Most of us in the industry recognize that in all trade agreements there are winners and losers.
However, since the implementation of NAFTA many crops have experienced a decrease in acreage, production, employees, and income due to the Agreement’s shortcomings. The U.S. dumping and countervailing duty statutes (and the NAFTA agreement) do not currently protect growers of a number of “perishable and seasonal” specialty crops. When a perishable and seasonal crop is subjected to dumping or subsidization that leads to injury, it results in either significant reduction in production or the elimination of a geographical area’s perishable and seasonal crop.
Perishable and seasonal crops have special characteristics (short shelf life and marketing periods) that make it uniquely difficult for the producers of these products to obtain meaningful relief from injury as a result of dumping and/or subsidization due to the law’s definition of “domestic industry.” Perishable and seasonal crops are unable to receive relief because income/expense information from the entire domestic industry is required to be reviewed by the U.S. International Trade Commission (USITC) when determining injury.
When the income and expenses for the whole year within the entire industry are considered, economic injury by the petitioning perishable and seasonal crop no longer exists. I have to believe this was an oversight by the drafters of the original dumping and countervailing statutes when there was little to no trade of perishable and seasonal crops. They failed to realize a crop in Southern California or Florida has different seasons and import competition than the same crop being harvested in New Jersey or Oregon. Growers of perishable and seasonal crops do not have the option of withholding product until market pricing improves. If there is dumped or subsidized imported product in the marketplace during a perishable and seasonal product’s marketing season, the result is injury.
There are 97 chapters in the U.S. Harmonized Tariff System and all of these trade items – from A to Z - are protected from dumping and subsidization if they can demonstrate injury. Unfortunately, when NAFTA was being negotiated the unique market conditions for perishable and seasonal crops was not accounted for. The definition of “domestic injury” must be revised to account for the unique market conditions faced by perishable and seasonal crops.
We understand that any remedy in the NAFTA Modernization agreement will be available to all three nations’ perishable and seasonal crops.
The solution is intended to be narrowly tailored to particular marketing periods for perishable and seasonal crops. A finding of significant injury for a crop would result in an order only being applied to the period of injury – unlike an order for a manufactured product that would be applied for the entire twelve months.
For example if an U.S. crop dumped in Canada and the Canadian crop could demonstrate injury the order would be applicable just for the marketing period in Canada. The NAFTA had an Emergency Action (Safeguards) Tariff Snapback that failed because of unnecessarily complex procedures so I urge our negotiators not to offer this program as acceptable to our perishable and seasonal growers.
In conclusion, one can conclude NAFTA did open the U.S. market for the Mexican perishable and seasonal crops but it may be the lack of a dumping act provision that is allowing the injuring of U.S. perishable and seasonal crops.