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Bilateral Is Good, Trilateral Is Better in NAFTA Talks, Say Farm Groups

President Trump dangled the possibility of terminating NAFTA, which generates one third of U.S. food and ag trade, at the same time he announced a tentative trade agreement with Mexico on Monday. Farm groups said NAFTA should stay in effect until a new agreement linking North America’s three economic giants is in place.

The two-decade-old NAFTA guarantees duty-free access to Canada and Mexico for U.S. farm exports. They are the No. 2 and No. 3 markets for U.S. agriculture, worth more than $40 billion this year. Mexico and Canada are the No. 1 and No. 2 sources of U.S. food and ag imports, responsible for nearly $4 of every $10 of incoming shipments.

“We hope the agreement opens the door for Canada’s reengagement,” said the U.S. Grains Council, “and we continue to oppose withdrawal from the existing NAFTA under any circumstances except adoption of a new, beneficial, and trilateral pact.” The National Corn Growers Association took a similar stance. The American Soybean Association and the American Farm Bureau Federation said they wanted the administration to move forward to a new NAFTA, under negotiation for a year.

An ebullient U.S. Trade Representative Robert Lighthizer said the U.S.-Mexico pact covered $1.1 trillion in trade and would be “the biggest agreement of its kind in the world. We hope that Canada can join in. I expect them to very soon.”

According to Lighthizer’s office, the U.S.-Mexico agreement will keep ag tariffs at zero between the nations; the top priority for farm groups has been maintenance of duty-free trade in NAFTA negotiations. A fact sheet from the trade representative’s office said the tentative agreement provides acceptance of gene editing as a biotechnology innovation, reduces trade barriers, and includes provisions on use of geographic names for cheeses. So-called geographic indications are a quiet struggle between the European Union, which claims the right to names such as Parmesan cheese, and the U.S., which says those are “common” names that denote a type of cheese, not its place of production.

During a White House announcement, Trump said Canada has tariffs “of almost 300% on some of our dairy products and we can’t have that.” In the end, he said, there might be a trinational agreement or two bilateral pacts.

“Our farmers are going to be so happy. You know, my farmers — the farmers have stuck with me; I said we were going to do this,” said Trump. During a discussion with Lighthizer over the timetable for submitting a trade agreement to Congress, he said, “I’ll be terminating the existing deal and going into this deal. We’ll start negotiating with Canada relatively shortly.”

As far as China, the No. 1 ag market for the U.S.,Trump said, “It’s just not the right time to talk now, to be honest, with China.”

To see the USTR fact sheet on agriculture in the U.S.-Mexico agreement, click here.

For a White House fact sheet on renegotiation of NAFTA, click here.

For a transcript of President Trump’s comments on the tentative agreement, click here.

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