“New NAFTA” puts the brakes on farm policy reforms

Farm economies in the United States, Mexico and Canada are very different than they were when the North American Free Trade Agreement (NAFTA) was signed.

180830_farmbill-1250x650Supply chains for meat and feed have become highly integrated, with goods and animals flowing back and forth across borders to take advantage of the cheapest conditions, allowing for dramatically increased corporate concentration. After NAFTA, Mexican farmers were devastated by the flood of cheap corn from the U.S. Nearly two million Mexican farmers were driven out of agriculture, with many more losing their farms to become contract workers or compelled to migrate to cities or to the U.S. to seek work.1 More than 250,000 U.S. small—and medium-scale family farms have disappeared since NAFTA,2 as volatile prices and increasing corporate concentration and control made it harder for them to make a living from the land. Farm Bill programs enacted since NAFTA have facilitated farm consolidation and a deeper reliance on export markets to absorb chronic over-production and low prices.

Also, since NAFTA, our food systems have become less healthy, with increasing meat and processed food consumption contributing to rising obesity in all three countries, but especially in the United States and Mexico. Consumers and farmers are pushing back, leading to more demand for healthier and locally grown foods and for farm and trade policies that are fair and sustainable.

Unfortunately, the new NAFTA, dubbed the U.S.-Mexico-Canada Agreement (USMCA), not only doesn’t fix the problems in the original agreement, it takes several steps back from those goals. Canada’s existing dairy supply management program has been weakened, a promising new initiative in Mexico to enhance food sovereignty is endangered and the problem of dumping of agricultural exports has been ignored.

Weakening supply management

Canada’s supply management program has been operating for more than 40 years, long before the current crisis in U.S. dairy markets. The U.S. crisis is due to massive oversupply linked to the growth of mega-sized dairy operations and years of prices below the true cost to farmers. Most Canadian dairy farms are family owned and operated, and this program helps them stay in business without reliance on public subsidies.

This program of balancing Canadian supply and demand requires the ability to restrict imports, so they don’t overwhelm the market. Canada’s dairy program was excluded from the original NAFTA.

Recent increases in consumer demand for butter have reduced the market for high-protein milk products. Over the last few years, U.S. dairy processors have exported ultrafiltered milk or diafiltered milk as a concentrated protein product under customs definitions (thus avoiding Canadian dairy tariffs) for use in cheese and other food production. As the market for these inputs rebalanced, the Canadian Dairy Commission decided to create new designations for dairy products (Class 6 and Class 7) for ingredients like protein concentrates, skim milk and whole milk powder. The decision to lower the price of Class 7 products as supplies built up led to trade tensions with the U.S.

New NAFTA creates a special window, called a tariff rate quota, for duty-free exports of U.S. dairy products to Canada amounting to 3.6 percent of the Canadian market. This comes on top of a concession equivalent to 3.25 percent of the market granted under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and additional market access for 17,500 tons of European cheese under CETA (the Canada-European Union trade deal). While the Canadian government has promised farmers some compensation for the opening, National Farmers Union Canada president Jan Slomp says, “We take no comfort in promises of compensation…CETA shrinks total revenue available to Canadian farmers, yet the subsidy is given to the farmer that expands. To expand when revenue is diminished is a rather reckless business decision.”3This approach will contribute to overproduction in Canada, replicating the problem at the heart of the U.S. dairy crisis.

Canada also agreed to abolish the Class 6 and Class 7 milk designations in Annex 3B of new NAFTA chapter on agriculture. That annex details plans to tie prices for Canadian non-fat dairy solids to domestic prices set by USDA (adjusted by Canadian processor margins and yield factors). It also agreed to add a price surcharge to global exports of skim milk powder, milk protein concentrate and infant formula if they exceed certain set volumes. Thus, rather than achieving “free trade” in dairy products, these changes will tie Canadian prices to those set in the U.S., potentially raising prices for consumers in other countries while weakening a successful program that attempts to avoid overproduction and help farmers stay on their lands. Even so, the U.S. National Family Farm Coalition (NFFC) points out that, “The impacts for U.S. farmers will be minimal: Canada’s entire dairy market is smaller than that of Wisconsin.”4

Limits on rebuilding national food systems

Mexican President-elect Andrés Manuel López Obrador has promised to revitalize the country’s agricultural sector, based on the Plan de Ayala Siglo 21,5 which was endorsed by more than 100 Mexican farmers’ organizations. A primary goal is to achieve self-sufficiency in corn, wheat, rice and beans by 2024. This program would reorient agricultural support to target smaller producers through credit, crop insurance and reforms to anti-competitive business practices by buyers and sellers. Small Planet Institute’s Tim Wise explains:

The Plan commits to a transition toward agro-ecology, bars transgenic crops, and creates a National System for the Protection and Improvement of Mesoamerican Agro-biodiversity, with a special program called Native Maize-Tortilla 2050 to promote the cultivation and consumption of native maize. This is just the sort of directed action that can revalue indigenous cultures and practices while actively supporting the production of native maize.6

These kinds of programs would require significant restructuring of Mexico’s support to agriculture, which could be undermined by language in the Agriculture Chapter of new NAFTA. Article 3.6.1 states that, “If a Party supports its agricultural producers, the Party shall consider domestic support measures that have minimal or no trade distorting or production effects.” While “shall consider” is not binding language, it is consistent with other provisions, especially the articles that follow, which establish a consultation process in cases where trade distortion is alleged.

It seems possible that the López Obrador administration’s plans to reorient agriculture spending to achieve self-sufficiency in corn, beans, wheat and rice production and to end reliance on imports of those goods through floor prices, public procurement, and production and distribution of fertilizers7 could be considered trade distorting. The more important question is not whether these programs distort trade, but if they contribute to enhanced rural livelihoods and food security.

In addition, Article 20.A.7 (2) of new NAFTA, like the CPTPP, requires all countries to ratify the 1991 version of the International Union for the Protection of New Varieties of Plants (UPOV 1991), which prohibits farmers from saving and sharing protected seeds. Mexico ratified the 1978 version of that accord, which includes exceptions for small-scale farmers, but has declined to ratify the more stringent 1991 version. Given the recent experience of Guatemala and other Central American countries after ratification of the U.S-Central America-Dominican Republic Free Trade Agreement,8 it seems likely that the U.S. would insist that Mexico comply with that new requirement as well.

Blocking the way to reforms

It’s hard to see how Mexico can achieve self-sufficiency in basic grains without limits on imports priced below the cost of production (dumping). IATP has documented the extent of dumping since the early 1990s. Since NAFTA’s inception, dumping rates have ranged as high as 33 percent for corn, 44 percent for wheat and 34 percent for rice. After temporary reversals in the wake of the 2008 food price crisis and the 2012 drought, recent figures show a trend toward the resumption of dumping. Our calculations show that as of 2017, dumping rates were nine percent for corn, 38 percent for wheat and three percent for rice.9

Mexico agreed to maintain zero tariffs for these and other farm goods under new NAFTA, so they will not be able to shelter these goods as they restart production. Article 3.9 forbids Parties from utilizing WTO special agricultural safeguards, which would allow them to enact temporary trade barriers in cases of unstable prices or import surges. Some 39 countries (including the U.S., Canada and Mexico) have registered agricultural products for potential protection under that agreement.10 There are ongoing debates at the WTO among developing countries to expand that provision through the establishment of a Special Safeguard Mechanism and the designation of Special Products (key goods for food security that could be excluded from imports), so this provision would cut off that possibility from parties to USCMA (and those in the CPTPP, where it is also included). Article 3.3 of new NAFTA also commits members to work together at the WTO, “with the objective of substantial progressive reductions in agriculture support and protection.”

