Key Topic – NAFTA

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.

From USMEF’s standpoint, it is 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 2016, 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. The first round of NAFTA negotiations was held Aug. 16-20 in Washington, D.C., with round two held Sept. 1-5 in Mexico City and round three Sept. 23-27 in Ottawa.

UPDATE:The fourth round of NAFTA renegotiations concluded Oct. 17. In a joint statement, U.S. Trade Representative Robert Lighthizer, Canadian Foreign Affairs Minister Chrystia Freeland, and Mexican Secretary of the Economy Ildefonso Guajardo noted that in order to bridge “significant conceptual gaps,” the parties have agreed to a longer intersessional period before the next negotiating round, which will be held Nov. 17-21 in Mexico City. The statement adds that additional rounds will be scheduled through the first quarter of 2018.

In his own closing statement, Lighthizer expressed frustration with the lack of progress on certain NAFTA chapters, citing digital trade, telecommunications and anticorruption as examples.

UPDATE:The fifth round of NAFTA renegotiations was held Nov. 17-21 in Mexico City, with Lighthizer again expressing frustration with the lack of progress. The next round is set for Jan. 23-28, 2018 in Montreal.

UPDATE:The sixth round of NAFTA renegotiations was held Jan. 23-29, 2018 in Montreal. Although Ambassador Lighthizer’s closing statement said this round was a step forward, he emphasized that negotiations are still “progressing very slowly.” In remarks to reporters, he also criticized Canada’s responses to some of the more controversial U.S. negotiating positions and confirmed that President Trump remains prepared to withdraw the U.S. from NAFTA if significant improvements cannot be negotiated.

UPDATE: The seventh round of NAFTA renegotiations was held Feb. 25-March 5 in Mexico City. Ambassador Lighthizer expressed disappointment in the amount of progress made in this round, though he noted that three additional chapters were concluded: sanitary and phytosanitary (SPS) measures, good regulatory practices and administration and publication.

Completion of the NAFTA 2.0 SPS chapter is a significant development for the red meat industry, as it represents the primary area in which remaining trade barriers or disputes within North America will be addressed in the future. The SPS chapter builds on many of the concepts that were agreed to in the Trans-Pacific Partnership negotiations and which are utilized by the World Trade Organization. While U.S. red meat exports to Mexico and Canada currently face few product restrictions or technical barriers, this was not always the case – even with NAFTA in effect. Going forward, the revised SPS chapter should be a useful mechanism for resolving disputes on food safety or animal and plant health in a more timely and efficient manner.

UPDATE: U.S. Trade Representative Robert Lighthizer, Canadian Minister of Foreign Affairs Chrystia Freeland and Mexican Secretary of the Economy Ildefonso Guajardo held ministerial-level negotiations on NAFTA in April 2018 and again in early May. They indicated that while negotiators are making progress, the parties are not yet ready to announce an agreement in principle. Congressional leaders stated that an agreement must be reached in May in order to be considered for ratification by the end of this year. With NAFTA negotiations expected to resume this summer, it now appears that even under a best-case scenario, the ratification process will extend well into 2019.

UPDATE: NAFTA-related activity has picked up in late July, following Mexico’s presidential election. Canadian trade officials met with their Mexican counterparts July 25, as well as with Mexican President Enrique Peña Nieto and President-elect Andrés Manuel López Obrador. In a post-meeting press conference, both sides reiterated their commitment to successfully renegotiating NAFTA as a trilateral agreement. Mexico’s Economy Minister Ildefonso Guajardo met with U.S. Trade Representative Robert Lighthizer on July 26.

UPDATE: In late August, 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.