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Specialty crop growers want better NAFTA deal
By RACHEL LANE
D.C. Correspondent
 
WASHINGTON, D.C. — Specialty crop growers find themselves on the opposite side of opinion on the North American Free Trade Agreement (NAFTA) from many agriculture producers, as trade with Mexico has caused dramatic reductions in specialty crops across the United States.
 
The federal government is planning to renegotiate NAFTA. Negotiations for the agreement with Mexico and Canada began in the 1980s. Canada and the United States reached an agreement in 1988 that was replaced by NAFTA when it was signed by President George H.W. Bush in 1992 and instituted in 1994.

Representatives for the dairy, beef, poultry, egg and grain industries spoke in favor of NAFTA and asked the House Agriculture Committee last week to not harm the parts of the agreement that work, in an effort to fix problems in other areas.

During the same hearing, Reggie Brown, executive vice president of the Florida Tomato Grower Exchange and on behalf of the Florida Fruit and Vegetable Assoc., said NAFTA has caused a drastic decrease in specialty crop production in the United States, from tomatoes in Florida, to watermelon in Texas, grapes in California, blueberries in Georgia, and other areas across the country. “We have a $5.3 billion trade deficit with NAFTA.

That deficit is specialty crops coming into this country,” Brown said. He said the Mexican government has provided incentives to farmers to grow specialty crops. Between the incentives and the cheaper wages for field workers, Mexico has an unfair competitive advantage compared to U.S. farmers.

In renegotiations, Brown asked for stronger restrictions on dumping – the artificial decrease cost of exported produce – and heavy enforcement of the restrictions. “We are the canary in the coal mine,” Brown said. “We are an industry under assault.”

In the last 16 years, strawberry production in Mexico has increased from 16 million pounds to 216 million pounds. Only half the bell peppers sold in the United States today are actually grown in the country.

“We have family farmers being forced out of business by unfair trade practices ... Those individuals, once they’re gone, they will never come back,” he said. “When those family farms are sold and those businesses are broken up, there will be no capacity to grow those fruits within the United States of America.

Perdue in Mexico

USDA Secretary Sonny Perdue is in Mexico this week meeting with his counterpart, Secretary Jose Calzada last week. In a press conference, almost every question Perdue answered related to NAFTA.

“We understand that not all sectors of U.S. ag have benefited equally from NAFTA. Some feel disadvantaged and we understand that,” Perdue said. Part of the problem is the cross-over of growing seasons, making the deficiencies in the southern parts of the U.S. more heavily impacted than other areas of the country.

"We understand that not all sectors will benefit uniformly, that’s unfortunately a problem we have with a comprehensive agreement,” he said. “We would like to understand how we can mitigate and modify some of those concerns in those sectors, certainly in the fruit and vegetable area. We’ll be looking to do that and we welcome ideas from the sector in what they think we can do to help their situation as producers in the U.S.”

Perdue said he has spent time answering similar questions about the advantages of U.S. corn and soybeans being imported into Mexico.

“We understand that the ag sectors both in the United States and in Mexico have benefited tremendously under the rules of NAFTA. We know that U.S. manufacturing, frankly, has not,” Perdue said. This aspect can be addressed, in part, by focusing on the manufacturing jobs that are related to agriculture and the agriculture supply chain.
 
“In many trade renegotiations or negotiations, the anxiety of our producers is that agriculture is always used as a retaliatory measure and that’s why I’m speaking” with everyone involved in possible renegotiations, Perdue said. He is focused on trying to keep any renegotiations from harming the areas of U.S. agriculture that have benefited from NAFTA.

Floyd D. Gaibler, director of Trade Policy and Biotechnology, U.S. Grain Council (USGC), said the grain producers have benefited from NAFTA and export markets will continue to drive American agriculture.

“In no case has that been more apparent than in our trade relationship with Canada and Mexico,” he said. While grain is exported directly to Mexico and Canada, the industry has seen a benefit in domestic sales too as poultry and beef producers have seen an increased demand for their product and have increased herd and flock size as a result.

