Trump announces Mexico deal with pressure on Canada | TSLN.com

Trump announces Mexico deal with pressure on Canada

President Trump said there will be a deal with Canada "one way or the other." Image courtesy Wikimedia

President Donald Trump today announced that the United States has reached a deal with Mexico to replace the North American Free Trade Agreement.

The deal put pressure on Canada to agree to U.S. demands on autos and dairy if they want to be part of a continuation of NAFTA, or to reach separate agreements.

In a statement, the White House said, "The agreement specifically addresses agricultural biotechnology to keep up with 21st Century innovations. And we mutually pledge to work together with Mexico to reduce trade-distorting policies, increase transparency, and ensure non-discriminatory treatment in grading of agricultural products.

"This is nothing short of a great victory for farmers and ranchers, because locking in our access to Mexican markets is critical to supporting farm income and strengthening rural communities. Mexico has historically been a great customer and partner and we are happy to have this resolved for our agricultural producers.

"We now hope that Canada will see the need to settle all of the outstanding issues between our two nations as well, and restore us to a true North American Free Trade Agreement."

Agriculture was not a centerpiece of the Mexico agreement, but according to a fact sheet released by the Office of the U.S. Trade Representative, the provisions include:

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▪ New commitments to reduce trade-distorting policies for agricultural goods.

▪ Improvements enabling food and agriculture to trade more fairly.

The U.S. cotton industry could also be affected, as USTR also said that there are new provisions "to incentivize greater United States and Mexican production in textiles and apparel trade, strengthen customs enforcement, and facilitate broader consultation and cooperation among the parties on issues related to textiles and apparel trade."

USTR said the provisions will:

▪ Promote greater use of Made-in-the-USA fibers, yarns, and fabrics by:

— Limiting rules that allow for some use of non-NAFTA inputs in textile and apparel trade.

— Requiring that sewing thread, pocketing fabric, narrow elastic bands, and coated fabric, when incorporated in apparel and other finished products, be made in the region for those finished products to qualify for trade benefits.

▪ Establish a Textiles chapter for United States–Mexico trade, including textile-specific verification and customs cooperation provisions that provide new tools for strengthening customs enforcement and preventing fraud and circumvention in this important sector.

"The new Textiles chapter provisions are stronger than those in NAFTA 1.0 with respect to both enforcement and incentivizing North American production of textiles," USTR said.

Trump warned that efforts to revamp the 24-year-old pact could result in two different agreements, and threatened Canada with tariffs on automobiles if Ottawa didn't agree to negotiate "fairly," Politico reported.

"I think we'll give them a chance to probably have a separate deal," Trump said, referring to Canada. "We could have a separate deal, or we could put it into this deal."

He added that the U.S. would reach an agreement with Canada "one way or the other."

Agriculture Secretary Sonny Perdue said "President Trump is delivering on his promise to renegotiate the old, outdated North American Free Trade Agreement (NAFTA), making good on his pledge to strike the best deals possible for all of our economic sectors, including agriculture."

"The president has achieved important improvements in the agreement to enable our agricultural producers to be treated more fairly," Perdue said in a statement. "This breakthrough demonstrates that the president's commonsense strategy of holding trading partners accountable will produce results. President Trump and Ambassador [Robert] Lighthizer, our U.S. trade representative, are to be congratulated for their determination, vision, and leadership.

"The agreement specifically addresses agricultural biotechnology to keep up with 21st Century innovations. And we mutually pledge to work together with Mexico to reduce trade-distorting policies, increase transparency, and ensure non-discriminatory treatment in grading of agricultural products.

"This is nothing short of a great victory for farmers and ranchers, because locking in our access to Mexican markets is critical to supporting farm income and strengthening rural communities. Mexico has historically been a great customer and partner and we are happy to have this resolved for our agricultural producers.

"We now hope that Canada will see the need to settle all of the outstanding issues between our two nations as well, and restore us to a true North American Free Trade Agreement."

Reaction to the Mexico agreement was generally positive if cautious.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, said,"Today's announcement by the United States and Mexico is an important step toward modernizing NAFTA, the largest free-trade zone in the world."

"Preserving and improving NAFTA will ensure that American families will continue to benefit from lower prices, better jobs and increased productivity, while also ensuring that the 25-year-old agreement maintains the leadership of American businesses, manufacturers, farmers and ranchers," Hatch said.

"To achieve that goal, a final agreement should include Canada. Further, to meet Trade Promotion Authority (TPA) and gain Congress' support, a modernized NAFTA must establish strong rules to protect intellectual property rghts to benefit America's innovators, artists and creators. I look forward to reviewing the details of today's announcement and continuing to work with USTR to resolve these issues so that a revamped NAFTA can pass Congress and become law."

Hatch also noted that "NAFTA eliminated most tariffs on products traded between the United States, Canada and Mexico between 1994 and 2008. The free-trade zone links 487 million people and totals $21.4 trillion in gross domestic product (GDP)."

House Ways and Means Committee Chairman Kevin Brady, R-Texas, said, "A modernized and improved North American trade agreement is vital to American workers and businesses.

"It is very encouraging that President Trump, along with Ambassador [Robert] Lighthizer and his team, have reached a bilateral understanding with Mexico to update the agreement for the benefit of American workers, farmers, and local businesses.

"I look forward to carefully analyzing the details and consulting in the weeks ahead with my colleagues and constituents to determine whether the new proposal meets the trade priorities set out by Congress under Trade Promotion Authority.

"I call on Canada to come back to the negotiating table quickly with the aim of concluding a modern, seamless three-way agreement."

