Trump administration outlines objectives for NAFTA renegotiation

by Jay Sjerven
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Jay Sjerven

Ambassador Robert E. Lighthizer, the U.S. trade representative (U.S.T.R.), on July 17 issued a summary of the Trump administration’s objectives for the renegotiation of the North American Free Trade Agreement. Under the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, the U.S.T.R. is required to issue such a summary of objectives 30 days before any trade negotiation may commence. The renegotiation of the 23-year-old trade agreement with Mexico and Canada may now proceed at an agreed date but no earlier than Aug. 16.

For the first time, the U.S.T.R. included deficit reduction as a specific and, indeed, the primary objective for the NAFTA negotiations. The U.S.T.R. noted since NAFTA was implemented in 1994, the U.S. bilateral goods trade balance with Mexico has gone from a $1.3 billion surplus to a $64 billion deficit in 2016. Also, market access issues have arisen in Canada with respect to dairy, wine, grain and other products — barriers the U.S.T.R. said the current agreement is not equipped to address.

“The new NAFTA must continue to break down barriers to American exports,” the U.S.T.R. objectives document stated.

NAFTA
For food and agriculture trade, the first enumerated goal was maintaining existing reciprocal duty-free access for agricultural goods.
 

The objectives outlined in the 17-page document comprise a broad overview of U.S. goals for modernizing NAFTA. No specific trade disagreement was discussed.

For food and agriculture trade, the first enumerated goal was maintaining existing reciprocal duty-free access for agricultural goods. The United States also will pursue reducing or eliminating remaining tariffs on U.S. agricultural products and ending non-tariff barriers to U.S. exports.

The United States also will seek an agreement that will provide for enforceable sanitary and phytosanitary measures that will build upon World Trade Organization rights and obligations “including with respect to science-based measures, good regulatory practice, import checks, equivalence, and regionalization, making clear that each country can set for itself the protection it believes to be appropriate to protect food safety and plant and animal health in a manner consistent with international obligations.”

The U.S.T.R.’s issuance of its summary of objectives provided food industry and agriculture groups an opportunity to restate their own priorities for the NAFTA renegotiation.

“The administration’s key negotiating objectives include the essential elements to maintain and expand tariff-free trade and set fair rules that level the playing field for U.S. consumer product manufacturers,” said Pamela G. Bailey, president and chief executive officer, Grocery Manufacturers Association.

David Schemm, president of the National Association of Wheat Growers, said, “Because NAFTA helped make Mexico one of the most important export markets for U.S. wheat, our main priority right now is to do no harm to wheat trade. We are happy to see that the objectives call for maintaining existing reciprocal duty-free market access for agricultural goods.”

Mike Miller, chairman of U.S. Wheat Associates and a wheat farmer from Ritzville, Wash., said wheat growers favor updated rules on sanitary and phytosanitary health and safety standards similar to those the three NAFTA countries already agreed to as part of the Trans-Pacific Partnership negotiation (President Trump withdrew the United States from the T.P.P. at the beginning of his term).

Wheat growers also want to see a change in Canada’s restrictions on cross-border trade, Mr. Miller said.

“We believe wheat should be allowed to cross the border and be treated equally,” Mr. Miller said. “Today, Canadian wheat can move into our handling system freely, but U.S. wheat farmers don’t have the same opportunity in Canada. NAFTA renegotiation is a good context with which to address this issue.”

Michael Dykes, president and c.e.o. of the International Dairy Foods Association, said, “We are pleased to see efforts to address unjustified measures that unfairly limit access to markets for U.S. goods, such as price undercutting, included in the administration’s negotiating objectives. We believe these goals will allow the administration to address Canada’s new milk pricing policy, referred to as Class 7, which has allowed Canadian companies to sell their products below world market prices. In addition, we’re pleased to see an objective to expand competitive market opportunities for U.S. agricultural goods by reducing or eliminating tariffs. Canadian tariffs on some U.S. dairy products are nearly 300%”

Chrystia Freeland, Canada’s minister of foreign affairs, noted the U.S.T.R. summary of trade objectives was an internal U.S. matter required under U.S. trade promotion authority legislation.

“When negotiations begin, we will be ready to work with our partners to modernize NAFTA while defending Canada’s national interest and standing up for our values,” Ms. Freeland said. “Canada is the top customer of the United States. Canada buys more goods from the United States than China, Japan and the United Kingdom combined.”

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