Dumping is an issue for U.S. farmers, too. IATP’s dumping calculations are based in part on USDA data on the costs of production, which include both direct costs, like seeds and fertilizer, and the opportunity costs of labor and land. When prices are below the cost of production, farmers do not fully cover those costs. Many farm households now rely on off-farm income. According to the USDA Economic Research Service, “Median farm income earned by farm households is estimated at—$800 in 2017 and is forecast to decline to—$1,691 in 2018.”11

Changes to this losing game would require reforms to both farm and trade rules. For example, NFFC and the U.S. National Farmers Union, among others, have suggested that rather than weakening Canada’s dairy supply management program, the U.S. should consider adopting a similar program to revitalize U.S. dairy markets. Those groups, along with many others including the ranchers organization R-CALF and the United Food and Commercial Workers Union (as well as IATP and Food & Water Watch) asked for Canada and Mexico to withdraw their WTO complaint against mandatory Country of Origin Labeling (COOL) for meat. Congress overturned COOL after the WTO found that the labeling program restrained trade, but without the complaint it could be refined and restarted so that consumers could know where their meat is grown and processed. That proposal is not addressed in new NAFTA.

The Trump administration has proclaimed U.S. farmers “winners” under USMCA, but the main achievements they claim are holding on to the status quo on most tariffs and increased market access to Canadian dairy markets—neither of which will contribute in any meaningful way to resolving the problems of U.S. farmers. Many of the supposed fixes in new NAFTA are provisions brought in from the rejected CPTPP. Agribusiness exporters may be breathing a sigh of relief that they can continue with business as usual, but for rural communities confronting falling incomes, rising debt and an increasingly unstable climate, new NAFTA is a lost opportunity for change.

From the IATP

Read further analysis on the “New NAFTA”

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How the Midterm Election Affects the Fate of NAFTA Renegotiations

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

45583938_2502795236417224_1736943035733770240_oA lot of corporate lobbyists and congressional Republicans were downright scornful of U.S. Trade Representative Robert Lighthizer’s efforts to engage on NAFTA renegotiation with the congressional Democrats and unions that have opposed past trade deals. Now his approach appears prescient: After this election, only trade deals that can earn Democratic support will get through Congress.

Regardless of the change in control of the House, there is a path to creating a final NAFTA package that could achieve broad support.

In response to publication of the NAFTA 2.0 text, congressional Democrats that have opposed past pacts did not launch a campaign against it, but rather identified where progress was made and where more work is essential, including the labor standards enforcement that is necessary to counter NAFTA’s job outsourcing incentives and downward pressure on wages. This election has increased the number of House members whose support of any trade deal will be premised on such improvements.

If trade officials are willing to work with congressional Democrats, unions and other groups on the improvements needed to stop NAFTA’s ongoing job outsourcing and raise wages, there clearly is a policy path to a renegotiated NAFTA that could gain wide support next year. Of course, who knows what lunatic things unrelated to trade that Donald Trump might do in the meantime to derail that prospect?

What Does a Divided Congress Mean For Trade After The Mid-Terms?

A divided Congress could force the Trump administration to think about how it might get the votes to pass a new NAFTA deal.

UYQ4V2GOSFH3LI7NLXYN6DCVVEThe election outcome spoke little to the impact of the president’s trade policies on voter decisions. And does a divided Washington mean that nothing gets done? Don’t count on it, especially if Democrats hope to tout a productive agenda ahead of 2020.

A DEMOCRATIC HOUSE SETS UP A GRAND BARGAIN ON TRADE: Let the dealmaking begin, especially if the Trump administration wants to get a new NAFTA deal through both houses of Congress. If the past is any guide, the White House can look at how a Republican administration struck a deal with congressional Democrats 11 years ago.

On May 10, 2007, then-President George W. Bush struck a deal with Democrats to set new standards on labor and environment protections in trade pacts. It could be a road map for the Trump administration to find common ground on trade issues.

“May 10 was a vital breakthrough,” said Rep. Sandy Levin (D-Mich.), who helped author the original agreement. “The challenge became to take the clear language in May 10, which was a breakthrough, and make it real.”

A grand bargain, but no grand strategy: Trade experts caution against thinking that House Democrats will use the opportunity to develop a cohesive policy for all trade negotiations.

“The Democrats are not going to make it easy for political reasons, but there’s a path there,” said Bill Reinsch, a senior adviser at the Center for Strategic and International Studies. “I just don’t know if it has bigger meaning.”

U.S. Trade Representative Robert Lighthizer is looking to hit an almost mythical sweet spot for bipartisan trade cooperation with the new U.S.-Mexico-Canada Agreement, but labor unions — a key motivator for securing Democratic votes — are already asking for more.

“We’re fighting to say this isn’t over and there are still gains to be had,” said Celeste Drake, trade policy specialist for the AFL-CIO.

A REFERENDUM ON TRUMP’S TRADE POLICIES? MAYBE NOT: Trump’s tariffs garnered much media attention over the past months, but Tuesday night’s results made no clear statement on how the electorate views the administration’s trade policies.

A CNN exit poll found that a third of voters say the policy has had no impact and 25 percent say the policy has helped their area’s economy. A remaining 30 percent of voters said Trump’s trade policies have hurt them.

But even in races in which Trump’s trade policies have had a big effect on the local economy, the issue didn’t seem to drive voting decisions at the polls.

In North Dakota, farmers stood by Trump: Republican Rep. Kevin Cramer ousted Sen. Heidi Heitkamp in North Dakota, flipping the major agriculture-producing state Trump won by 36 percentage points in 2016. Heitkamp sought to drive a wedge between North Dakotans and Trump on trade and tariffs. Farmers in the state — a major producer of soybeans and other ag-export goods — have been struck hard by retaliatory tariffs in response to Trump’s tariffs on U.S. trading partners. But the president has remained popular there, and Cramer opted to urge patience with Trump on tariffs.

Illinois district as a test for economic policy: Republican Mike Bost won reelection in Illinois’ 12th District. The race there demonstrated how an economic argument alone may not be enough to prevail among voters.

WHAT A DIVIDED WASHINGTON MEANS FOR THE NEXT TWO YEARS: Democrats will have to find policy victories where they can get them, while also avoiding two years of obstruction that could risk alienating swing voters ahead of the 2020 presidential election.

A senior administration official told POLITICO recently that no one has “a Pollyanna view of the world, that we’re all going to come together and do big things.” But the hope in the West Wing is that Democrats feel “it’s also in their best interests to look functional.”

Where bipartisan possibility lies: With a divided Congress, the Trump administration is expected to focus on forging an infrastructure deal with the two chambers and potentially work to rein in drug prices — two areas typically more aligned with liberals. That’s not to say we should expect a major breakthrough on either issue, but there’s hope in both parties for impactful reforms and projects that could get bipartisan support.

Where Trump will likely go it alone: If Trump can’t get Congress on board, he’s expected to pursue some policy goals via executive orders, especially on immigration and energy. Among the White House’s priorities are exporting more oil and natural gas.

CHAMBER LOOKS FOR COMMON GROUND: Shortly after it was clear that Congress would be divided, the U.S. Chamber of Commerce appealed for a constructive path forward.

“Divided government does not — and cannot — mean gridlock. We urge each and every leader to find the middle ground on issues including immigration, infrastructure, and trade,” Chamber CEO and President Tom Donohue said in a statement.

“Now is the time for our elected leaders to train their focus on what can be achieved to keep up America’s economic momentum. There is much to do and no time to waste.”

From Politico Pro.

