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Preliminary NAFTA deal struck with Mexico

iStock Thinkstock NAFTA countres Canada, US, Mexico flags
Leaders say it's crucial for Canada to return to negotiating table to finalize trilateral deal.

The U.S. and Mexico reached a bilateral agreement on the North American Free Trade Agreement (NAFTA) on Monday. The agriculture industry welcomed the news, which should help support prices with a top destination for many agricultural products.

“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. Mexico has historically been a great customer and partner, and we are happy to have this resolved for our agricultural producers,” Agriculture Secretary Sonny Perdue said in a statement.

Although details of the deal were slim, Perdue said in his statement: “The agreement specifically addresses agricultural biotechnology to keep up with 21st-century innovations, and we mutually pledge to work together with Mexico to reduce trade-distorting policies, increase transparency and ensure non-discriminatory treatment in grading of agricultural products.”

According to the White House, the U.S.-Mexico pact includes:

  • Continuation of zero tariffs on agricultural products;
  • New standards for agricultural biotechnology;
  • Improved transparency and non-discriminatory treatments for agricultural product standards;
  • Enhanced rules for science-based sanitary and phytosanitary measures; and
  • New disciplines on geographical indications and common names for cheeses, among other things.

Perdue added, “We now hope that Canada will see the need to settle all of the outstanding issues between our two nations as well and restore us to a true North American Free Trade Agreement.”

Sen. Orrin Hatch (R., Utah), chairman of the Senate Finance Committee, which has jurisdiction over any trade agreement, said, “Today’s announcement by the United States and Mexico is an important step toward modernizing NAFTA, the largest free trade zone in the world. Preserving and improving NAFTA will ensure that American families will continue to benefit from lower prices, better jobs and increased productivity while also ensuring that the 25-year-old agreement maintains the leadership of American businesses, manufacturers, farmers and ranchers. To achieve that goal, a final agreement should include Canada.”

Reuters reported that “Canadian Prime Minister Justin Trudeau spoke to Mexican President Enrique Pena Nieto on Sunday, and both agreed to the trilateral nature of the NAFTA deal, the prime minister’s office said on Monday amid news that the United States and Mexico have reached an agreement on trade.”

The National Corn Growers Assn. (NCGA) said in a statement that the trilateral relationship is important and urged President Donald Trump to reconsider terminating the underlying agreement until full trilateral negotiations have been concluded and a new agreement is secured. “This new agreement has the potential to deliver the economic certainty rural America needs; prematurely terminating the existing agreement would only undermine that potential,” NCGA president Kevin Skunes said.

Sen. Chuck Grassley, (R., Iowa) said in a statement, “While the details of a preliminary agreement haven’t yet been released and I reserve final judgment until there is a final agreement that includes Canada, I am encouraged by the progress announced today. The sooner we get a new agreement in place, the sooner farmers and businesspeople across the country can focus on exporting American products to Canada and Mexico without concern of tariffs."

Brian Kuehl, executive director of Farmers for Free Trade, said in a statement that any news of progress on restoring NAFTA certainly is reassuring for American farmers, but questions remain on the nature of the deal.

“Farmers will ultimately be judging any new NAFTA deal by two crucial measures: Will it provide any new market access for American ag exports, and will it do anything that erodes the enormous gains the original NAFTA provided? On those points, it will be necessary for Canada to rejoin the negotiations and for an agreement to be reached among all parties before a judgment can be made. American farmers know better than most that a deal isn’t done until the ink is dry and all parties have agreed,” Kuehl said.

“For our farmers, whose livelihoods depend on global markets, the end goal remains restoring NAFTA certainty, de-escalating a trade war that’s put them in the crosshairs and returning to negotiating new trade agreements that open foreign markets hungry for made-in-America farm exports," he added. "While we are encouraged the Administration is seeking out NAFTA stability, there is still significant work that remains in delivering on the trade priorities for farmers, ranchers and rural communities.”

TAGS: Policy
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