The new North American Free Trade Agreement has a new name but otherwise doesn’t change much for fresh produce marketers.
Bringing Canada into an agreement already embraced by Mexico and the U.S. in late August, negotiators on Sept. 30 agreed on “NAFTA 2.0” with a new trade deal called the United States-Mexico-Canada Agreement (USMCA), refreshing the original agreement in place since 1994.
“In terms of tariff treatment, (the agreement) is generally open for fresh produce and that’s good,” said Richard Owen, vice president of global business development at the Newark, Del.-based Produce Marketing Association.
The major friction point for the negotiations were dairy and auto issues, Owen said. Once those issues were resolved, the talks were concluded rapidly, he said.
Trump can sign the deal after 60 days — November 30 — but Congress may take until next year to vote it up or down.
The House Ways and Means Committee and the Senate Finance Committee will likely have hearings on the trade agreement but cannot make any changes to the text, Owen said.
Owen said PMA believes a single agreement is the best way to address the extensive relationships and investments in produce and floral production and sales that have developed in North America. He said the deal is consistent with PMA’s goals of free and fair trade and expressed hope for quick action on the deal by all three countries.
The agreement provides certainty to produce companies doing business in North America, he said, with a six-year review and a 16-year duration of the agreement.
The original NAFTA deal helped the North American produce industry grow over the last 25 years, said Tom Stenzel, president and CEO of the United Fresh Produce Association. “United Fresh looks forward to working with Congress to achieve the swift approval of this new agreement,” Stenzel said in a statement.
The leadership of the Canadian Produce Marketing Association also expressed satisfaction with the deal, stating that the agreement will ensure that the supply chains of the fresh produce industry remain integrated.
Western Growers said the United States-Mexico-Canada Agreement will enable food and agriculture to trade more fairly, and could help expand exports of American agricultural products.
The agreement did not contain any language that would provide an anti-dumping tool help protect seasonal producers of perishable crops, which had been an early goal of the talks for the Trump administration. However, Owen said that Trump administration officials have indicated they will seek a comprehensive evaluation of the produce industry in Mexico by the U.S. International Trade Commission and would use the findings of the investigation to guide further actions.
“Obviously we were happy to see that the seasonality proposal was not included in the agreement,” said Lance Jungmeyer, president of the Nogales, Ariz.-based Fresh Produce Association of the Americas. “We thought it was a bad precedent for trade,” he said.
FPAA believes the tool would have been extremely restrictive to both the existing import trade and also to future fresh produce shipments from Mexico — even in the event that the Southeast U.S. suffered weather and crop setbacks, he said.
Southeast growers were looking for dumping protection in other ways, despite the lack of a seasonal protection provision in the trilateral trade agreement.
Even as the new trade agreement was being finalized, Sens. Bill Nelson, D-Fla., and Marco Rubio, R-Fla., introduced legislation Sept. 26 that would allow Florida farmers to bring trade cases to the Department of Commerce and the U.S. International Trade Commission against Mexican growers if they can prove acts of dumping occur seasonally, rather than the current requirement of year-round.
The Florida Fruit & Vegetable Association said in a statement it supported the Nelson-Rubio bill and a similar bill introduced in the House by Reps. Carlos Curbelo, R-Fla., and Al Lawson Jr., D-Fla..
"The bill would guarantee specialty crop growers the seasonal and perishable provisions that were missing from the renegotiated NAFTA, known as the United States-Mexico-Canada Agreement, providing critically needed trade relief for specialty crop producers in Florida and the Southeast," FFVA said in a statement.
The “USMCA” — the acronym for the deal — preserves duty-free access for Washington tree fruit growers, who send 40% of their apple exports and 60% of their pear exports to Mexico and Canada, said Desmond O’Rourke, economist and president of Belrose Inc., Pullman, Wash.
O’Rourke suggested the renegotiation was more “show” than substantive and said the name change to remove “NAFTA” from the lexicon was a smart move.
NAFTA was like a curse word to some people, O’Rourke said, and President Trump while campaigning in 2016 called NAFTA the worst trade deal the U.S. had ever signed. USMCA doesn’t roll off the tongue in the same way NAFTA does, and that alone may make it less subject to criticism, he said.
The new agreement with Mexico still doesn’t address labor, or the free movement of workers between Mexico and the U.S., O’Rourke said. That’s a big hole in the relationship between the two countries, O’Rourke believes.
If U.S. apples are able to move freely to Mexico, then workers from Mexico should be able to move freely to the Northwest orchards to pick the fruit, he said.