WASHINGTON, Oct. 18, 2017 – U.S. Trade Representative Robert Lighthizer isn’t ready to throw in the towel on renegotiating the North American Free Trade Agreement, but he expressed sharp disappointment Tuesday with his Mexican and Canadian counterparts for resisting some U.S. proposals.
“Frankly, I am surprised and disappointed by the resistance to change from our negotiating partners from both countries,” Lighthizer said in a press conference in Arlington, Virginia, marking the end of the fourth round of negotiations to rewrite the three-country trade pact.
A sign of the difficulties may be reflected in Lighthizer’s announcement that a deal would not be reached this year, as was earlier hoped. Instead, he said there will be one more round of talks in November, in Mexico City, with the goal of finishing a new agreement by the end of March 2018.
Some of the biggest splits between the three countries are over non-agriculture issues like trade in cars and car parts, but the U.S. has also proposed ag trade provisions on dairy and produce that the Mexicans and Canadians are rejecting.
The new confrontations will likely diminish hopes from the U.S. farm sector that ag trade will go unscathed in the increasingly combative talks.
Canadian Foreign Affairs Minister Chrystia Freeland called the U.S. proposals “unorthodox” and accused the Trump administration of demanding changes that would violate World Trade Organization rules.
Lighthizer, when asked later by reporters about the WTO claim, said, “I have no idea what she’s talking about.”
Meanwhile, Mexican Minister of Economy Ildefonso Guajardo Villarreal also expressed some frustration: “We must understand that we all have limits … We must ensure that the decisions we make today do not come back to haunt us.”
One U.S. proposal that is causing some conflict involves a U.S. plan that would make it easier for fruit and vegetable farmers to file anti-dumping and countervailing claims against Mexican produce exports. That plan was tabled at the end of the third round in Ottawa. Just this weekend, during the Arlington talks, U.S. negotiators put forth a proposal to weaken Canada’s dairy supply management system and price-setting methods.
Lighthizer said the proposals are being contested, but predicted a U.S. victory.
“We laid out our positions …” he said. “We think we’re on the right side of those issues.”
The U.S. has also put forth a provision that is being championed mostly by Florida tomato farmers who are struggling to compete with cheap imports from Mexico. Mexican negotiators have “drawn a red line" when it comes to the U.S. proposal to make it easier for U.S. produce farmers to file antidumping and countervailing trade actions against Mexican exporters, negotiators told Agri-Pulse.
Bosco de la Vega, president of Mexico’s largest farm organization, told reporters Friday that he met with the heads of Mexico’s agriculture and economic ministries and both stressed to him that the U.S. proposal is unacceptable.
“We’re very concerned,” said Lance Jungmeyer, president of the Fresh Produce Association of the Americas, an Arizona-based group that represents U.S. companies that pack and distribute imported Mexican produce.
Jungmeyer said he’s worried that such a provision, if incorporated in a new trade agreement, could result in a massive spike in trade disputes that would significantly hamper commerce and result in higher prices at the grocery store for tomatoes, avocados, cucumbers and bell peppers.
But Reggie Brown, executive vice president of the Florida Tomato Growers Exchange, told Agri-Pulse that it’s a matter of fairness.
Under current trade rules, farmers can only file anti-dumping suits if they can show damages across the entire country. The U.S. proposal would make an exception for perishable and seasonal crops, allowing complaints on a regional basis
It's not just produce-centric groups opposing the U.S. provision that would allow regional farm groups to use seasonal data as a basis to challenge Mexico’s imports of tomatoes, berries and other commodities. Fears that the proposal could contribute to a negotiating impasse and the failure of the NAFTA talks has groups like the U.S. Grains Council, the National Corn Growers Association and the Corn Refiners Association worried.
“Canada and Mexico on average are a $900 million market for us and they are irreplaceable because of the uniqueness of our products,” said Cassandra Kuball, director of trade and industry affairs for the Corn Refiners. “If we lose Mexico, which is our leading market for high fructose corn syrup, there’s no other market that can take it up. We are very much focused on insuring that each move that we make in these renegotiations is a successful move.”
Representatives for the National Corn Growers, Grains Council, Corn Refiners, Heritage Foundation, the Association of Growers and Packers of Avocados from Mexico (APEAM) and Mexico’s National Agricultural Council (CNA), the Fresh Produce Association of the Americas, the United Fresh Produce Association and others all sat down with reporters Friday to stress their opposition to the controversial U.S. proposal.
“If a group of growers in one area is able to carve out a market for themselves, why wouldn’t every region want that for themselves,” Jungmeyer said. “It’s like the string on a sweater. If you pull it and pull it and pull it, at the end you don’t have a sweater any more. I do believe this is the beginning of the unraveling of NAFTA.”
But the USTR’s decision to propose the “seasonality” provision didn’t come from a void. Congress included language requiring help for Southeastern farmers when it passed the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, known commonly as Trade Promotion Authority.
Tucked away in the law is a provision that tells the USTR to eliminate “practices that adversely affect trade in perishable or cyclical products, while improving import relief mechanisms to recognize the unique characteristics of perishable and cyclical agriculture.”
And in case the USTR missed it, Florida's two U.S. senators, Democrat Bill Nelson and Republican Marco Rubio reminded Lighthizer in an Aug. 31 letter, viewed by Agri-Pulse.
“It is critically important that NAFTA provide a fair and equitable market for U.S. fruit and vegetable growers,” the senators wrote. “To this end, we are hopeful the administration will use all means available to prevent Mexico from targeting regional growers in an effort to monopolize the U.S. market during certain seasons.”
U.S. challenges Canadian dairy policy
Meanwhile, the U.S. proposal taking aim at Canada’s insulated dairy program was lauded by the U.S. dairy industry, but was lambasted by Canadian government, industry and labor representatives.
U.S. producers blame Canada’s supply management system for essentially blocking U.S. exports with a pricing system that assures domestic processors only buy milk from Canadian dairies. The artificial pricing programs run by the Canadian industry also have the effect of flooding the international market with subsidized product, U.S. sources say.
But Canada’s dairy lobby is one of the strongest and most powerful in North America and its supported by the unions that represent dairy workers.
“The United States launched a violent assault on Canada's dairy supply management system,” François Laporte, president of the influential Canadian Teamsters Union, said Monday. “Tens of thousands of jobs will be in jeopardy unless the Trudeau government continues its defense of dairy workers and farmers. Don't be surprised if U.S. dairy proposals derail these NAFTA talks. An unstoppable force is meeting an immovable object.”