U.S. Trade Representative Robert Lighthizer released a detailed and comprehensive summary of the negotiating objectives for the renegotiation of the North American Free Trade Agreement (NAFTA). For agriculture, the goals were welcomed due to the attention on market access and sanitary and phytosanitary (SPS) measures.
“Under these objectives, a new NAFTA will give our farmers, ranchers, service providers and other businesses new opportunities to grow their exports and reclaim American prosperity, ut most importantly, the new NAFTA will promote a market system that functions more efficiently, leading to reciprocal and balanced trade among the parties,” USTR said in the text of the negotiating objectives. “If we succeed in achieving these objectives — maintaining and improving market access for American agriculture, manufacturing and services — then we look forward to a seamless transition to the new NAFTA.”
Market access issues have arisen in Canada with respect to dairy, wine, grain and other products — barriers that the current agreement is unequipped to address, USTR said.
Through the renegotiation of NAFTA, USTR said the Trump Administration will seek a much better agreement that reduces the U.S. trade deficit and is fair for all Americans by improving market access in Canada and Mexico for U.S. manufacturing, agriculture and services.
At the top of the list of negotiating objectives for agriculture is to maintain the existing reciprocal, duty-free market access for agricultural goods. Another objective looks to expand competitive market opportunities for U.S. agriculture substantially equivalent to the competitive opportunities afforded foreign exports into the U.S. market by reducing or eliminating remaining tariffs.
“Because NAFTA helped make Mexico one of the most important export markets for U.S. wheat, our main priority right now is to do no harm to wheat trade,” said David Schemm, president of the National Association of Wheat Growers (NAWG) and a wheat farmer from Sharon Springs, Kan. “We are happy to see that the objectives call for maintaining existing, reciprocal duty-free market access for agricultural goods. Mexican buyers import more of the wheat my neighbors and I grow than any other country, and we can’t afford to risk interrupting that positive relationship with our customers.”
The objectives also look to eliminate non-tariff barriers to U.S. agricultural exports, including discriminatory barriers, restrictive administration of tariff rate quotas and other unjustified measures that unfairly limit access to markets for U.S. goods, such as cross-subsidization, price discrimination and price undercutting.
“We are pleased to see efforts to address unjustified measures that unfairly limit access to markets for U.S. goods, such as price undercutting, included in the Administration’s negotiating objectives. We believe these goals will allow the administration to address Canada’s new milk pricing policy, referred to as Class 7, which has allowed Canadian companies to sell their products below world market prices," said Dr. Michael Dykes, president and chief executive officer of the International Dairy Foods Assn.
“In addition, we’re pleased to see an objective to expand competitive market opportunities for U.S. agricultural goods by reducing or eliminating tariffs. Canadian tariffs on some U.S. dairy products are nearly 300%," Dykes added.
The objectives also state that USTR will provide reasonable adjustment periods for U.S. import-sensitive agricultural products, engaging in close consultation with Congress on such products before initiating tariff reduction negotiations.
Another goal includes promoting greater differences in regulation, including through regulatory cooperation, where appropriate.
“As we have said before, it is difficult to improve upon duty-free, unlimited access to Canada and Mexico — and we are pleased that USTR’s objectives for NAFTA include maintaining existing reciprocal duty-free market access for agricultural goods,” National Cattlemen’s Beef Assn. (NCBA) president Craig Uden said. Uden said NCBA will continue to support the inclusion of strong sanitary and phytosanitary (SPS) standards in NAFTA.
One of the stated goals of the SPS measures is to establish a mechanism for expeditiously resolving unwarranted barriers that block the export of U.S. food and agricultural products. It also calls for a mechanism to improve the dialogue and cooperation on addressing SPS issues and facilitate trade, where appropriate and possible.
Wheat farmers agree with the Administration that renegotiation can set the stage for a stronger NAFTA and establish standards for trade agreements going forward. A good place to start is with the updated rules on SPS health and safety standards that the three countries already agreed to as part of the Trans-Pacific Partnership negotiation.
“The United States, Canada and Mexico are all strong advocates of free trade and science-based regulations,” said Mike Miller, chairman of U.S. Wheat Associates (USW) and a wheat farmer from Ritzville, Wash. “We should go big in this negotiation and agree to align around those gold standard rules. That will ensure that all three countries can’t throw out regulations that are just flimsy excuses to restrict trade.”
In addition to President Donald Trump being the first U.S. President to begin renegotiating a comprehensive free trade agreement like NAFTA, USTR has included, for the first time, deficit reduction as a specific objective for the NAFTA negotiations. Since NAFTA was implemented in 1994, the U.S. bilateral goods trade balance with Mexico has gone from a $1.3 billion surplus to a $64 billion deficit in 2016.
At the direction of the President, on May 18, 2017, Lighthizer sent a letter notifying Congress of the Administration’s intent to initiate NAFTA renegotiation.
Since then, USTR has been conducting extensive consultations with Congress, stakeholders and the public at large. USTR sought public comments, received more than 12,000 responses and heard directly from more than 140 witnesses over three days of public hearings. During this process, the Administration received valuable advice that directly affected development of the negotiating objectives.
Further, these objectives reflect the negotiating standards Congress established in the bipartisan congressional Trade Priorities & Accountability Act of 2015, which requires that USTR release objectives at least 30 days prior to formal negotiations. Negotiations will begin no earlier than Aug. 16, 2017.