Statement on NAFTA and Immigration

Citizen Trade Campaign’s Executive Director Arthur Stamoulis statement on NAFTA and Immigration.

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In response to President Donald Trump’s tweets implying that the pending North American Free Trade Agreement (NAFTA) renegotiation may be in jeopardy if Mexico does not prevent Central American immigrants from traveling through its country, Citizens Trade Campaign’s executive director Arthur Stamoulis released the following statement:

“Civil society groups in the United States have a long list of changes we’ve been pushing in order to make trade policy better for working families.  Keeping out immigrants isn’t on that list.  We oppose Donald Trump’s ongoing attempts to scapegoat immigrant workers.
“Latin America’s working families and family farmers have been hit exceptionally hard by NAFTA and CAFTA, fueling displacement and forced migration.  No one should be forced to leave their home.  We have always fought alongside our Mexican and Central American counterparts to replace the corporate-centered NAFTA and CAFTA agreements with policies that put people before profits in all countries.
“The trade debate has never been about the United States versus Mexico and Central America, but rather, big corporations against the rest of us.  A major reason that big corporations have pushed existing trade policies is so that they can ship jobs around the world to wherever workers are the most exploited and environmental regulations are the weakest.  This global race to the bottom is hurting working families everywhere, and it will only be abated with policies that improve working conditions and quality of life both at home and abroad.
“Unfortunately, the Trump administration’s current NAFTA proposal fails to include the critical changes necessary to protect jobs, raise wages, defend human rights and reverse environmental damage.  Substantial additional changes are needed if the pact is going to provide real benefits to the majority of people other than corporate elites.

“The revised NAFTA deal on offer does not include the enforcement mechanisms for labor and environmental standards needed to prevent employers from moving jobs abroad to areas where worker rights and environmental protection are routinely ignored.  Without strong labor and environmental rules with swift and certain enforcement, Trump’s version of NAFTA will continue to facilitate the outsourcing of jobs, the suppression of wages and the dumping of toxins.  While steps forward have been made in other areas, a NAFTA replacement without this fundamental fix is a nonstarter.

“We need our elected officials to stop trying to pit working families against one another.  They need to get to work creating policies that actually benefit working people and the planet.”
Citizens Trade Campaign is a U.S.-based coalition of labor, environmental, family farm, faith and consumer organizations working together to improve trade policy.

NAFTA 2.0 on deck at the polls

Voters are heading to the polls across the country today to cast ballots in roughly three dozen Senate and gubernatorial races and in House races in every congressional district.

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The outcomes could dictate how much trade becomes a focus in Congress in several ways

The biggest-ticket item on the legislative agenda next year will be passing the U.S.-Mexico-Canada Agreement, now that lame-duck passage has essentially been ruled out. If Democrats take over the House, they will likely look to leave their mark on the agreement in some way — perhaps by insisting on changes in the implementing bill to further tighten labor standards.

They might be loath to hand President Donald Trump a policy victory on one of his top priorities. But U.S. Trade Representative Robert Lighthizer’s dedication during talks to keeping in close touch with labor representatives means there’s a lot for Democrats to like in the deal, analysts contend.

Natural allies of Democrats, like prominent environmental groups, have come out against the deal. But voting down NAFTA 2.0 risks economic turmoil — especially with the 2020 presidential election on the horizon. For a refresher on where House Democrats might be able to work with the White House, including on NAFTA, click here.

The first polls start closing at 6 p.m. Eastern time tonight in Indiana and Kentucky. Most states will have closed their polling places by 11 p.m. Eastern — with the exception of Alaska, which wraps up at midnight. Here’s an hour-by-hour guide to watching tonight’s results like a pro.

What we may not know by Wednesday

Because of California’s voting laws, strategists and campaign experts say it could take days, if not weeks, to determine who won a series of tight races in the southern part of the state. That means that if control of the House depends on how Golden State races turn out — well, it could be a while until we find out which party will take control of the speaker’s gavel next year.

U.S. dairy farmers get little help from Canada trade deal

Minnesota farmer Paul Fritsche can no longer afford health insurance as he struggles to sustain a dairy farm that has been in his family for nearly a century.

SomaDetect-technology-brings-transparency-to-dairy-farms_wrbm_largeWith U.S. milk prices in the fourth year of a slump due to chronic oversupply, Fritsche, 58, is unsure whether he will be able to pass his 30-cow farm onto his sons and grandsons.

“Do you pull the plug? We’ve been at it for 90 years,” he said. “I’d hate to lose that.”

The dairy industry was a sticking point in the contentious renegotiations of the free trade deal between the U.S., Canada and Mexico that concluded last month.

U.S. President Donald Trump demanded concessions from the protected Canadian dairy industry and said on Twitter that Canada was hurting U.S. farmers with high tariffs. After Canada gave some ground, Trump claimed a big victory and said farmers would have more export options.

But Canada opened less than 4 percent of its dairy market to U.S. farmers – a concessions unlikely to make much of a dent in U.S. oversupply or improve the lot of farmers such as Fritsche, producers on both sides of the border say.

The U.S. Trade Representative – which negotiated the new deal that replaced the North American Free Trade Agreement (NAFTA) with Mexico and Canada – declined to comment. U.S. Agriculture Secretary Sonny Perdue said in a statement Friday that the deal will “crack open” additional dairy access and cited “significant victories” for U.S. agriculture.

In Canada, the dairy industry is faring much better and continues to be among the nation’s most profitable farm sectors, allowing most farmers to absorb the concessions’ impact. In addition, Ottawa has promised to compensate dairy farmers for losses stemming from opening up the industry.

Third-generation Canadian farmers Alain Philippot and Henry Holtmann are each preparing to bring their children into the business. They say the concessions sting and will limit growth. But the country’s protectionist system with its higher prices remains intact.

“I don’t think there will be a mass exodus” of farmers, Holtmann said. “There will be some leaving, but that’s because their business models weren’t flexible enough.”

DROWNING IN MILK

With Wisconsin alone producing more milk than is consumed in all of Canada, the additional market access provides little comfort.

The average price that dairy plants pay U.S. farmers for milk fell from a peak of $25 per hundred pounds (45.36 kilograms) in 2014 to about $16 now, according to the U.S. Department of Agriculture (USDA).

“The only thing that will help us is less milk or more consumption of milk,” said Scooter LaPrise, 53, who with his wife has about 30 cows on one of eight remaining dairy farms in Rhode Island.

“It’s not going to fix anything,” he said of the revamped trade agreement. “It’s just something to catch votes.”

(For a Wider Image photo essay on U.S. dairy farmers, see: https://reut.rs/2JicGyI )

While the more than 40,000 U.S. dairy farms have endured slumps before, the current price slide has been unusually drawn-out as milk production increased in recent years despite falling prices. Per capita consumption of U.S. fluid milk has been falling steadily since the 1970s, although total dairy consumption has increased as Americans eat more yogurt, butter and cheese, according to the USDA.

The new arrangement with Canada likely won’t pull U.S. dairy farmers out of the ditch, said Mark Stephenson, director of dairy policy and analysis at the University of Wisconsin.

“It does provide a bit more access to Canada,” he said. “But it’s pretty incremental change.”

PROTECTED MARKET

Canada has been an island of stability in an otherwise volatile global industry. In July, farmers in the Canadian province of Ontario received the equivalent of $24.20 per hundred pounds of milk, about 50 percent more than U.S. farmers collect, according to data published by Dairy Farmers of Ontario.

That’s because Canada manages oversupply by issuing production quotas to farmers based on domestic consumption, setting prices according to a formula that factors in farm costs and imposing high tariffs to keep most imports out.

In 35 years of farming, St. Claude, Manitoba farmer Philippot has lost money only “a handful” of times.