Senate Judiciary Committee Chairman Charles Grassley, R-Iowa, said, "Mexico has been an important trading partner of the United States for decades, and farmers in Iowa have felt the sting of increased tariffs on products like pork and cheese."

"While the details of a preliminary agreement haven't yet been released and I reserve final judgment until there is a final agreement that includes Canada, I am encouraged by the progress announced today," Grassley said.

"The sooner we get a new agreement in place, the sooner farmers and businesspeople across the country can focus on exporting American products to Canada and Mexico without concern of tariffs."

House Agriculture Appropriations Subcommittee Chairman Robert Aderholt, R-Ala., said, "All throughout the 2016 campaign, Democrats laughed at the idea we could renegotiate our trade deals."

"With this important step towards a new NAFTA deal, President Trump has once again proven these critics wrong," Aderholt said.

"The strength of the American economy, and the American consumer, comes with a lot of negotiating power. Power that has too often not been used, to the detriment of American workers. Those days are over."

House Majority Whip Steve Scalise, R-La., said, "President Trump's renegotiated trade deal with Mexico will be a huge victory for American workers and will send a strong message to other countries around the world that we will be happy to enter trade deals that benefit both countries equally."

"When President Trump ran for office, he promised that he would renegotiate outdated trade deals that were putting other countries first," Scalise said.

"With his announcement today that he's reached a new trade agreement with Mexico, President Trump is once again delivering on his promises to stand up for American workers and get better deals for our country.

"While it's important we have free trade, it's equally important that we have trade that is fair, and this agreement could be a huge step in achieving that goal for American workers and consumers."

National Corn Growers Association President Kevin Skunes, a North Dakota farmer, said, "NAFTA has been an unequivocal success story for American agriculture, dramatically expanding market access for all parties, integrating supply chains and providing economic opportunity to farmers and rural communities."

"Mexico is the largest export market for U.S. corn farmers and we are pleased the United States and Mexico are reaffirming mutual commitment to this important relationship," Skunes said. "Farmers across the country have been closely following NAFTA negotiations and NCGA welcomes the opportunity to evaluate the details of this agreement with Mexico."

"However, the trilateral relationship is important, and we urge President Trump to reconsider terminating the underlying agreement until full trilateral negotiations have been concluded and a new agreement is secured. This new agreement has the potential to deliver the economic certainty rural America needs, prematurely terminating the existing agreement would only undermine that potential," Skunes said.

The American Soybean Association said, "Renewal of the North American Free Trade Agreement, or NAFTA, is looking more promising after President Trump announced today that the U.S. and Mexico have reached an "understanding" regarding sensitive bilateral issues."

"That news also opens the door for Canada to return to the table and move the trilateral agreement one step closer to ratification. This is exciting news for soy growers anxious to expand existing markets and pursue new ones.

ASA President John Heisdorffer, a soy grower from Keota, Iowa, said, "We need NAFTA and new free trade agreements to build and ensure the certainty of our markets for soy and livestock product exports.

"Approval of NAFTA would be a big step in the right direction for us, with the uncertainty and market loss resulting from China's tariff on U.S. soybeans. We are hopeful that a new NAFTA agreement will set the tone for more trade agreements to come."

Brian Kuehl, executive director of Farmers for Free Trade, a group that has been critical of Trump's decision to impose tariffs that led to retaliatory tariffs on U.S. farm products, said, "While any news of progress on restoring NAFTA certainty is reassuring for American farmers, there are questions that remain on the nature of a final deal."

"Farmers will ultimately be judging any new NAFTA deal by two crucial measures: will it provide any new market access for American ag exports and will it do anything that erodes the enormous gains the original NAFTA provided?

"On those points, it will be necessary for Canada to rejoin the negotiations and for an agreement to be reached among all parties before a judgement can be made," Kuehl said. "American farmers know better than most that a deal isn't done until the ink is dry and all parties have agreed."

"For our farmers, whose livelihoods depend on global markets, the end goal remains restoring NAFTA certainty, de-escalating a trade war that's put them in the crosshairs, and returning to negotiating new trade agreements that open foreign markets hungry for made-in America farm exports.

"While we are encouraged the Administration is seeking out NAFTA stability, there is still significant work that remains in delivering on the trade priorities for farmers, ranchers, and rural communities."

The news about Mexico and Canada came out the same day that the U.S. Dairy Export Council (USDEC) released a report saying that retaliatory Mexican and Chinese tariffs on U.S. dairy products could cost U.S. producers billions of dollars.

"Retaliatory tariffs by China and Mexico could lower dairy exports by $2.7 billion and depress dairy farmers' revenues by $16.6 billion over the next several years unless they are rolled back," the council said in a news release.

"Moreover, U.S. economic output tied to the dairy industry would fall by more than $8 billion and 8,200 U.S. jobs would be imperiled through 2023.

"The damage is real, and it is being felt by dairy farmers, dairy businesses and dairy exporters every day," said Tom Vilsack, president and CEO of USDEC and former Agriculture secretary.

"Exports hold tremendous potential for our industry and the struggling rural economy, but we must address these tariffs immediately for that potential to be realized."

The situation in China is particularly problematic, according to Informa. Tariffs have now reached 45 percent on some U.S. dairy products, which puts America at a great competitive disadvantage to suppliers from Europe, Australia and New Zealand that don't face the same barriers and in some cases have free trade agreements with China.

"We've spent years cultivating overseas markets, and those investments are slowly eroding," explained Jaime Castaneda, USDEC's senior vice president. "We are losing market share, and once it's lost, it is very hard to reclaim. We need our government to bring these tariffs to an end immediately with Mexico and find solutions going forward with China."

–The Hagstrom Report