With NAFTA on the horizon, U.S. deals with Canada and Mexico ag issues

Agriculture Secretary Sonny Perdue went north and Commerce Secretary Wilbur Ross looked south as the Trump administration focused on North American food and farm trade issues. Based on “quite meaningful” progress, Ross allowed an additional 24 hours to complete a deal on sugar imports from Mexico, while Perdue discussed the future of two-way farm trade with Canadian Agriculture Minister Lawrence Macaulay.

The two North American countries are the heart of U.S. agricultural trade. They account for one-third of all U.S. imports and exports of food and ag products, a combined $83.7 billion of the estimated $251.5 billion in U.S. ag trade this fiscal year. While China is the No. 1 market for U.S. farm exports, Canada is the largest U.S. food and ag trade partner, Canadian officials noted in a statement about the Macaulay-Perdue meeting in Toronto.

Food and ag trade with Canada is forecast for a total of $42.7 billion, with the United States sending $21 billion to its northern neighbor and importing $21.7 billion of Canadian goods. Mexico-U.S. trade is estimated at $41 billion, some $18.5 billion of it being U.S. goods shipped south and $22.5 billion in Mexican food and ag going to U.S. buyers. Mexico is the second-largest U.S. ag trade partner, followed by the EU and China.

A month ago, Ross threatened to collect antidumping and countervailing duties on sugar from Mexico beginning on June 5 unless the country agreed to limit its shipments. “The two sides have come together in quite meaningful ways, but there remain a few technical details to work out,” said Ross in extending the deadline for agreement to Tuesday. “We are quite optimistic that our two nations are on the precipice of an agreement we can all support, and so have decided that a short extension of the deadline is in everyone’s best interest.”

An agreement would resolve the dispute before negotiations begin later this year, possibly in mid-August, to revamp the 1994 North American Free Trade Agreement. U.S. farm groups hope the talks result in larger sales but fear disruptions in trade with two leading countries.

Mexico is the largest U.S. sugar supplier, estimated by USDA to provide 37 percent of imports this year. NAFTA called for gradual liberalization in sweetener trade between the countries. In 2014, U.S. growers and processors accused Mexico of dumping sugar at unfairly low prices. The U.S. government agreed, which led to an agreement to limit shipments in exchange for suspension of the tariffs. The Commerce Department decided last December that the 2014 agreement was not working.

Citing two unnamed sources, Reuters said said the two countries “were working on final details of a deal.”

After meeting his Canadian counterpart, Perdue said the session was “very frank, like family members discussing some things that are not necessarily comfortable. We laid out a great framework to begin renegotiating NAFTA.” U.S. issues included Canada’s dairy support system, which restricts U.S. imports, and a wheat grading system that U.S. farmers say effectively prevents imports by giving them too low a value. “And also certain provincial wine issues, where wines are not displayed out in front where other Canadian wine is,” said Perdue. The recent spat over ultra-filtered milk is not a NAFTA issue, said the secretary said, adding, “While we didn’t try to negotiate back and forth, I think it was clearly understood that we consider all options on the table and we’ll pursue them in the best interests of U.S. producers.”

In a statement, Macaulay said both sides want to strengthen the agricultural trade relationship. “I’m confident that we can reinforce this relationship in a balanced manner, allowing us to boost farmers’ bottom lines and create good, middle class jobs on both sides of the border,” he said.

On Twitter, Perdue said he had “friendly but frank talk w/Minister @L_MacAulay about U.S. exports to Canada. Foundation for future negotiations w/our friend to the north.” Macaulay tweeted, “Productive discussions today with our key trading partner and friends. @USDA @SecretarySonny, looking forward to working with you.” Perdue replied, “Very productive, I agree. Great discussion and we look forward to more of them.”