Since Holtmann and his brother took over the family dairy farm near Rosser, Manitoba in 1995, they have expanded nine-fold, to 600 cows, which required them to spend about C$14 million to purchase the right to produce more milk. The system allows farmers to buy and sell units of production quota – based on 1 kilogram of butterfat per day, or nearly the output of one cow – which currently fetch close to C$30,000 each at auction in Manitoba.

In a Statistics Canada profitability measure, dairy farmers’ operating expenses were 77 percent of gross farm receipts in 2015, the latest data available, the healthiest level of 11 farm sectors.

That statistic does not include debt, however. Canadian dairy farmers in 2015 held the second-highest liabilities on average among Canadian farm sectors as well as the third-highest net worth, according to Statistics Canada.

Farmers say concessions in recent trade deals will strain their profits and leverage.

Dairy Farmers of Canada (DFC) estimates that the market share ceded to the United States, as well as in trade deals with the European Union and Pacific nations, will add up to 18 percent by 2024, worth C$1.3 billion.

“Is it impossible to get over that? No. But it’s like losing a finger, and then another one,” said Philippot at his small 68-cow farm.

Canada also agreed in trade talks with the United States to dismantle a pricing system for the lower-value skim portion of milk that previously allowed Canadian skim to displace U.S. ingredients in the production of cheese and yogurt. Philippot says that move will reduce the prices farmers receive for milk.

Canada’s combined concessions could mean reductions to Canadian dairy farmers’ quotas, since production is matched to domestic consumption, less imports.

Domestic consumption growth, however, estimated at 2 percent annually by DFC for the next six years, offsets some of the lost share to imports and mitigates any reduced quotas.

LaPrise expressed admiration for Canada’s “really good milk system.”

“When a Canadian dairy farmer wants to retire he sells his quota and he can retire on that,” he said.

‘BACK IN THE HOLE’

U.S. dairy farmers have sought additional revenue with second jobs, harvesting grain and dabbling in genetics by selling cows, bulls and embryos.

Many farmers couldn’t get by without such side jobs, said Julie Brodeur of West Kingston, Rhode Island. Brodeur and her brothers, fourth-generation dairy farmers, quit the business in March after their 70-cow operation stopped generating enough income to keep the cows fed.

“You borrow some more and then you pay everything off,” Brodeur said. “And you think everything is going good. And then you’re back in the hole.”

(Reporting by Julie Ingwersen in Madison, Wisconsin and Rod Nickel in St. Claude, Manitoba; additional reporting by Humeyra Pamuk in Washington and Caroline Stauffer in Chicago; editing by Denny Thomas, Simon Webb and Brian Thevenot)

Published on Business Insider

3.4 Million American Jobs Wiped Out by U.S.-China Trade

Trade Deficit Growth Continues to Prevent Recovery, Feeds Widening Economic Inequality

Screen Shot 2018-10-26 at 4.33.41 PMThe ballooning trade deficit with China cost 3.4 million American jobs between 2001 and 2017, according to a new report recently released.

Massive job losses caused by trade with China since 2001 overwhelmingly have impacted the manufacturing sector, the Economic Policy Institute finds. The growing deficit almost entirely explains why manufacturing employment has not fully recovered along with the rest of the economy since the Great Recession.

“The growing trade deficit with China affects different regions in different ways,”write the authors of the report. “Some regions are devastated by layoffs and factory closings, while others are surviving but not growing the way they could be if new factories were opening and existing plants were hiring more workers. This slowdown in manufacturing job generation also is contributing to stagnating wages and incomes of typical workers and widening inequality.”

Alliance for American Manufacturing President Scott Paul said: 

“China’s cheating on trade has real consequences. As this report shows, millions of hard-working Americans have been sidelined by China’s unfair trade practices, and also by our government’s unwillingness to respond. Americans are expecting leaders, especially candidates from both parties in the upcoming midterm elections, to do something to finally address this massive job loss and work to stabilize our factory communities. Without assertive action, our out-of-control trade deficit will continue to rob Americans of job opportunities and make the American Dream a distant fantasy.”

U.S. Sen. Sherrod Brown (D-Ohio) said:

“Our manufacturing industry lifts families up with good wages, good benefits, and opportunities for career advancement. Our workers can compete with anyone—but they need a level playing field. That’s why trade enforcement against countries like China is critical to preventing more layoffs and preventing American jobs from being sent overseas. I’ll continue to work across the aisle to hold China accountable for its cheating that has shuttered factories across Ohio and around the country, so we can finally have a trade policy that puts American manufacturers and American workers first.”

U.S. Rep. Robert Aderholt (R-Ala.-04) said:

“China is and has been a bad actor when it comes to trade deficits. Simply put, their markets should be as open to our products as our markets are to theirs. It is past time that the United States stand strong against China’s unfair trade practices.”

The trade deficit-related job losses are affecting communities across the country and are felt in industries in which the United States long has demonstrated a competitive advantage. By eliminating the trade deficit with China, the United States could create millions of good-paying jobs in manufacturing and manufacturing-related fields.

The computer and electronic parts industry experienced the most dramatic growth in terms of the trade deficit, leading to the displacement or loss of more than 1.2 million jobs. The hardest-hit congressional districts are in Arizona, California, Illinois, Massachusetts, Minnesota, New York, Oregon and Texas.

The widening trade deficit even has slashed the wages of workers without college degrees in sectors outside of manufacturing. Workers directly impacted by the trade deficit have lost $37 billion per year in wages from 2001 to 2011. The wages of all non-college graduates dropped $180 billion per year because of the growing competition with imports from China and other low-wage countries. Companies have redistributed these lost wages to workers at the top of the income distribution, exasperating our nation’s inequality crisis.

The free market is not responsible for China’s large and growing trade surpluses with the United States and the world. Instead, China has crafted its growth through dishonest policies that subsidize and dump a vast number of exports, pirate software and technology from foreign companies, manipulate its currency and invest in excessive overproduction through state-owned enterprises.

Americans must pressure Congress and the White House to continue to respond swiftly and efficiently to the growing trade deficit in order to reverse the catastrophic impact it is having on the U.S. economy and U.S. workers. Washington must hold China accountable by enhancing the enforcement of fair trade laws and treaty obligations, in addition to implementing better systems to identify and respond to import surges.

The following are the reactions of members of Congress to the report’s findings:

U.S. Sen. Tammy Baldwin (D-Wis.):

“In 2000, I voted against letting China into the World Trade Organization. Since joining, China has refused to play by the international rules that all WTO members must agree to. As this report clearly shows, when China cheats, Wisconsin workers lose. It’s time to hold bad actors like China accountable when they use unfair trade actions that disadvantage American manufacturers and undermine the ability of American businesses to compete on a level playing field.”

U.S. Rep. Lou Barletta (R-Pa.-11):

“I have long been concerned with China’s unfair and predatory trade practices. These activities hurt the U.S. economy, and we must make certain that nations who engage in trade cheating are held accountable for their actions. As a driving force behind the 2016 ENFORCE Act, which took steps to prevent countries from circumventing trade laws, I am pleased that the Trump Administration is addressing the illicit practices of foreign bad actors like China, and I will continue to support efforts that level the playing field for affected domestic businesses and help protect the American worker.”

U.S. Rep. Rick Crawford (R-Ark.-01), Co-Chairman, Congressional Steel Caucus:

“For years, China’s illegal trade practices have undermined American businesses and the jobs those businesses support. On a level playing field American companies can compete with anyone else in the world. I continue to support actions that put American interests first.”

