Key Topic – NAFTA/USMCA
On May 18, 2017, the Trump administration officially notified Congress of its intent to renegotiate NAFTA. A Federal Register notice was also published with the Office of the U.S. Trade Representative (USTR) accepting public comments on the direction, focus, and content of the NAFTA negotiations. The comment period ended June 14, 2017. From USMEF’s standpoint, it was absolutely essential that U.S. negotiators protect the benefits that NAFTA has delivered for U.S. red meat exports and work to maintain duty-free access for these products in Mexico and Canada. The U.S. industry must be prepared to defend the favorable terms currently in place for U.S. meat and explain the importance of the Mexican and Canadian markets, which currently take about 40 percent of U.S. pork export volume and 30 percent of our beef exports. (In 2018, the combined value of those exports was $3.9 billion.) In addition, USMEF noted in its comments that NAFTA’s chapter on sanitary and phytosanitary measures should be strengthened and that the agreement should accommodate e-commerce. UPDATE: On July 17, the Office of the U.S. Trade Representative (USTR) published its list of objectives for the NAFTA renegotiations. On a very positive note, topping the list of objectives for agricultural trade is to maintain existing reciprocal duty-free market access for agricultural goods. USMEF summarized the full list of published objectives in this Exporter Update. UPDATE: In late August 2018, USTR announced that the United States and Mexico reached an agreement in principle on key issues under discussion in the NAFTA renegotiations. A USTR fact sheet states that tariffs on agricultural products traded between the United States and Mexico will remain at zero. However, Mexico has not yet been exempted from the United States’ steel and aluminum tariffs and so Mexico’s retaliatory duties on U.S. pork remain in place. The Trump administration then notified Congress of its intent to sign an agreement with Mexico. Canada is not included in the agreement, but negotiations with Canada are ongoing. While USMEF is pleased with the progress in reaching an agreement with Mexico, removing the retaliatory duties on U.S. pork remains the most immediate concern for the U.S. meat industry. UPDATE: On Sept. 30, 2018, U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland announced that the U.S. and Canada, along with Mexico, had reached an agreement in principle on a modernized trade agreement. In response to the announcement, USMEF President and CEO Dan Halstrom issued the following statement: According to the Office of the U.S. Trade Representative (USTR), all food and agricultural products that have zero tariffs under NAFTA will remain at zero tariffs under the new U.S.-Mexico-Canada Agreement. While this is very positive news for the U.S. red meat industry, it is important to note that the retaliatory duties imposed by Mexico on U.S. pork and by Canada on U.S. prepared/cooked beef products remain in place. These duties were imposed in response to U.S. Section 232 tariffs on imports of steel and aluminum from Mexico and Canada, and these tariffs also remain in place. USMEF hopes to see this issue resolved soon, so that all U.S. red meat exports will once again have duty-free access to Mexico and Canada. UPDATE: On Nov. 30, 2018, President Donald Trump, outgoing Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau signed the U.S.-Mexico-Canada Agreement (USMCA). The agreement must be ratified by the U.S. Congress, the Canadian Parliament and the Mexican Senate before entering into force. While USMCA ensures long-term duty-free access for U.S. pork, beef and lamb entering Mexico and Canada, retaliatory duties imposed by Mexico on U.S. pork and by Canada on U.S. cooked/prepared beef products remain in place. These duties were imposed in response to U.S. tariffs on steel and aluminum imports from Mexico and Canada. Following the USMCA signing ceremony, U.S. Trade Representative Robert Lighthizer told reporters that negotiations continue on the issue of steel and aluminum tariffs. UPDATE: Lighthizer briefed the House Democratic Caucus on USMCA on March 13, 2019, marking a significant step in the Trump administration’s push for ratification. However, USMCA still has not been formally submitted to Congress, and key congressional leaders have stated that the tariffs on steel and aluminum imports from Mexico and Canada still represent a major obstacle. UPDATE: