It’s a trade pact that’s been in the renegotiation process since August 2017. As speculation started flying last month that a new North American Free Trade Agreement (NAFTA) was almost across the finish line, the White House is now throwing a curve ball in the negotiations, deciding to move forward with tariffs on steel and aluminum imports from Canada and Mexico. In response, both countries fired back with list of goods each country would retaliate against, including pork legs into Mexico and yogurt into Canada.
The latest twist in the negotiations is the Administration’s apparent push to negotiate bilateral deals instead of a trilateral NAFT 2.0. Agriculture Secretary Sonny Perdue told U.S. Farm Report that since all three countries aren’t aligned with a path forward for NAFTA, bilateral deals could produce the best outcome.
“The President has made the decision, certainly on NAFTA, not to withdraw but to negotiate separately with Canada and Mexico, believing that we can get a better deal with Canada and with Mexico separately,” said Perdue. “Honestly, based on some of the differences and the needs there, that's true.”
Perdue points out the U.S. has an access issue with dairy, eggs and poultry into Canada. Those issues are different than what the Secretary views as obstacles with trade into Mexico.
“With Mexico, most of the economy was based on the auto and auto parts industry, whereas we were doing fairly well from an ag export standpoint there,” he said. “So we're going to deal with them separately and negotiate with them separately is what the president's decided to do.”
Perdue said U.S. Trade Ambassador Robert Lighthizer is on the same page as the President, also wanting to pursue the bilateral route. The Administration is optimistic that bilateral deals will be negotiated sooner than a trilateral trade pact.
“I believe we will come out with a better deal with both and hopefully sooner rather than later, because trying to get a triangulation, it was very frustrating and we were all running into different timelines of the window shutting,” said Perdue.
Dairy is still on the table, as the U.S. continues to push for greater access into Canada, an issue the U.S. dairy industry made clear it wanted fixed from the start. Recent reports say Canadian Prime Minister Justin Trudeau offered up some concessions on the dairy front, however, Perdue and the Administration say those concessions didn’t go far enough.
“They made an offer most recently that they felt like it was a very fair offer, but I don't think it moved far enough in that way,” said Perdue. “Hopefully they can come back and we can negotiate that. I think we're really close to a deal there, but there are some of the revisions, such as the five-year sunset clause, were the most difficult to negotiate.”
Perdue said despite the recent steel and aluminum tariffs, he’s optimistic that a deal on dairy is close that will provide changes; changes that could be good for U.S. dairy.
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