U.S. Rep. Debbie Dingell (D-Mich.-12):

“Our primary focus must be bringing jobs to the US and having trade policies that put the needs of working people and their communities first. Our workers can compete against anyone, but they need a level playing field. Five thousand jobs lost in Southeast Michigan is unacceptable and has a real human cost in our community. I’m fighting for the Michigan economy, manufacturing and keeping our state at the forefront of innovation.”

U.S. Rep. Marcy Kaptur (D-Ohio-09):

“The U.S.-China trade deficit has had a devastating economic impact on our economy and hard-working Americans. Since 2001, 6,600 jobs in my district have been lost to offshoring and to unfair Chinese trade practices. Workers across our region and in China’s sweatshops deserve better. Holding job exporters accountable and working with our allies to better target the culprits of global excess are first steps to balancing trade accounts.”

U.S. Rep. Dan Lipinski (D-Ill.-03):

“The numbers don’t lie. Despite some changes in policy, it is painstakingly clear that China continues to inflict damage on American manufacturers, their hard-working employees, and the middle class with their unfair trade practices. Stopping China and other countries from cheating American workers is a bipartisan issue that those on both sides of the aisle should be able to get behind.”

U.S. Sen. Jeff Merkley (D-Ore.):

“If we don’t make things in America, we won’t have a middle class in America. This important report shows that subpar labor and environmental standards are a form of subsidies that make manufacturing in China artificially cheap. If we want to stand up for American workers, we need to fight for a level playing field for American businesses and workers, and not let China undercut our wages and environmental protections.”

U.S. Rep. Rick Nolan (D-Minn.-08):

“Make no mistake, our Nation’s skyrocketing trade deficit with China has reached a tipping point – costing the American economy and workers billions in lost wages and millions of good paying jobs – triggering a devastating ripple effect in mining, manufacturing, transportation, building trades, and Main Street businesses across Northern Minnesota. We can no longer allow foreign subsidized poor-quality products to flood our markets and undermine American businesses. The fact is, American workers produce the best products in the world – and when given a level playing field, they win almost every time. But they can’t be expected to compete with one hand tied behind their backs because of massive trade deficits and unfair trade practices by trade cheater nations like China. This study serves as a warning sign of what’s to come if we fail to address this catastrophic issue. Congress and the White House must act now to stabilize the growing trade deficit with China once and for all, or risk further damage to our communities and our economy.”

U.S. Rep. Pete Visclosky (D-Ind.-01), Vice Chairman, Congressional Steel Caucus: 

“I applaud the initiative of the Alliance for American Manufacturing and the Economic Policy Institute for documenting in this report the devastating impact of China’s illegal trading practices on American workers and our industrial base. The American manufacturing industry is absolutely essential to the strength of our national economy and our national defense. We must continue to do all we can to fight back against the illegal trading practices of China and all other countries that cheat in order to defend the dignity of the American workforce.”

 

he Alliance for American Manufacturing (AAM) is a non-profit, non-partisan partnership formed in 2007 by some of America’s leading manufacturers and the United Steelworkers. Our mission is to strengthen American manufacturing and create new private-sector jobs through smart public policies. We believe that an innovative and growing manufacturing base is vital to America’s economic and national security, as well as to providing good jobs for future generations. AAM achieves its mission through research, public education, advocacy, strategic communications, and coalition building around the issues that matter most to America’s manufacturers and workers.

A Century of U.S. Intervention Created the Immigration Crisis

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Those seeking asylum today inherited a series of crises that drove them to the border

Screen Shot 2018-10-24 at 10.33.31 AM.pngA national spotlight shines on the border between the United States and Mexico, where heartbreaking images of Central American children being separated from their parents and held in cages demonstrate the consequences of the Trump administration’s “zero-tolerance policy” on unauthorized entry into the country, announced in May 2018. Under intense international scrutiny, Trump has now signed an executive order that will keep families detained at the border together, though it is unclear when the more than 2,300 children already separated from their guardians will be returned.

Trump has promised that keeping families together will not prevent his administration from maintaining “strong — very strong — borders,” making it abundantly clear that the crisis of mass detention and deportation at the border and throughout the U.S. is far from over. Meanwhile, Democratic rhetoric of inclusion, integration, and opportunity has failed to fundamentally question the logic of Republican calls for a strong border and the nation’s right to protect its sovereignty.

At the margins of the mainstream discursive stalemate over immigration lies over a century of historical U.S. intervention that politicians and pundits on both sides of the aisle seem determined to silence. Since Theodore Roosevelt in 1904 declared the U.S.’s right to exercise an “international police power” in Latin America, the U.S. has cut deep wounds throughout the region, leaving scars that will last for generations to come. This history of intervention is inextricable from the contemporary Central American crisis of internal and international displacement and migration.

The liberal rhetoric of inclusion and common humanity is insufficient: we must also acknowledge the role that a century of U.S.-backed military coups, corporate plundering, and neoliberal sapping of resources has played in the poverty, instability, and violence that now drives people from Guatemala, El Salvador, and Honduras toward Mexico and the United States. For decades, U.S. policies of military intervention and economic neoliberalism have undermined democracy and stability in the region, creating vacuums of power in which drug cartels and paramilitary alliances have risen. In the past fifteen years alone, CAFTA-DR — a free trade agreement between the U.S. and five Central American countries as well as the Dominican Republic — has restructured the region’s economy and guaranteed economic dependence on the United States through massive trade imbalances and the influx of American agricultural and industrial goods that weaken domestic industries. Yet there are few connections being drawn between the weakening of Central American rural agricultural economies at the hands of CAFTA and the rise in migration from the region in the years since. In general, the U.S. takes no responsibility for the conditions that drive Central American migrants to the border.

U.S. empire thrives on amnesia. The Trump administration cannot remember what it said last week, let alone the actions of presidential administrations long gone that sowed the seeds of today’s immigration crisis. There can be no common-sense immigration “debate” that conveniently ignores the history of U.S. intervention in Central America. Insisting on American values of inclusion and integration only bolsters the very myth of American exceptionalism, a narrative that has erased this nation’s imperial pursuits for over a century.

As the British immigrant rights refrain goes, “We are here because you were there.” The adage holds no less true here and now. It’s time to insist that accepting Central American refugees is not just a matter of morality or American benevolence. Indeed, it might be better described as a matter of reparations.

The following timeline compiles numerous sources to lay out an incomplete history of U.S. military and economic intervention in El Salvador, Honduras, and Guatemala over the past century.

El Salvador

1932: A peasant rebellion, led by Communist leader Farabundo Martí, challenges the authority of the government. 10,000 to 40,000 communist rebels, many indigenous, are systematically murdered by the regime of military leader Maximiliano Hernández Martínez, the nation’s acting president. The United States and Great Britain, having bankrolled the nation’s economy and owning the majority of its export-oriented coffee plantations and railways, send naval support to quell the rebellion.

1944: Martínez is ousted by a bloodless popular revolution led by students. Within months, his party is reinstalled by a reactionary coup led by his former chief of police, Osmín Aguirre y Salinas, whose regime is legitimized by immediate recognition from the United States.

1960: A military-civilian junta promises free elections. President Eisenhower withholds recognition, fearing a leftist turn. The promise of democracy is broken when a right-wing countercoup seizes power months later. Dr. Fabio Castillo, a former president of the national university, would tell Congress that this coup was openly facilitated by the United States and that the U.S. had opposed the holding of free elections.