In early April 2019, news reports from Canada and Mexico suggested that both countries are preparing to make changes in the lists of U.S. products subject to retaliatory duties. There is some speculation that Mexico could add U.S. beef to its list and that Canada could possibly add pork, but no specifics are available at this time. UPDATE: On May 17, 2019, USTR announced the removal of Section 232 tariffs on steel and aluminum imports from Mexico and Canada and elimination of those countries’ retaliatory tariffs on U.S. goods. On May 20, the Mexican government published the official notice removing Mexico’s retaliatory duties on U.S. pork and Canada’s Department of Finance announced that Canada had eliminated the 10% tariff Canada imposed on prepared beef items imported from the United States. USMEF President and CEO Dan Halstrom issued this statement: Restoring duty-free access to the Mexican and Canadian markets is a tremendous breakthrough for the U.S. red meat industry. USMEF thanks President Trump and Ambassador Robert Lighthizer for reaching an agreement with Mexico and Canada on steel and aluminum tariffs and in turn Mexico and Canada’s lifting of the retaliatory duties on U.S. red meat. This also removes a significant obstacle for the U.S.-Mexico-Canada Agreement (USMCA), and USMEF is hopeful that all three countries ratify USMCA as soon as possible. UPDATE: On May 30, 2019, the White House issued a statement announcing President Trump’s intention, effective June 10, to impose tariffs on goods imported from Mexico unless more steps are taken to curb illegal migration at the U.S.-Mexico border. The tariffs would begin at a rate of 5% and increase by an additional 5% each month until reaching 25% on Oct. 1. Fortunately, following several days of high-level talks on this issue, the White House announced on June 7 that Mexico has pledge additional border protection measures that that the plan to impose tariffs will not move forward at this time. This is a relief to the U.S. meat industry, which had only recently seen Mexico’s retaliatory duties on U.S. pork removed and was also concerned about possible retaliatory duties on U.S. beef. This is also a positive development for the USMCA, which must be ratified by all three countries and would have faced another key obstacle if the tariff plan had moved forward. UPDATE: The Mexican Senate ratified USMCA on June 20, 2019. (In Mexico, lower house approval is not required.) The Canadian Parliament is adjourned until September but is expected to ratify USMCA. With Congress now in its August recess, USMCA will not receive a ratification vote until Fall 2019. But the Trump administration has been working the issue on Capitol Hill, and the prospects for approval in the fall look promising. UPDATE: With Congress returning from its August 2019 recess, the Trump administration resumed efforts to round up support for USMCA. The prospects for approval in the fall look promising, but the timeline for a ratification vote in Congress is still unclear. UPDATE: The newly updated version of USMCA was signed Dec. 10, 2019, in Mexico City by U.S. Trade Representative Robert Lighthizer, Canadian Deputy Prime Minister Chrystia Freeland and Mexican Deputy Foreign Minister Jesus Seade. The amendments to USMCA are available from the USTR website. UPDATE: On Dec. 19, 2019, the U.S. House of Representatives approved H.R. 5430, the legislation implementing USMCA, on a strong bipartisan vote of 385 to 41. USMEF President and CEO Dan Halstrom issued this statement following the House vote: USMEF applauds the House of Representatives for approving the implementing legislation for USMCA and the bipartisan effort by Congressional leaders and the Trump administration to bring USMCA to a House vote. Ratification of USMCA is an important step in solidifying trade relations with Mexico and Canada, which are critical destinations for U.S. pork, beef and lamb. This agreement will bolster the United States’ position as a reliable supplier to two leading markets that currently account for about one-third of all U.S. red meat exports. We look forward to the Senate taking up this legislation as soon as possible and completing the ratification process. The U.S. Senate must also approve USMCA, and this vote is expected to take place in January 2020. The Mexican Senate has ratified USMCA but approval by both houses of the Canadian Parliament is also required. Parliament is not due back in session until late January.