The public hearings follow USTR’s 90-day notification to Congress on May 18 regarding intent to renegotiate NAFTA as well as USTR’s Federal Register notice published May 23, 2017, requesting public comment.
Since the Trump administration announced its intention to renegotiate NAFTA, grain groups such as the U.S. Wheat Associates (USW), the National Association of Wheat Growers (NAWG), the U.S. Grains Council (USGC) and the National Corn Growers Association (NCGA) have urged the government to not harm its trade relationships with Canada and Mexico.
The groups testified to the USTR during the first day of public hearings on June 27.
“NAFTA has been one of the most advantageous trade agreements for wheat farmers in U.S. history,” said Chandler Goule, chief executive officer of NAWG. “By removing import tariffs, NAFTA has established a crucial market for wheat producers in Mexico.”
A continued voice of support is given in updating sanitary and phytosanitary rules within NAFTA.
“Some improvements can be made that benefit the food and agriculture sectors in both countries,” Goule said. “For instance, a new agreement should include the sanitary and phytosanitary (SPS) rules that the three countries already agreed to as part of the Trans-Pacific Partnership (TPP). The SPS provisions of TPP provided more tools to address problems.”
Ben Conner, director of policy for USW, pressed for resolution of barriers that are a disincentive for U.S. wheat farmers to deliver wheat to nearby Canadian elevators.
“U.S. farmers should be able to deliver their wheat to a Canadian elevator and not automatically receive the lowest grade because it was grown on our side of the border,” Conner said. “This is a no-brainer, and it is already Canada’s legal obligation under existing trade agreements.”
Chip Councell, chairman of the USGC, spoke about the priorities that should be considered regarding the corn, sorghum and barley sectors while renegotiating NAFTA.
He told officials he has been to Mexico twice this year and helped to host a team of Mexican grain buyers visiting the United States to talk with farmers and policy makers. Through those conversations, he learned firsthand that buyers’ concerns are translating into dollars lost in farm country.
“Because our agriculture economies have grown to be so closely intertwined, this trade agreement in particular is critical to my business,” Councell said. “The last several months have highlighted how important it is to maintain this strong, stable relationship if we are going to continue to grow.”
Councell also told officials that the Council has "strong but unconfirmed evidence” Mexico will purchase corn from South America later this year, and that he himself took a futures position for his entire 2017 corn crop when withdrawal talk began, fearing what might happen to markets as the new crop approached.
“What is happening now in our relationship with Mexican buyers will change how the Mexican industry invests in infrastructure, impact our demand for years to come and impact individual producers like myself financially,” he said.
Councell said that rising demand for feed and food has created new opportunities for grain and oilseed exports to Canada and Mexico over the past three decades, which have been tariff-free thanks to NAFTA. Proximity and natural logistical advantages have led to efficiencies and integration on both sides of the border and helped dramatically expand U.S. farmers’ exports to Mexico, in particular.
With these successes in mind, Councell urged panelists to ensure negotiators make every effort to do no harm to existing markets and avoid retaliation against U.S. agriculture. He also outlined improvements the Council would suggest for the agreement, including elements drawn from the TPP text as well as updated sanitary and phytosanitary, biotechnology synchronization and energy provisions.
Kevin Skunes, first vice-president of the NCGA, spoke about the importance the North American market has on the U.S. corn industry.
“North America has become the most important export market for the U.S. corn industry,” Skunes testified. “Corn farmers export about 20% of our annual corn crop, and exports account for about one-third of our income. Today, the agriculture economy is experiencing its fourth year of a downturn marked by low commodity prices. I cannot stress enough how important export markets are to our ability to stay in business.”
Skunes highlighted how NAFTA has positively impacted U.S. agricultural trade with Canada and Mexico since its implementation in 1994.
“Free trade has benefited American farmers, and NAFTA has been extremely valuable to our industry,” Skunes said. “Twenty-three years of investment has led to a sizeable increase in trade. Since 1994, U.S. corn exports to NAFTA partners have increased more than seven-fold. Today, we export a record volume of more than 14 million tonnes of corn to Mexico and Canada, valued at $2.68 billion. In 2016, corn exports to these two neighbors supported 25,000 jobs, on top of helping support 300,000 U.S. corn farmers.”