October 17, 2017
As of October 15, four of the seven scheduled rounds of North American Free Trade Agreement negotiations have been held. Both the United States and Mexico are pushing to conclude talks before 2018. According to Northarvest Bean Growers Association Washington, D.C. representative Gordley Associates, the three countries continue to make progress in a number of chapters, but it appears they have now reached a point where the tougher issues will need to start being addressed.
To date we have seen advancements in the following areas:
Sanitary & Phyto-Sanitary
- All countries have tabled text
- Everyone is constructively engaged
- 25% agreement on text
- A few hurdles to get over before getting to the finish line
Ag Market Access
- All three countries have tabled text, more likely to come
- Canada tabled biotech text
- A range of different issues remain
- There has been some targeting of U.S. export and food aid programs
The U.S. has tabled several topics that Canada and Mexico describe as poison pills such as a sunset provision in NAFTA after five years. Provisions like this are creating an atmosphere of uncertainly and mistrust within the negotiations. In the Agriculture sector there are two such provisions including eliminating Chapter 19 of NAFTA which provides the dispute settlement mechanisms, the Investor State Dispute Settlement mechanism and the “Review and Dispute Settlement in Antidumping/Countervailing Duty Matters Chapter.” As well as a proposal to change trade remedy law by re-defining domestic industry on a regional or seasonal basis, making it easier for all three nations to impose anti-dumping duties on imports of many types of produce.
Chapter 19 of NAFTA has provided U.S. food and agriculture exporters an effective tool to hold Mexican [and Canadian] anti-dumping (AD) and countervailing duties (CVD) investigators and administrators accountable through an effective appeals process that can overturn egregious AD and CVD findings and keep markets open for U.S. products. Because of these provisions, U.S. sectors, including beef, pork, chicken, corn syrup, apples, and other exported U.S. products, have succeeded in getting unlawful threats to their market access struck down.
Without such dispute-resolution mechanisms, U.S. companies would be forced to contest AD and CVD determinations in lengthy and potentially unreliable Canadian and Mexican court proceedings. Unfortunately, World Trade Organization processes are not a meaningful alternative as they are unduly lengthy and political, and they do not provide for restitution of AD/CVD duties found to be applied improperly.
The application of the dispute settlement provisions under Chapter 19 has been fair and well-reasoned, with 80 percent of panel decisions being unanimous. In addition, home country representations on panels are strong, meaning home countries retain a high degree of national control—higher than the dispute mechanisms in any other U.S. trade agreement.
The United States has also tabled a provision to change trade remedy law by re-defining domestic industry on a regional or seasonal basis, making it easier for all three nations to impose anti-dumping duties on imports of many types of produce. Such a change in trade remedy law will set a precedent for NAFTA that could be seized upon by trading partners across the globe to pursue the same or similar provisions in trade agreements to protect their regional or seasonal agricultural interests which could threaten consistent, duty-free access for agricultural products to Mexico and Canada.
While recent reports suggest that the United States intends to apply this provision to fruits and vegetables only, Mexico and Canada will likely use this provision to limit exports of a wide variety of agricultural exports from the United States, either by explicitly expanding the change in trade remedy procedures to apply to major U.S. exports, or by retaliating against our products when Mexican or Canadian fruit and vegetable exports are restricted by the imposition of anti-dumping duties by the United States.
The NAFTA negotiations remain contentious as President Trump as well as Secretary Ross and Ambassador Lighthizer have all either threatened a pull out of NAFTA or suggested that if a better deal cannot be reached they would initiate a pull out of NAFTA. This rhetoric is concerning and largely unhelpful as USTR works to make strides in a variety of areas. It also casts a shadow as to whether the White House really wants a NAFTA 2.0 to succeed.