1980–1992: A civil war rages between the military-led government and the leftist Farabundo Martí National Liberation Front (FMLN). The Reagan administration, under its Cold War containment policy, offers significant military assistance to the authoritarian government, essentially running the war by 1983. The U.S. military trains key components of the Salvadoran forces, including the Atlacatl Battalion, the “pride of the United States military team in San Salvador.” The Atlacatl Battalion would go on to commit a civilian massacre in the village of El Mozote in 1981, killing at least 733 and as many as 1,000 unarmed civilians, including women and children. An estimated 80,000 are killed during the war, with the U.N. estimating that 85 percent of civilian deaths were committed by the Salvadoran military and death squads.

1984: Despite the raging civil war funded by the Reagan administration, a mere three percent of Salvadoran and Guatemalan asylum cases in the U.S. are approved, as Reagan officials deny allegations of human rights violations in El Salvador and Guatemala and designate asylum seekers as “economic migrants.” A religious sanctuary movement in the United States defies the government by publicly sponsoring and sheltering asylum seekers. Meanwhile, the U.S. funnels $1.4 million to its favored political parties in El Salvador’s 1984 election.

1990: Congress passes legislation designating Salvadorans for Temporary Protected Status. In 2018, President Trump would end TPS status for the 200,000 Salvadorans living in the United States.

2006: El Salvador enters the Dominican RepublicCentral America Free Trade Agreement (CAFTA-DR), a neoliberal export-economy model that gives global multinationals increased influence over domestic trade and regulatory protections. Thousands of unionists, farmers, and informal economy workers protest the free trade deal’s implementation.

2014: The U.S. threatens to withhold almost $300 million worth of Millennium Challenge Corporation (MCC) development aid unless El Salvador ends any preferences for locally sourced corn and bean seeds under its Family Agriculture Plan.

2015: Under the tariff reduction model of CAFTA-DR, all U.S. industrial and commercial goods enter El Salvador duty free, creating impossible conditions for domestic industry to compete. As of 2016, the country had a negative trade balance of $4.18 billion.

Honduras

1911: American entrepreneur Samuel Zemurray partners with the deposed Honduran President Manuel Bonilla and U.S. General Lee Christmas to launch a coup against President Miguel Dávila. After seizing several northern Honduran ports, Bonilla wins the Honduran 1911 presidential election.

1912: Bonilla rewards his corporate U.S. backers with concessions that grant natural resources and tax incentives to American companies, including Vaccaro Bros. and Co. (now Dole Food Company) and United Fruit Company (now Chiquita Brands International). By 1914, U.S. banana interests would come to own one million acres of the nation’s best land — an ownership frequently insured through the deployment of U.S. military forces.

1975: The United Fruit Company ( rebranded as the United Brands Company) pays $1.25 million to a Honduran official, and is accused of bribing the government to support a reduction in banana export taxes.

1980s: In an attempt to curtail the influence of left-wing movements in Central America, the Reagan administration stations thousands of troops in Honduras to train Contra right-wing rebels in their guerrilla war against Nicaragua’s Sandinistas. U.S. military aid reaches $77.5 million in 1984. Meanwhile, trade liberalization policies open Honduras to the interests of global capital and disrupt traditional forms of agriculture.

2005: Honduras becomes the second country to enter CAFTA, the free trade agreement with the U.S., leading to protests from unions and local farmers who fear being outcompeted by large-scale American producers. Rapidly, Honduras goes from being a net agricultural exporter to a net importer, leading to loss of jobs for small-scale farmers and increased rural migration.

2009: Left-leaning and democratically elected President Manuel Zelaya, who pursued progressive policies such as raising the minimum wage and subsidizing public transportation, is exiled in a military coup. The coup is staged after Zelaya announces intentions to hold a referendum on the replacement of the 1982 constitution, which had been written during the end of the reign of U.S.-backed military dictator Policarpo Paz García. Honduran General Romeo Vásquez Velásquez, a graduate of the U.S. Army training program known as the School of the Americas (nicknamed “School of Assassins”), leads the coup. The United States, under Hillary Clinton’s Department of State, refuses to join international calls for the “immediate and unconditional return” of Zelaya.

2017: Honduras enters an electoral crisis as thousands of protesters contest the results of the recent presidential election, which many allege was rigged by the ruling party.

 

By Mark Tseng Putterman on Medium

View story at Medium.com

From diabetes to displacement: How NAFTA disrupted Mexican agriculture, food, and health

Alyshia Gálvez, author of Eating NAFTA, took us to La Morada in the Bronx—using the ingredients in a traditional Oaxacan meal to demonstrate how a free trade agreement forever changed Mexican people and cuisine.

eating-nafta-at-la-morada-with-alyshia-galvez-september-2018-3-1She didn’t set out to write a book about the North American Free Trade Agreement (NAFTA). She’s not your typical expert on the economics of trade deals. At heart, she’s a scholar of people and place.

A cultural and medical anthropologist and professor of Latin American studies at the City University of New York’s Lehman College, Gálvez is the author of two books about Mexican immigrants. One is an ethnographic examination of the “Latina health paradox”—the phenomenon that Latina women experience less complicated pregnancies and more favorable birth outcomes than many other groups, in spite of socioeconomic disadvantage. The other is about Catholicism as practiced by undocumented Mexicans in New York.

But she knew she also wanted to write about Mexico’s obesity epidemic, its rise in diabetes rates, and the way cultural and agricultural shifts have impacted what and how Mexicans eat—in turn affecting their health. To her surprise, every path Gálvez followed in her research led in some way to the influence of NAFTA, the now nearly 25-year-old pact signed by the United States, Canada, and Mexico to eliminate barriers to trade and investment.

We met Gálvez for lunch on an unusually warm Wednesday afternoon in late September, just ahead of the release of her new book, Eating NAFTA: Trade, Food Policies, and the Destruction of Mexico (University of California Press). In lieu of a traditional author Q&A, we asked Gálvez to suggest a restaurant in New York that she felt reflected the impact of NAFTA in some way. The idea was to use a shared meal to highlight the effects of trade policy on our plates, discussing how the ingredients in a mole, or a tortilla, could help to tell NAFTA’s story.

Gálvez’s choice? La Morada, a Oaxacan restaurant in the South Bronx, owned and operated by a family of mostly undocumented immigrants, a fact that they are outspoken and unapologetic about. It’s run by 48-year-old Oaxacan native Natalia Mendez and her 28-year-old son, Marco. La Morada is, in some ways, “the anti-NAFTA,” said Gálvez, because “the kind of food that she’s cooking is the kind of food that’s threatened by NAFTA.”

La Morada was neither totally empty or totally full on the Wednesday afternoon we went. It serves the community—comprised of mostly Hispanic workers, students, fellow South Bronx residents—complex, delicious food in an informal setting. On its tinted glass front door, facing the street, “Oaxaca Resiste” was painted in red and white letters. Inside, a cloth banner adorned the entrance read, “NO DEPORTACIONES. NO DEPORTATIONS.”

We asked Gálvez to order an assortment of dishes that would help us connect the dots between NAFTA and its impact on specific foods that Americans are familiar with—avocados and corn, for instance. To start, Marco suggested we try all six of the moles that La Morada serves. That included poblano—a rich, glossy brown and mild sauce made with chocolate and dry peppers familiar to American palates—as well as green, black, white, and red versions with varying degrees of heat and depth.

At La Morada, Mendez mixes ingredients for her moles by hand. We watched on as she prepared her mole verde. In a metal bowl, she combined cumin, scallions, green peppers, pepitas, also known as pumpkin seeds, before puréeing the miscellany in a blender. The resulting sauce was fragrant, bright, and nutty.

“A mole might have 10 kinds of chiles [and] a whole bunch of spices,” Gálvez told us.

