Mexico, U.S. ag groups push for NAFTA modernization, not renegotiation

18.05.2017

In the wake of uncertainty during the renegotiation of the North American Free Trade Agreement (NAFTA) U.S. ag groups have begun working with a Mexican trade delegation to prevent trade disruption.

During a press conference on May 16, the U.S. Grains Council (USGC), the National Corn Growers Association (NCGA), the Nebraska Corn Board and the Governor of Nebraska, Pete Ricketts, aired their concerns about NAFTA and their plan to encourage the modernization of NAFTA, not renegotiation.

A member of the Mexican trade delegation, Felipe Basarte, spoke about watching the corn markets sharply increase when U.S. President Donald Trump tweeted about the possibility of the U.S. withdrawing from NAFTA.  

“Be sensitive, don’t take our business for granted,” Basarte said. “We represent (the trade delegation) 80% of Mexico’s grain demand. The market is speculating against us right now. The U.S. needs us as buyers and we need U.S. grain. Please realize that if U.S. grain is taxed it won’t be attractive for us anymore.”

He also mentioned that Mexico was looking at other grain options such as Brazil. But Brazil’s logistics and infrastructure is a concern for Mexico compared to the dependability of the United States.

“Having these industry leaders here in the United States this week to share how NAFTA has impacted their companies and their country is invaluable to helping us communicate how important strong trade policy with our nearest neighbors is to the continued success of U.S. grain producers and exporters,” said Tom Sleight, president and chief executive officer of the USGC.

The main concern the group has is the impact the renegotiation may have on billions of dollars’ worth of trade between the countries.

“We need strong trade agreements like NAFTA,” said Jon Doggett, vice-president of NCGA. “NAFTA has been one of the most important catalysts for economic growth in our industry that I have seen.”

According to the USGC, approximately 20% of U.S. corn and corn co-products are exported. Mexico is the largest market for U.S. corn. In 2016, U.S. corn exports to Mexico totaled 13.3 million tonnes (523.5 million bushels) of corn, valued at $2.5 billion. The United States also exported 1.9 million tonnes of distiller’s dried grains with solubles (DDGS), a byproduct of ethanol.

As a result of NAFTA, corn is exported to Mexico without tariffs or duties. Under the agreement, the USGC said U.S. agricultural exports to Canada and Mexico have tripled and quintupled, respectively.

NAFTA is a multi-layer free trade agreement between the United States, Canada and Mexico that came into effect in 1994. It was designed to remove tariff barriers and facilitate the cross-border movement of goods and services among the three countries. There has been controversy over the effectiveness of the agreement in ongoing discussions of potential renegotiations.

The goal is to get started with the update or modernization of NAFTA and decide what parts or section of the trade agreement need to be focused on to avoid a complete renegotiation.

“We will work closely with the Trump administration and Congress to build on the successful trade relationship we have with our neighbors in Mexico, and make sure a modernized NAFTA is a win-win for both our countries,” Doggett said.

The Mexican delegation will now travel to Washington, D.C., from Lincoln, Nebraska, where they will join U.S. corn farmers for meetings with U.S. congressional leaders to discuss the U.S.-Mexico trade relationship.



world-grain

Readers choice: TOP-5 articles of the month by UkrAgroConsult