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With NAFTA Talks at Crucial Point, Ag Is on the Table

The U.S. will put its agricultural trade proposals on the table with Canada as part of this week’s round of negotiations for the new NAFTA, according to Agriculture Secretary Sonny Perdue. It’s the fourth of seven scheduled rounds of talks, and with limited progress so far, some analysts say the U,S, is trying to torpedo discussions with unacceptable demands of its North American neighbors.

“Honestly, we’ve been somewhat disappointed in the first three rounds, but we think this is the way these things get going,” said Perdue, speaking to the Washington International Trade Association last week. Perdue said he expects serious discussion of agricultural issues in the new round, which opens on Wednesday, and said there is a “real opportunity” for inroads into Canada’s supply-management system that limits dairy imports. The U.S. also objects to Canadian government management of the poultry market and may seek concessions from Mexico to limit shipments that compete with Florida’s fruit and vegetable marketings.

Dairy was excluded from NAFTA in 1994, and the Trudeau government has vowed repeatedly to defend Canada’s farmers and the supply-management system. President Trump objected personally last April that Canada was undercutting imports of ultrafiltered milk, used in making cheese, from U.S. dairy farmers in the upper Midwest and the Northeast.

Canadian Agriculture Minister Lawrence MacAulay said on Facebook that he had a “great meeting” on ag trade issues with five U.S. representatives on Saturday in Ottawa. The meeting was a sign of a rising profile for agriculture in the NAFTA talks. MacAulay is now on a 10-day trade mission to three European nations in pursuit of larger farm exports. Under a new EU-Canada trade agreement, tariffs were removed on most of Canada’s agricultural and fisheries exports.

“We have had productive conversations over the weekend with Canadian officials and are eager for negotiations to resume in Washington,” said House Agriculture Chairman Michael Conaway, who led the U.S. delegation. “As I’ve said before, U.S. production agriculture will continue to stay at negotiators’ elbows throughout this process to ensure their interests are taken into account. This is too important to screw up.”

Oregon Representative Kurt Schroeder said, “It became obvious to me as we ended our visit … the Canadians feel no urgency to come to the table” to resolve U.S. complaints about dairy, wheat, wine, softwood lumber, and Pacific fishing. “A stronger approach is needed.”

Canadian Prime Minister Justin Trudeau is to meet Trump on Wednesday on the NAFTA discussions and to fly to Mexico to brief Mexican President Enrique Pena Nieto. “This could be the decisive week,” said the Washington Post. If prospects for an agreement do not improve, “that would give an opening to Trump to exit the agreement.” Canadian Presslisted dairy among “hard issues still on the horizon” where U.S. demands may be too great for its partners to swallow.

Canada and Mexico account for one third of U.S. agricultural trade. Under NAFTA, most U.S. farm exports cross the border duty-free into Canada and Mexico. Food and ag exports to the U.S. neighbors quadrupled since the trinational free trade agreement took effect in 1994. Canada and Mexico are the number two and number three customers for U.S. exports and are the two leading sources of U.S. food and ag imports. Both nations have a trade surplus in food and ag with the U.S. The USDA has forecast Canada’s surplus at $600 million and Mexico’s at $4.3 billion during this fiscal year. One of the White House’s goals for the new NAFTA is to eliminate trade deficits. The U.S. consistently posts an agricultural trade surplus on its worldwide sales.

FERN’s Ag Insider. Produced by FERN
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