While some of those chiles and spices can be bought at grocery stores across New York City, many lesser-known ingredients can’t be secured through normal distribution channels. At the same time, commonly found items often lack the diversity and exceptional flavor of heirloom varieties. This poses problems for chefs like Mendez, who often have to settle for less-than-ideal substitutions of preferred ingredients. She laments the quality of chile peppers available to her in New York. On the day we visited, Mendez had resorted to using pepitas purchased locally, rather than ones she favors from Mexico, which are larger and meatier, and have better flavor.

In the U.S., chefs like Natalia often turn to informal distribution methods to secure ingredients, including the use of paqueteros, which Gálvez describes as a “bustling microindustry of small-scale package shippers.” Paqueteros routinely travel between places where immigrants have settled in America and their Mexican hometowns, bridging gaps in geography with foods that evoke memories of home, such as of a grandmother’s bread or a bag of locally-grown chiles.

But while NAFTA has provided Americans with nearly unlimited access to ingredients like avocados grown south of the border, the rise in accessibility coincides with a growing scarcity of the very same foods for people in Mexico.

“While moving something from one geographic or cultural space to another is a feasible business strategy, to raise the price on a product like a tortilla to many times its customary monetary value requires it to have become scarce in those original spaces,” Gálvez says. We don’t talk enough about who loses out when a culture is appropriated. In Eating NAFTA, she cites the $750-per-seat “pop-up” restaurant in Tulum, Mexico served by Danish chef René Redzepi.

At its core, Eating NAFTA seeks to understand the political and social changes that severed ties between Mexican people and the food they cooked and consumed for generations.

One of the book’s key findings is that Mexican people have effectively been priced out of eating their ancestral foods.

As our meal continued, she began to explain connections between NAFTA and the decline in traditional Mexican cuisines; the industrialized and processed foods that flooded in to replace them; and the resulting effects on the health of the Mexican population at large.

The first dish to arrive at our table was a basket of warm corn tortillas. They were slightly sweet and springy, and we rolled them up and dipped them into the array of moles. They were also a fitting introduction to our meal: Corn, the key ingredient, is one of the most influential and controversial characters in the story of NAFTA.

In 1994, when NAFTA went into effect, it devastated small-scale and heirloom corn farming operations in Mexico by opening the floodgates to a torrent of commodity corn from American producers. In NAFTA negotiations, Mexico was strong-armed into giving up subsidies to its corn farmers, while American farmers continued to receive them. The surge of corn into the Mexican market caused prices to plummet and displaced millions of farmworkers from the agrarian economy.

Eating NAFTA points out that Mexican avocado farmers endured a similar fate: American avocado producers “ensured that the trade agreement included new limitations on imports so that they could continue to dominate the US market.” As it did with corn, NAFTA ultimately left Mexican producers in a position where they were unable to compete with American ones, prompting their emigration to places like New York City.

Today, those import limitations have been phased out and an avocado craze has taken over stateside. The buttery fruit is a staple on everything, from toast at coffee shops to the tlayudas at La Morada. Mendez makes hers by topping a large tortilla with beans, cheese roasted vegetables, and slices of fresh avocado. Gálvez tells her children that it’s “Mexican pizza.”

Gálvez pointed out that the small-scale farmers pushed out of business at the dawn of NAFTA aren’t reaping the profits of today’s avocado boom. Instead, they—like their corn farming counterparts—remain displaced.

“Even as Mexico urbanized and industrialized, it expelled millions, leading to 10 percent of the Mexican population living in the United States by 2006,” Gálvez writes in Eating NAFTA

As we enjoyed Mendez’s tortillas, Gálvez reminded us that La Morada’s very existence can be viewed as a testament to that displacement.

“In some ways, [La Morada] is a product of NAFTA because it’s factors like NAFTA that lead to migration of people like Natalia and her family, who found themselves unable to remain in their community of origin as much as they would’ve liked to.”

She pointed out a key irony of this: While ingredients were allowed to travel freely under NAFTA’s terms, human beings were not, and still aren’t.

“While it was widely understood that the relationship between the United States and Mexico needed to include terms governing the flow of goods, capital, and people, the United States refused to allow migration to be on the table,” Gálvez writes. “To remove one leg of what had been envisioned as a three-legged stool made the entire deal wobbly from the start. The Mexican government anticipated that a half million campesinos would be displaced before a place could be found for them in the new economy, a process some called ‘de-peasantization.’”

In other words, policymakers in both Mexico and America knew that NAFTA would destabilize millions of farmers and farmworkers. But they grossly underestimated just how many would be affected, and failed to implement measures to proactively protect them from the predicted economic fallout.

America’s desire to have unfettered access to Mexican produce and capital, while refusing to open its borders to Mexican people, is not just unsustainable. Gálvez makes the case that it’s amoral as well. But the nationalistic sentiments that shaped NAFTA are still being stoked by the politicians currently revising the trade agreement. How can we learn from our mistakes if we don’t acknowledge them in the first place?

“[We’re united] by a system that simultaneously wreaks havoc on people, displaces people, keeps people divided from their family members, families like this one who can’t go back and forth, who are constantly at risk of detention and deportation,” she said, motioning to Mendez and her son, Marco. “I think we need to ask ourselves why is it that we don’t want a freely circulating North America. Why are we so afraid of our neighbors that we think we can take their goods—have capital flows but not the flow of people? That basic unwillingness to actually open the doors of the continent in itself produces these imbalances.”

One of the most memorable dishes at La Morada was the molcajete, a dish filled with a variety of different meats, including chorizo, chicken, and pork cutlets, as well as cheese grilled to the texture of a steak and strips of cactus. It’s named for the black, animal-shaped stone bowl that it’s served in.

Meat, however, wasn’t always a staple of the Mexican diet, a point underscored in Eating NAFTA.

In its introduction, Gálvez introduced readers to Aura, a native of Puebla, Mexico who immigrated to New York City in 1999. Back home, Aura was used to eating a milpa-based diet, which is centered around corn, beans, and squash, and features meat or poultry only occasionally. In the U.S., her protein intake rose, after she found that it was often cheaper than milpa vegetables at her grocery store.

Later in the book, Gálvez also notes that a surplus in industrialized corn production helped “jumpstart” the meat industry, which relies heavily on the crop for livestock feed. That boost, combined with globalization, helped push demand for meat onto plates in communities where previously there was little or none, Gálvez writes, with negative health outcomes as a result.

Upon moving back to Mexico, Aura was diagnosed with type 2 diabetes.

It would be specious to say that high meat intake alone leads to type 2 diabetes (though links have been established). However, its adoption into people’s diets serves as an effective litmus test for the extent to which the Standard American Diet—characterized by its high intake of meat, dairy, grains, and sugar—has been popularized globally.

For all NAFTA has done to bring ingredients into the U.S., Gálvez told us, its greatest boon to big American food companies has been the removal of barriers of entry into new markets. As American eaters attempted to wean themselves off of sugary drinks, for example, companies like Coca-Cola, with the help of free trade agreements, have redirected their marketing dollars to countries like Mexico.

“Declining consumption in industrialized countries doesn’t matter to shareholders when there is a whole world of new consumers to be targeted,” Gálvez writes. “Mexicans’ increased consumption has propped up economic agreements like NAFTA and produced a vibrant regional economy, but it is impacting their health.”

Eating NAFTA provides a snapshot of what exactly those impacts are. “Data from 1990, before NAFTA, and 2013, nearly twenty years after it took effect, reveal the consequences: chronic kidney disease increased 276 percent, diabetes 41 percent, and ischemic heart disease 52 percent.”

But NAFTA didn’t just accelerate the export of unhealthy foods, Gálvez stresses. It also changed the way the government saw its responsibility towards public health.

