Industry players outline their wish lists for ‘NAFTA 2.0’ and express anxiety about renegotiation
“Dynamic duty-free North American trade under NAFTA has helped better satisfy North American consumer needs since the agreement’s inception” and substantially boosted US agriculture exports to Canada and Mexico in the past 20 years, Sec. Thomas Vilsack, president and CEO of US Dairy Export Council, told the House Committee on Agriculture during a hearing July 26 on the opportunities for agriculture in renegotiating NAFTA.
“But,” he added, “NAFTA can be made so much better, for the betterment of all.”
Other representatives at the hearing agreed, including Kevin Brosch for national poultry and egg trade groups, Floyd Gaibler, the director of trade policy and Biotechnology for the US Grains Council, Thomas Hammer, president of the National Oilseed Processors Association and Reginald Brown of the Florida Tomato Exchange.
While each group brought unique concerns, several agreed that NAFTA 2.0 should strengthen the Sanitary Phytosanitary (SPS)-Plus and Rapid Response Mechanism to ensure a science-based approach and measures that are transparent, predictable and non-discriminatory.
In particular, Brosch urged legislators to adopt the improvements outlined in the course of the Trans-Pacific Partnership negotiations – a sentiment echoed by others.
Balance geographical indications and common names
Several also wanted to see standardized geographical indications and common names adopted through NAFTA for all three North American countries to avoid competition on various common name products which might be falsely claimed as geographical indications.
“I cannot overstate both the urgency and importance of negotiating NAFTA language that addresses the EU’s global attempt to win further acceptance of geographic indicators. Canada already recognizes GIs. The EU is talking to Mexico about GIs. And, just recently, Japan struck an agreement with the EU that recognizes geographic indicators,” said Vilsack, explaining that GIs “can and should be used when they bring value to the consumer to better define a product, but not when they exist solely as a tool for exporters in one country or region to create monopolies and price-setting cartels on what are otherwise common types of cheeses and dairy goods.”
Industry specific demands
For as much agreement as there was across the trade groups, each also had unique requests.
For example, both the dairy and poultry industries wanted to see current restrictions on trade in their industries lifted or at least eased.
Brosch explained that when NAFTA was first negotiated the US poultry industry believed that limits on poultry products reserved by Canada would eventually be eliminated, but as time passed those supply-control limits remained in effect, which he said, “has been a disappointment that, while virtually all other product sectors enjoy totally free trade under NAFTA, poultry remains the exception.”
For the dairy industry, Vilsacks said he hopes NAFTA 2.0 will remove “trade-disorienting policies” in Canada to open a “sheltered market.”
He explained the Canadian government seems to create new classifications, categories and standards to make US dairy exports non-competitive with domestic products every time that the US begins to create a small foothold in the country.
Specifically, he wants Canada to repeal a new Class 7 pricing system instituted in February that establishes a protein price based on the lowest of US, EU and Oceania skim milk prices, and then subtracts a processor margin.
Biotech is touch point for grain industry
A big concern for the grain industry is how biotechnology will be handled under NAFTA 2.0, with Gailbler calling for a standard approach.
“While products derived from agricultural biotechnology are grown in 28 countries and are traded widely, there remains a lack of synchronicity between countries,” which results in unpredictable regulatory and trade environments, he testified.
As such, he asks that the new NAFTA include mutually recognized safety determinations for biotech crops and a consistent approach to managing low-level presence of products that have undergone a complete safety assessment in one country but are not approved by another NAFTA member.
Hammer also echoed Gaibler’s concerns and recommendations around biotech in his testimony.
Not everyone wants change
While most players came to the hearing with a wish list of changes to NAFTA, the National Cattlemen’s Beef Association did not. Rather, it argued to keep changes to a minimum and in some cases keep potential changes out.
“Quite frankly, it is difficult to improve upon a duty-free, unlimited access to Canada and Mexico,” the association’s CEO Kendal Frazier said. He added that his group’s biggest concern would actually be the addition to NAFTA of an onerous and unproductive requirement that failed in its goals previously.
He was talking about the mandatory country of origin labeling policy which was US law for six years and, he says, “failed to deliver on its promise to build consumer confidence and add value to our products.”
Instead, he said, it resulted “in a long battle in the World Trade Organization with the United States facing the promise of $1 billion in retaliatory tariffs from Mexico and Canada unless MCOOL was repealed by Congress.”
With that cautionary note, Frazier added that he hopes the new negotiations are “swift and successful and will build upon the success of current NAFTA provisions.”
This sentiment was echoed by others at the hearing who said the primary goal of reopening NAFTA should first be “do no harm.” For many their fears that this would not be the case were woven through their testimonies.
House Agriculture Committee Chairman Michael Conaway sought to calm industry “angst about renegotiating the terms of” NAFTA in his opening comments in the committee’s July 26 hearing by telling the group, “we have no interest in reverse any of production agriculture’s hard-fought gains, and the administration has made it clear that it doesn’t either.”
Nonetheless, he added, “we must stay vigilant and all work together to ensure we achieve the best deal possible for American agriculture.”