Monthly Archives: November 2018

NAFTA 2 Signed at G-20 Summit Today

Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto signed the new U.S. Mexico Canada Agreement — or USMCA — in Buenos Aires today

rts288si_wide-852fbd696f10b39b65eb9ba866180d325d830f0b-s1600-c85“Let’s go,” all three leaders said as they sat alongside each other to sign multiple copies of the deal.

They then shuffled binders around in front of them, to finalize the deal that remakes one of the world’s largest free trade zones. When the signing was over, they paused for a photo-op. “Might as well hold that up,” Trump said, displaying the fresh signatures as the three leaders sat together.

Despite that and other prodding, Trudeau opted not to follow his peers in holding up his binder to celebrate — a sign, perhaps, of the lingering effects of the contentious process that was triggered when Trump imposed tariffs on Mexico and Canada earlier this year, which remain in place.

The signing event and the leaders’ remarks were livestreamed. You can watch the event here.

In the lead-up to the signing, Canadian officials had “made it clear they didn’t want to celebrate the end of a year of U.S. attempts to twist Canada’s arm with the tariffs still in place,” the CBC reports. But that wish ran counter to the desires of Trump and Peña Nieto, both of whom have preferred to portray the deal as a victory that helps to cement their legacies.

“This has been a battle, and battles sometimes make great friendships,” Trump said at the start of the signing ceremony.

Saying all three countries will benefit from the deal, Trump said of the USMCA, “It is probably the largest trade deal ever made.”

The USMCA (read the whole text here) replaces the North American Free Trade Agreement, which had created a free trade zone between the three countries back in 1994. The deal will require ratification by all three countries’ legislatures before taking effect.

“The biggest change this deal makes, really, is to the automotive sector,” NPR’s Scott Horsley reports, “where it does put higher requirements on North American content, and in particular high-wage content, for vehicles to trade duty-free.”

The USMCA deal emerged in early October, months after President Trump hit Mexico and Canada with tariffs on their steel and aluminum products. That move set off retaliatory tariffs and intense negotiations to create a new trade pact.

Calling the deal “the new North American Free Trade Agreement, Trudeau said it “lifts the risk of serious economic uncertainty that lingers throughout a trade renegotiation process — uncertainty that would have only gotten worse and more damaging if we had not reached a new NAFTA.”

There is more work to be done, Trudeau said, calling the recent announcement that General Motors will close plants in Canada and the U.S. “a heavy blow.”

Turning to address Trump, said “And Donald, it’s all the more reason why we need to keep working to remove the tariffs on steel and aluminum between our countries.”

“General Motors has said that those steel and aluminum tariffs robbed it of a billion dollars in profits in the last year,” Scott Horsley reports. In June, GM also warned the Trump administration that new tariffs could result in “a smaller GM.”

When it was his turn to speak, Peña Nieto said the trade agreement includes provisions for e-commerce and informational technology — subjects that he said made it necessary to update NAFTA.

“In fact, one-third of the agreement includes topics that were not included in the first agreement,” he said.

Peña Nieto also said the USMCA “is the first trade agreement that incorporates elements that address the social impact of international trade; it enables the participation of more sectors in the economy.”

Among those provisions, he said, are protections for workers’ rights and the environment, and elements that seek to extend the benefits of free trade more broadly.

The signing took place on Peña Nieto’s final day in office; Mexico’s newly elected president, Andrés Manuel López Obrador, will be sworn in on Saturday.

Shortly before the signing ceremony, Peña Nieto awarded presidential senior adviser and Trump son-in-law Jared Kushner with the Order of the Aztec Eagle, the highest honor Mexico gives to foreigners.

The move “shocked many in Mexico,” as NPR’s Carrie Kahn reported earlier this week, referring to the outrage and anger that has poured out online.

Later in the G-20 meetings, Trump will turn to another high-profile trade crisis, when he has dinner on Saturday with Chinese President Xi Jinping.

 

From NPR

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How to fight a trade war: Turn the other cheek

If the current trade tensions between the United States and its major trade partners, especially China, escalate into a full-blown trade war, what should developing countries do?

Alternative strategies for developing countries: Impact on GDPIn a recent paper, my co-authors and I try to answer this question by using a global, general-equilibrium model to first simulate a major increase in U.S. tariffs (up to Smoot-Hawley levels of the 1930s) and a retaliation in kind by China, the EU, Canada, Mexico, and Japan. We then explore four possible options for developing countries (except China and Mexico):

  1. Join the trade war
  2. Do nothing
  3. Sign regional trade agreements (RTAs) with all countries outside the U.S
  4. “Turn the other cheek”—option 3 plus eliminate all tariffs on imports from the U.S.

Before discussing the results, some comments on the modeling choices are in order. First, the simulated, high (nearly 30 percent) tariffs by the U.S. are consistent with the tariffs imposed since the beginning of this year on aluminum, steel, and other imports from China. These tariffs rates are, in turn, similar to the “Column 2 tariffs” currently applied to Cuba and North Korea. We assume the U.S. imposes Column 2 tariffs on all countries. The retaliation by the major trading partners is, however, restricted to imports from the U.S. This creates opportunities for developing countries to export products that were previously imported from the U.S. Second, the option of developing countries’ signing regional trade agreements with non-U.S. states stems from the fact that there has been a proliferation of such agreements since 2017, including among G-20 countries, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the African Continental Free Trade Area (CFTA).

Finally, the multi-country, multi-sector general-equilibrium model captures only the static gains and losses from the trade war and developing country responses. It does not take into account the effects of a trade war on investment (through increased uncertainty) and hence on long-term growth. Also, since most developing countries are small, open economies, we assume that there is no retaliation from their actions.