“Since NAFTA, the government of Mexico has framed citizens as consumers, free and capable of purchasing the goods of health and well-being in the marketplace.”

To demonstrate this, Gálvez introduces readers to two terms: “food sovereignty” and “food security.” The former refers to a region’s ability to feed itself. The latter, to a region’s ability to afford to feed itself, often with food produced or processed elsewhere.

“One of the key bargains implied by the deal was for Mexico to shift from a model of food sovereignty based on small-scale subsistence agriculture to one of food security,” Gálvez writes. This may sound innocuous at first. But NAFTA helped to make Mexican citizens reliant on the global marketplace for sustenance, rather than traditional, self-reliant methods of food production rooted in their culture.

This shift also allowed Mexico’s government to deflect blame for the country’s growing public health problems onto individual eaters—who are seen as decision-makers responsible for their spending in a free market, as opposed to victims of a major upheaval in the way food is grown and sold.

“Rather than take responsibility for the structural changes to the nation’s economy and food system since NAFTA, the government of Mexico has framed citizens as consumers, free and capable of purchasing the goods of health and well-being in the marketplace,” Gálvez writes. “If diet-related illness has risen in the aftermath of NAFTA, it is, the logic holds, because Mexicans need to be educated to be better consumers, not because their political leaders have transformed the context in which they make their lives.”

At its core, Eating NAFTA is a reminder that people in Mexico and the United States are linked by what we eat. But the benefit of being joined by food across nations has not been distributed equally. Throughout the book, Gálvez stresses the extent to which the free trade agreement has functioned as a tool to enrich multinational food corporations at the expense of eaters on both sides of the border.

NAFTA’s health impacts include a rise in caloric intake in Canada, but its effects have been especially significant in Mexico. Even in renegotiations today, big food companies are lobbying to ban health warning labels through the force of the free trade agreement. Gálvez also makes the case that NAFTA has weakened the power we have over our own day-to-day eating. Free trade might sound like it increases our gustatory freedom. In reality, we are likely left with less.

“There’s this illusion of choice in terms of product diversity, [in having] aisle after aisle of yogurts or snacks,” she said, as we wrapped up our meal at La Morada. “But it’s about what we aren’t getting. There’s less variety. It’s more homogeneous, we’re eating more like each other around the world. It’s choice as defined in a really corporate, market-centric way. It helps us think that we’re not being impoverished by this but we are.”

The less we question the food options available to us, the more uniform our diets become. And that makes it easier for big food corporations to scale up their operations, at the expense of our biodiversity. If we continue on the track we’ve laid through NAFTA, according to Gálvez, then we’re headed for “possibly apocalyptic scenarios.”

“The reduction of this incredible wealth and diversity of plants and animals to two species of corn that are grown on 90 percent of the [corn fields]—what happens when Roundup stops working?” she asked, referring to the fact that most of the corn grown in America is genetically modified, inedible for humans, and dependent on privately-owned chemical inputs. “Or when there’s a blight specifically micro-adapted to that species of corn?”

Throughout the writing of Eating NAFTA, Gálvez struggled to find solutions to the problems she presents in her book. It’s one thing to explore the issues that cropped up after the trade agreement was enacted. The challenge is that, now that NAFTA is here, ending it isn’t really an option.

“I find myself being somebody who wrote a book critiquing NAFTA and at the same time, I’m saying, ‘Please don’t get rid of NAFTA. Don’t be reckless and don’t think you can with the stroke of a pen get rid of that,’” she said. “Because that could cause another huge wave of instability and pain for people who are always going to get the short end of the stick.”

“If our goal is to diminish hunger, we have a weird way of going about it.”

But through the process of writing the book, Gálvez ultimately came to a better understanding of what is needed.

“The more I [watched] these closed-door negotiations, that to me became the most morally reprehensible aspect. Who’s at the table? Whose voices are influencing this? Who’s being completely left out of the conversation?”she said. “And the answer is: all of us. We have this revolving door between industry and government agencies that are regulating industry and then the trade negotiators.”

Ordinary people, Gálvez insisted, need a seat at that table. Not just sustenance and large-scale farmers, but health advocates, nutritionists, and cultural anthropologists.

It’s not hard to imagine why most people may feel a distance between NAFTA and their daily lives. But at the end of the day, Eating NAFTA makes the case that the trade agreement has profoundly personal consequences. Despite what President Donald Trump may say, America is not the only loser under NAFTA—and neither is Mexico. Instead it’s eaters in both countries who lose out on diverse and affordable food.

“If our goal is to diminish hunger, we have a really weird way of going about it,” Galvez said.

Kate Cox is The New Food Economy’s editor. In her former life, she was a freelance health policy reporter for radio and text. @thekatecox . Reach her by email at: kate.cox@newfoodeconomy.org.

Jessica Fu is a news producer and reporter for The New Food Economy. Reach her by email at: jessica.fu@newfoodeconomy.org

 

 

Jane Kelsey: Nafta II is a game changer we need to confront

Donald Trump described the North American Free Trade Agreement as the worst agreement ever – even worse than the Trans-Pacific Partnership agreement – and vowed to rewrite it to put America first or rip it up. That promise resonated with swing state voters.

GameChangerLogo

American workers, small businesses, First Nations and the environment have suffered under Nafta. American corporations have been the big winners, as they would have been from the TPP.

Armed with threats, insults and sanctions, Trump has succeeded in replacing the 25-year old Nafta with the unimaginatively but honestly named US Mexico Canada Agreement (USMCA). We don’t know if this will be a new US template and supplant the World Trade Organisation that is also under attack from the Trump administration.

Some have dismissed the new deal as crude protectionism or a cynical rebranding so Trump appears to deliver his election promise. Both criticisms miss the bigger picture. Three salient points need noting.

First, Trump’s unilateralism is driven by a visceral aversion to China and its threat to US hegemony. That’s not new. Most Democrats share that view. Obama sold the TPP (unsuccessfully) as the US writing the 21st century rules, not China. Trump has gone further. The new pact says any party that negotiates a free trade agreement with a non-market country – meaning China – must disclose that fact, along with draft texts, and the other parties can kick it out of the USMCA.

If the US repeats this provision in its new and revised agreements, countries will be forced to choose China or the US. Prospects of a new cold war through free trade agreements are now very real and pose a huge challenge for Australia, New Zealand and many others.

Second, the Democratic Party is like a possum in the headlights. Its instinct is to oppose whatever Trump does. But that’s not enough. Trump is poaching the party’s voter base.

On automobiles, the new deal requires more content produced in the three countries and a minimum wage of US$16 an hour for 40 per cent of that content – Mexican auto workers generally earn less than US$2 an hour. The deeply unpopular right of investors to sue states will end between US and Canada after three years, and is severely wound back with Mexico, except for the powerful energy and utilities sector. The US even agreed to an exception on indigenous rights that goes beyond the Treaty of Waitangi exception in the TPP that the NZ Government insists cannot be improved.

Third, the big corporate gains from the original TPP text have been imported and strengthened by restoring the original US proposals. That includes even longer monopoly rights on new generation super-expensive biologic medicines, and an electronic commerce chapter basically written by and for Google, Amazon, Facebook and Big Tech to cement their oligopoly.

We need to think smarter and recognise that Nafta-II is a massive game changer. In the US recently, Prime Minister Jacinda Ardern seemed to suggest there are only two choices – the unilateral power plays of a populist and protectionist autocrat or the “multilateral rules-based system” established over 30 years of neoliberalism.

As with the US Democrats, we in Aotearoa need to confront these challenges and build the momentum and political will to advance an alternative paradigm of international economic relations.

Originally posted in the NZ Herald
Jane Kelsey is a professor of law at the University of Auckland.