'Do no harm' a key focal point regarding NAFTA renegotiations

by Jay Sjerven
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NAFTA
While extolling the benefits of the current agreement, food and agriculture leaders point to measures that may be implemented that would improve NAFTA.
 

WASHINGTON – Representatives of the food and agriculture industry in testimony during a public hearing convened by the Office of the U.S. Trade Representative on June 27 urged the Trump administration to recognize and preserve the gains seen under the North American Free Trade Agreement even as it prepares to negotiate changes aimed at modernizing the trade pact with Mexico and Canada. More than one witness referred to a statement by U.S. Trade Representative Robert Lighthizer to the effect the renegotiation of NAFTA must “do no harm to U.S. agriculture.”

While extolling the benefits of the current agreement, the food and agriculture leaders pointed to measures that may be implemented that would improve NAFTA.

Melissa San Miguel, senior director, global strategies, Grocery Manufacturers Association, said even as the agreement is brought up to date, the current benefits of NAFTA must be preserved in order to continue to support the 2.1 million grocery manufacturing jobs in the United States.

She said U.S. negotiators should consider certain priority objectives for modernizing NAFTA. First, the modernized agreement should maintain comprehensive, tariff-free trade in food, beverage, and consumer products and remove any tariff barriers, quotas, and/or other limitations to market access for goods traded among NAFTA countries. Second, rules should be updated to address non-tariff barriers that impede U.S. producers’ ability to export.

And third, Ms. San Miguel said, regulations among the United States, Canada and Mexico should be aligned to decrease costs associated with unnecessary regulatory differences. 

“U.S. processed food and beverage exports totaled around $40 billion in 2016, which is roughly a third of all U.S. agricultural exports, and approximately $17.6 billion of those processed food and beverage exports were destined for Canada and Mexico,” Ms. San Miguel said. “With 95% of the world’s potential consumers living outside the United States, exports to foreign markets are key to future growth and employment in U.S. grocery manufacturing, and a strong NAFTA agreement is critical for success.”

Randy Gordon, president of the National Grain and Feed Association, noted U.S. agricultural exports to Mexico and Canada have more than quadrupled since NAFTA took effect 23 years ago. Canada and Mexico now constitute America’s second- and third-largest food and agricultural export markets — with Canada ranking second in terms of U.S. export value and Mexico No. 2 in U.S. export volume.

Mr. Gordon said improvements that would help modernize NAFTA include incorporating a “rapid response mechanism” that would reduce delays resulting from import checks of shipments, which may occur without transparent reasons or scientific justification; enhancing sanitary and phytosanitary rules to adopt risk-assessment and risk-management procedures based upon reasonably available and relevant scientific data and that are no more trade-restrictive than necessary; enabling innovation of information technologies to improve logistics, such as electronic phytosanitary certificates and other electronic documents to facilitate efficient trade; and ensuring safe and secure transit for rail and truck transportation of agricultural products within NAFTA-member countries.

Negotiations to modernize NAFTA should include market-opening provisions on sugar, testified Bill O’Connor, senior agriculture policy adviser, Sweetener Users Association (S.U.A.), and Liz Clark, vice-president, government affairs, National Confectioners Association (N.C.A.). Mr. O’Connor and Ms. Clark said U.S. food, beverage and confectionery manufacturers need to secure greater access to sugar through new NAFTA negotiations. Greater sugar trade liberalization in North America would help reduce the price of sugar for U.S. companies, they said.

Mr. O’Connor recommended expanding sweetener trade with a separate tariff-rate quota (T.R.Q.) for Mexican sugar that would operate outside the suspension agreement regime. The special T.R.Q. would be in addition to the minimum T.R.Q.s for other World Trade Organization members. He said Mexico should again permit U.S. sugar to enter duty-free under the Refined Sugar Re-Export program and Mexico’s IMMEX program. And he urged U.S. negotiators to secure additional access for Canadian refined sugar.

“Our first priority in the NAFTA renegotiation is to preserve duty- and quota-free access for chocolate, sugar confectionery and chewing gum,” Ms. Clark said. “Our second priority is to enhance access to key inputs for our manufacturers, including sugar and sugar-containing products from Mexico and Canada.”

Ms. Clark said under a new NAFTA, there should be immediate, permanent, dedicated and duty-free access for Mexican sugar without price support restrictions in order to ensure a sufficient supply of sugar at reasonable prices in the United States.

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