“Our economies have grown and become so intertwined that this trade agreement, in particular, is critical to our members’ businesses and in the last several months, it’s highlighted the importance to maintain the relationships if we’re going to continue to grow,” he said.

Corn from South America

The USGC has strong evidence confirming that Mexico will begin purchasing corn from South America in the fall as a result of the uncertainty surrounding NAFTA. If Mexico stops purchasing as much from the United States and finds other ready suppliers for corn, it would impact the U.S. grain industry for years.

The impact has already been seen, he said, crediting a 7 percent drop in U.S. corn prices since January to the possibility of Mexico leaving the supply chain.

When asked, Perdue said he had no evidence that Mexico was going to purchase corn from another country, but he’s not surprised they’re talking about it as a negotiation tactic.

Gaibler said the USGC has contacted economic analysts to measure the impact of NAFTA, but the council advocates removing trade barriers and tariffs to help with U.S. exports.

The aborted Trans Pacific Partnership, TPP, with Mexico, Canada, and several Asian countries, included some provisions Gaibler would like to see included in a new NAFTA agreement.

“Obviously the industry has changed since the early 90s and we believe that NAFTA can evolve with it,” he said. Thomas Hammer, President of National Oilseed Processors Assoc., said he would like to see updates in NAFTA specifically around issues like biotechnology which were included in TPP but not in the original NAFTA agreement.

He also requested the United States work to force Canada to remove regulations that block U.S. imports of agriculture commodities and products.

“Agriculture today represents NAFTA’s biggest success story. We stand ready to work with congress and the administration to create new opportunity for agriculture,” he said. “Our business sectors have grown, people have been hired ... do no harm must be the overarching objective.”

The U.S. dairy industry provides more than 100,000 jobs as a result of agriculture exports, said Tom Vilsack, president and CEO of U.S. Dairy Export Council. Since NAFTA, there has been an increase of $36 billion for producers and processors.

“We think this is an opportunity to preserve what’s working in NAFTA, to strengthen what can be better and to fix what is currently not working with our trade relationships with Mexico and Canada,” he said. Nearly one-third of U.S. dairy exports go to Mexico and the market is an opportunity for continued growth.

Duty-free and current tariffs

The duty-free and current tariffs need to be preserved. Strengthen rules to preserve science-based regulations in a transparent way and geographical indications that protect common names of cheese products. Vilsack said the agreement needs to be fixed to prevent Canada from continuing to use loopholes to protect their own supply.

Without trade agreements, other countries have more flexibility in setting standards just for U.S. imports. The National Cattlemen’s Beef Assoc. president Craig Uden released a statement last week regarding news that Japan is raising safeguard tariff’s on U.S. frozen beef imports, highlighting the need for an agreement.

The tariff is being increased from 38.5 percent to 50 percent until April 2018. “Japan is the top export market for U.S. beef in both volume and value, and anything that restricts our sales to Japan will have a negative impact on America’s ranching families and our Japanese consumers,” he said. “Nobody wins in this situation ... We hope the Trump Administration and Congress realize that this unfortunate development underscores the urgent need for a bilateral trade agreement with Japan absent the (TPP).” 
 
In addition to the United States, the tariff increase will impact Canada, New Zealand and other countries that do not have free trade agreements with Japan.

In contract, the NCBA, the North American Meat Institute and the U.S. Meat Export Federation sent a letter to Perdue about the success of the free trade agreement with South Korea, U.S. beef’s second largest export market. The letter was prompted by a Trump Administration announcement that there will be a special session to discuss changes to the Korea-U.S. Free Trade Agreement, KORUS.

“KORUS created the ideal environment for the U.S. beef industry to thrive in South Korea,” the letter states. “We would not support any changes in the terms of the KORUS that would jeopardize either our market share or the significant investment that has been made in rebuilding Korean consumer confidence in the safety, quality and consistency of U.S. beef.”

The U.S. beef industry has seen an increase of 82 percent in sales to South Korea between 2012 and 2016. The agreement established strong science-based trade measures and a schedule for elimination of South Korea’s 40 percent tariff on U.S. beef. Last year, $6.3 billion in U.S. beef was exported, with 17 percent exported to South Korea. 
8/1/2017