U.S. ag interests give initial approval to objectives
Addressing trade issues and provisions in a range of areas to bring down the U.S. trade deficits with Mexico and Canada have been released by the Trump administration’s Office of the U.S. Trade Representative (USTR) as objectives to improve the North American Free Trade Agreement (NAFTA).
Transparency, equivalency, timely implementation information sharing and using updated technology are frequently mentioned in various portions of the 18-page report. Link to report.
In agricultural products, the report outlines several areas where the administration seeks to improve the trade deal. “Maintain existing reciprocal duty-free market access for agricultural goods, expand competitive market opportunities for U.S. agricultural goods in NAFTA countries, substantially equivalent to the competitive opportunities afforded foreign exports into the U.S. market, by reducing or eliminating remaining tariffs” are two of the areas outlined, USTR said, with a goal also to “Seek to eliminate non-tariff barriers to U.S. agricultural exports including discriminatory barriers, restrictive administration of tariff rate quotas, other unjustified measures that unfairly limit access to markets for U.S. goods, such as cross subsidization, price discrimination, and price undercutting.”
Close consultation pledged. While wanting to provide “reasonable adjustment periods for U.S. import sensitive agricultural products,” USTR said they would also seek to engage in “close consultation with Congress on such products before initiating tariff reduction negotiations.” Promoting greater regulatory compatibility in order to “reduce burdens associated with unnecessary differences in regulation, including through regulatory cooperation where appropriate” is another goal.
Under sanitary and phytosanitary (SPS) measures, USTR said they want to “provide for enforceable SPS obligations that build upon WTO rights and obligations, including with respect to science-based measures, good regulatory practice, import checks, equivalence, and regionalization, making clear that each country can set for itself the level of protection it believes to be appropriate to protect food safety, and plant and animal health in a manner consistent with its international obligations.”
Preserving the use of US trade remedies is also a key objective, the USTR report said. The U.S. wants to “preserve the ability of the United States to enforce rigorously its trade laws, including the antidumping, countervailing duty, and safeguard laws,” the report noted, along with eliminating the NAFTA global safeguard exclusion “so that it does not restrict the ability of the United States to apply measures in future investigations.” The U.S. seeks to eliminate the Chapter 19 dispute settlement mechanism and will “seek a separate domestic industry provision for perishable and seasonal products in AD/CVD proceedings.”
Rules of origin are another area cited in the report, as USTR wants to “update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America,” and “ensure the rules of origin incentivize the sourcing of goods and materials from the United States and North America.” Plus, the U.S. wants to make sure that goods meeting the rules of origin” receive NAFTA benefits, prevent duty evasion, and combat customs offences.”
In a new provision, USTR said they want to seek an “appropriate mechanism” to “ensure that the NAFTA countries avoid manipulating exchange rates to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.”
Bottom line: The objectives give U.S. Trade Representative Robert Lighthizer plenty of room to negotiate on NAFTA with Canada and Mexico. The inclusion of the currency provision or at least the push to include that in the agreement marks an interesting turn even as neither Canada nor Mexico has been identified as countries that engage in currency manipulation. Responses from Canada and Mexico are awaited.
