A NAFTA agreement could open doors around the world for U.S. agriculture

The North American Free Trade Agreement negotiations between the U.S., Canada, and Mexico continue as the countries try to modernize the agreement. Several chapters in the agreement have closed, but there’s plenty of work left on important topics, including agriculture.

“It’s agriculture, automotive, which most of the attention is being spent on right now, it’s government procurement, it’s dispute resolutions, it’s textiles, sunset clause and labor issues with Mexico, in particular,” said Daniel Ujczo, an international trade and customs lawyer with Dickinson Wright in Columbus. “On all of those, there is still a lot of work to do.”

Ujczo says the countries are actually coming to an agreement on the controversial American “sunset proposal” clause. While negotiators are working on the automotive issues, he says he sees no hope on settling the government procurement disagreement. Agriculture and textiles are discussed in every round but he’s seen no movement on either topic.

President Donald Trump will be putting tariffs on steel and aluminum imports, something that Ujczo says threw a monkey-wrench into getting the negotiations done by the end of April. That’s when the Mexican election cycle heats up.

“If Mexico concedes on anything it will be seen as conceding with a gun to their head and so I do actually think that tariffs were counterproductive in trying to get a deal done by the end of April,” Ujczo said. “I think the same holds true for Canada because Canada is already not pushing for a speedy deal and that’s to say that I think Mexico and Canada want to take the time to do the deal right. It’s going to be very difficult for both countries to concede with the tariffs hanging over their head.”

Ujczo says he understands that farm country isn’t optimistic right now as the agricultural economy continues to struggle. He says there could be some good news on the trade front for agriculture, but it will take some effort and time to reap the rewards.

“U.S. Trade Representative Robert E. Lighthizer is also talking about opening up markets in Africa, so there could be some good news on the trade file,” Ujczo said. “There is undoubtedly going to be retaliation from Asia and elsewhere for steel and aluminum tariffs and agricultural goods will be right in the sight lines. But if we get NAFTA right it could be a great model for what we do with the rest of the world.”

Currently, the United States has trade agreements with only 10% of the world and that grouping gets 47% of our nation’s exports. That is why the U.S. Department of Agriculture is centering some of their focus on creating trade deals with other countries outside of Canada, Mexico, China, Japan and Korea.

“We are leaving no stone unturned and we are deep into getting into new countries and uncovering new markets,” said Ted McKinney, USDA Undersecretary for Trade and Foreign Agricultural Affairs. “Let me tell you about India. There are 1.3 billion people there and growing and they are starting to enter into the middle class more and more every day. History books will tell you where people start to spend that first little bit of disposable income — protein and nutrition for their kids. We make protein pretty well and we need to get our product into those types of countries.”

One success story in India as far as American products are concerned is with apples.

“For whatever reason a few years ago, India did not raise the tariff on Washington apples coming in and a funny thing happened as those apples were on the way to market,” McKinney said. “Washington apples were a top seller and, in turn, Indian apple producers started selling more apples and the Indian population started consuming more and more apples. India’s natural instinct was to throw up a tariff to protect their domestic markets. This was an example that a rising tide lifts all ships.”

“There is business to be had around the world and it’s not just China, Canada, Mexico, Korea and Taiwan. We have to go uncover every rock and introduce them to U.S. products, and we are.”

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