnerships with Canada and Mexico," he noted.
Senate Finance Committee ranking member Ron Wyden (D., Ore.) warned, “On an initial read, the notification is disappointingly vague in many areas with respect to the results the Administration wants to achieve, and consultations with Congress have been rushed.” Wyden did note, however, that he was encouraged by Lighthizer's commitment to improve on what was achieved in the Trans-Pacific Partnership (TPP) agreement in several important areas.
Agricultural groups were quick to call for a cautious approach to modernizing NAFTA so as not to disrupt the great relationship already in place with Mexico and Canada when it comes to agricultural trade.
Since NAFTA went into effect on Jan. 1, 1994, U.S. trade both north and south of the borders has more than tripled, growing more rapidly than U.S. trade with the rest of the world. Canada and Mexico are the two largest destinations for U.S. goods and services, accounting for more than one-third of total U.S. exports, adding $80 billion to the U.S. economy and supporting more than 3 million American jobs, according to data from the Office of the U.S. Trade Representative. In fact, U.S. manufacturing exports to Canada and Mexico have increased nearly 260% over the past 23 years, and U.S. farm exports to the countries have grown by more than 150%.
“Canada and Mexico are top pork export markets. We absolutely must not have any disruptions in exports to our number-two (Mexico) and number-four (Canada) markets,” said National Pork Producers Council president Ken Maschhoff, a pork producer from Carlyle, Ill. The council committed to working with the Administration to preserve tariff-free market access for U.S. pork exports to Canada and Mexico, which last year were almost $799 million and $1.4 billion, respectively.
Chip Councell, chairman of the U.S. Grains Council and a Maryland farmer, said the top priority for the modernization is to maintain this market access and keep place what has already been established with customers. “For instance, all corn products currently go into Mexico and Canada duty free, with sales last marketing year of $2.7 billion in commodity corn alone. That demand is an essential part of ensuring farmers can continue to farm in this economy,” he said.
“If the Administration intends on renegotiating NAFTA, it must guarantee growers that new terms won’t reverse the significant benefits for U.S. wheat farmers, like duty free access,” said National Association of Wheat Growers (NAWG) president David Schemm, a wheat farmer from Sharon Springs, Kan. “Despite the risks, there’s an opportunity here to get better trade rules in place that will set the gold standard for trade agreements going forward, without hurting wheat farmers and their importing customers.”
In a joint statement, NAWG and the U.S. Wheat Associates said improvements certainly can be made in negotiating a new NAFTA and suggested that “a good place to start" would be the SPS rules the three countries already agreed to as part of TPP negotiations.
“The Trump Administration understands that NAFTA has been an unequivocal success story for American agriculture,” National Corn Growers Assn. president Wesley Spurlock said. “Exports are one pillar of a strong farm economy, accounting for 31% of farmer income. Nowhere is the importance of trade stronger than right here in North America. Since NAFTA was implemented, U.S. agricultural exports to Canada and Mexico have tripled and quintupled, respectively. We export billions of dollars of corn and corn products to these countries each year.”
The Institute for Agriculture & Trade Policy (IATP) said what President Donald Trump's Administration hopes to accomplish remains a mystery. “Last month’s leaked draft of U.S. objectives in NAFTA renegotiation showed that Trump was breaking his campaign promise to take a different approach to trade, instead relying on the same failed strategies of the Trans-Pacific Partnership, which he railed so loudly against. The contradictory views and confusing chain of command within the Administration leave more questions than answers about the coherence and seriousness of any negotiating objectives,” IATP said.
The goals within NAFTA include restoring local and national sovereignty over the farm and food supply, including requiring Mexico and Canada to withdraw their challenges to country-of-origin labeling (COOL) for meat. The National Farmers Union (NFU) said the challenge from Mexico and Canada ultimately convinced Congress to repeal the COOL rule.
“We cannot allow the interests of foreign governments and companies to dictate our laws here at home,” NFU president Roger Johnson said. “The COOL repeal is the perfect example of just how much of our sovereignty we’ve traded away in decades of trade deals. This issue must be addressed in the NAFTA renegotiation. Any provisions keeping the U.S. from instituting COOL or any other commonsense law need to be struck from all of our trade agreements.”
A joint letter from the National Cattlemen's Beef Assn. and the cattle industry groups in Canada and Mexico urged Trump, Canada's Prime Minister Justin Trudeau and Mexico's President Pena Nieto to “reject efforts to use NAFTA as a platform to resurrect failed policies, especially the misguided, mandatory country-of-origin labeling policy that was the law of the United States for over seven years.”
Mandatory COOL "failed to deliver its proponents’ promise to increase consumer demand or consumer confidence,” the groups said. “Instead, it created massive disruptions in live cattle trade that hurt beef producers across North America and jeopardized the jobs of American workers that depend on processing those cattle.”