Dairy Groups Pledge to Work with Trump Administration on NAFTA Modernization

13 Jun 2017 --- Two leading dairy groups have said that they will work with the Trump Administration to modernize the North American Free Trade Agreement (NAFTA) to make sure it safeguards open trade with Mexico and confronts increasingly protectionist dairy policies by Canada.

In joint comments sent to the US Trade Representative, the US Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) describe the existing North American dairy landscape as one in which US dairy products flow relatively unhindered to Mexico but are curtailed by Canada’s increasing use of policy tools violating international trade obligations.

“NAFTA has accomplished a great deal over the past two-plus decades, but it has also been overtaken by new, unanticipated forms of trade and trade problems,” said Tom Vilsack, US Dairy Export Council president and CEO. “We agree that NAFTA could use a facelift and our industry looks forward to working with the Trump Administration to explore ways to preserve and strengthen it.”

Since NAFTA’s implementation, the United States has shifted from being a consistent net importer of dairy products to being a significant net exporter. Over the past five years, cumulative US dairy exports are more than double the import total.

“The relationship between the dairy sectors of the US, Mexico and Canada is of such great importance to all of our nations that we need to devote the time and effort to make it better,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “A modernized NAFTA agreement must preserve the open and dependable trade relationship with Mexico, and remove remaining barriers to trade that were not adequately addressed in the original agreement.”

Last year, the US dairy industry exported $1.2 billion worth of dairy products to Mexico, a dramatic increase from $124 million in 1995. Mexico is the largest US dairy export market by far, roughly double the size of the industry’s second-largest market, Canada.

The comments submitted to USTR say a modernized NAFTA can increase U.S. dairy exports, create jobs and build business partnerships between the three countries. On the other hand, withdrawing from NAFTA could devastate the US dairy industry. Last year’s dairy exports to Mexico alone required the milk equivalent of 1,500 American dairy farms. 

The document’s top request of the Trump Administration is for a “decisive confrontation and resolution” of nontariff concerns, including the removal of Canadian milk pricing classes 6 & 7, and the inclusion of Canadian dairy tariffs.

The industry’s main concern for Mexico is protecting the ability to sell cheeses with common names, like “parmesan,” “gorgonzola,” “asiago” and “provolone.” An aggressive ongoing effort by the European Union (EU) to claim sole ownership of these cheeses must be rejected by Mexican and U.S. officials, according to comments from USDEC and NMPF.

US dairy companies have been working with partners in the Mexican dairy industry for years to build the size and variety of cheese demand in Mexico. The comments ask the Administration to make it clear that the US is “vehemently opposed to the imposition of any new restrictions on the market access opportunities for U.S. products relying on common names.”

The document concludes by stating its commitment to work with the Administration to modernize NAFTA.

“Improvements to NAFTA that prioritize our positive trade relationship with Mexico and address Canada’s flouting of its trade commitments to us can be achieved and are worth pursuing,” the document said. “This is an essential agreement that the United States dairy industry, and in fact the broader economy, cannot do without. It is because NAFTA is so important that this modernization effort is so valuable.

GMA Calls for NAFTA Modernization to Grow US Food, Beverage and Consumer Products’ Competitiveness
Elsewhere, the Grocery Manufacturers Association (GMA) has urged that NAFTA modernization strengthen the benefits of free trade for consumers, US manufacturers and their workers.

GMA filed comments to the United States Trade Representative on NAFTA modernization.
“It is essential that the millions of men and women who work to produce the quality products enjoyed by consumers here at home and around the world be at the forefront of the negotiations to strengthen and improve this landmark trade agreement,” said Pamela G. Bailey, GMA’s president and CEO.  

“As the Trump Administration seeks to modernize the NAFTA agreement, we urge the Administration to strengthen and expand the benefits of free trade for consumers, US food, beverage, and consumer product manufacturers and their workers.”

The grocery manufacturing industry directly employs 2.1 million people in 30,000 US communities. These jobs in turn support another 9 million jobs across the country.

“Ambitious and successful trade agreements like NAFTA have helped the US food, beverage, and consumer products industry leverage sophisticated supply chains and investments to source ingredients, innovate products, and compete in the United States and overseas, but we understand NAFTA is more than 20 years old and can be modernized to further strengthen competitiveness and drive US growth and job creation.” said Bailey.

In its comments, GMA noted that US processed food and beverage exports to the world totaled almost $40 billion in 2016, roughly a third of all US agricultural exports. Of that amount, approximately $17.6 billion were destined for Canada and Mexico, which are the top two export markets for US processed foods and beverages. 

In order to maintain current and drive future growth and increased employment in the US food, beverage, and consumer product manufacturing sector, GMA urged the Trump administration in its comments to consider three priority objectives for modernizing NAFTA:

• Protect Existing Market Access and Remove Remaining Barriers – NAFTA modernization should maintain comprehensive, tariff-free trade in food, beverage, and consumer products and remove any tariff barriers, quotas, and/or other limitations to market access for goods traded among the NAFTA countries.
• Update Rules that Increase U.S. Companies’ Competitiveness – NAFTA modernization should implement even stronger commitments to establish effective, science-based rules governing non-tariff measures that build on WTO rules and set a new, higher standard for future U.S. trade agreements in order to expand opportunities for U.S. exports. 
• Increase Regulatory Alignment and Harmonization –NAFTA modernization should reinforce and expand regulatory cooperation efforts.  The agreement should set an ambitious agenda for regulatory alignment; for example, by making the U.S.-Canada Regulatory Cooperation Council (RCC) permanent, strengthening US-Mexico regulatory cooperation, and seeking mechanisms for trilateral regulatory cooperation on topics including food safety and chemicals management.