Agriculture amounts to a small part of NAFTA trade volume but it is a major sticking point for U.S. and Canadian negotiators who are scheduled to resume negotiations on the new NAFTA on Wednesday. The second-largest U.S. farm group said the White House ought to adopt the dairy supply management system that it reportedly is trying to eliminate in Canada and reinstate country-of-origin labeling on beef.
Canada is unlikely to yield on supply management, which has broad domestic political support, wrote associate professor Michael von Massow of the University of Guelph. “If a concession is made, it is likely to be in increased access. Canada had already provided an increase in access in the TPP negotiations. This would seem to be an area of potential concession that would provide Trump with a ‘win’ for farmers and allow the Canadians to sustain their domestic program. It would not be without pain for the Canadian industry, but may be the path to an agreement.” President Trump withdrew the United States from the Trans-Pacific Partnership trade pact within days of taking office.
Trump announced agreement with Mexico on a binational trade agreement last week and notified Congress on Friday “of my intention to enter into a trade agreement with Mexico — and with Canada if it is willing, in a timely manner, to meet the high standards for free, fair, and reciprocal trade contained therein.” He threatened over the weekend to leave Canada out of the potential trilateral agreement and to terminate NAFTA altogether.
The National Farmers Union, after blaming NAFTA for favoring corporations, called for updates that would strengthen the rural economy. “However, improvements on behalf of American farmers and ranchers should not occur at the expense of farmers across the border,” said the NFU. “Indeed, the United States should take a page from Canada’s book and establish similar (supply management) policies to support American dairy farmers, who have been enduring chronic oversupply and critically low prices for a number of years.”
Supply management and meat-origin labels have little currency among the free-market mindset of U.S. trade negotiators but they are popular causes among farm activists worried about the thin profit margins of modern agriculture. Congress repealed COOL for beef and pork in last 2015 after the WTO ruled the labels were a trade barrier in disguise against Canada and Mexico. Trump’s “America First” ideology inspired hope for a revival of COOL.