In terms of the results for the four options for developing countries, the worst is to join the trade war. The higher tariffs will make it harder for these countries to export and recoup the terms of trade losses from the trade war. Relative to the “no-war” scenario, developing countries will suffer a GDP loss of 0.2 percent and export loss of 0.3 percent by joining the trade war (see Figure 1). These costs are double what they would face by doing nothing. By contrast, if they sign regional trading arrangements with all countries outside the U.S., developing countries could reap significant benefits and mitigate the costs of the trade war: GDP could rise by 0.4 percent and exports by 1.7 percent relative to the no-war situation. If they were to in addition unilaterally eliminate tariffs on imports from the U.S., i.e., turn the other cheek, these gains would be even higher, especially for Latin American and Caribbean countries that are closely linked to U.S. markets. The latter two options enable developing countries to take advantage of the market opportunities created by the reduction of exports from the U.S. to its major trading partners.

While these results emerge from one model, they represent a direction for policy that is likely to be robust, at least qualitatively, to further refinements and other modeling frameworks. The point is that trade wars between large countries create openings for non-warring countries to increase exports to the combatants. The best policy response is to take advantage of those opportunities.

Needless to say, “turning the other cheek” may not always be politically acceptable. In fact, there may be strong political pressure to retaliate and raise tariffs against the United States, say. The paper shows that yielding to such pressure has costs, both directly and in terms of forgone opportunities to reap the benefits from a cooperative strategy.

 

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NAFTA 2.0 Text and What Comes Next

NAFTA 2.0 must not go to Congress unless further improvements are made to stop job outsourcing, raise wages, protect the environment and remove special protections for Big Pharma to raise medicine prices.

Screen Shot 2018-11-29 at 8.55.16 AMOur job is to make those changes happen: the first step is to watch this webinar and get up to speed.

The webinar features Celeste Drake, the AFL-CIO’s top trade expert. Celeste will help us understand the most important unfinished business: the absence of swift and certain enforcement of improved labor terms in the NAFTA 2.0 text. Celeste is interviewed by Public Citizen’s Global Trade Watch Director Lori Wallach. They discussed how the NAFTA 2.0 text fits into the overall fight to ReplaceNAFTA. (Spoiler alert: the NAFTA 2.0 text marks the middle, not the end of the fight!)

Patient Groups, Retirees, American Workers, Doctors, Manufacturers, Join to Voice Concern Over Proposed Trade Deal

The Association for Accessible Medicines (AAM), together with 28 groups representing patients, taxpayers, workers and health care groups, submitted letters.

Closeup Money rolled up with pills falling out, high cost, expensive healthcare

They were sent to U.S. Trade Representative Robert E. Lighthizer, Health and Human Services Secretary Alex M. Azar and congressional leadership expressing concern that the U.S. Mexico-Canada Agreement (USMCA), if left in its current form, will keep drug prices high and out of reach of Americans. The letter states that the draft agreement contains provisions that are inconsistent with U.S. law and includes monopoly protections and deterrents to competition that will slow the development of more affordable biosimilar medicines, hurt generic drug competition and disrupt the critical balance between access and medical innovation in the health care market.

Co-signers include AFL-CIO, AARP, Kaiser Permanente, American College of Physicians, American Federation of Teachers, FreedomWorks, Patients for Affordable Drugs and SEIU.

“Affordable, high-quality health care, including affordable prescription drugs, are a top priority for America’s working families,” says AFL-CIO President Richard L. Trumka. “The rules proposed in the new NAFTA (USMCA) would keep drug prices high by tying our hands and blocking reform. Workers looking for relief from outsourcing must not be asked to trade-off their families’ health in exchange for new trade rules. Working people need trade rules that protect their wages, their rights on the job, and their access to affordable medicines.”

“We are disheartened to see that the USMCA reduces competition in the pharmaceutical industry,” says FreedomWorks Vice President of Legislative Affairs Jason Pye. “Trade agreements should open up commerce across the globe to allow better, more efficient goods and services to reach consumers everywhere. This agreement instead preserves brand pharmaceutical monopolies and insulates them from competition for years to come. This is neither in the spirit of free trade nor the free market. We hope the administration will address these deficiencies.”

“We look forward to working with the Administration and Congress to foster a free, fair and balanced trade agreement with Mexico and Canada that ensures an adequate balance between access to affordable medicines and support for pharmaceutical innovation,” says AAM President and CEO Chip Davis.

The letter is available at MedsForAmerica.org at http://bit.ly/USTR-USMCA-letter. The MedsforAmerica.org website provides patients with an opportunity to contact their members of Congress to encourage more prescription drug competition in USMCA to bring down high prices.

From Accessible Meds website.

AFL-CIO has ‘serious doubts’ that labor rules in USMCA will be effective 

Labor provisions in the U.S.-Mexico-Canada Agreement, while an improvement over the original NAFTA, are unlikely to make a “meaningful difference” for North American workers, the AFL-CIO said last week.

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The labor group, in pre-hearing comments submitted to the U.S. International Trade Commission, said the new deal’s lack of “labor-specific monitoring or enforcement provisions (such as an independent secretariat or certification requirements)” were of concern to the largest federation of unions in the U.S. The AFL-CIO reiterated that it had yet to take a final position on USMCA and added that it would welcome some changes.

“While there are positive provisions in the renegotiated NAFTA, including improved labor and investment terms, both the labor rules and enforcement tools should be improved,” the AFL-CIO said in Oct. 30 comments. “There are also provisions in the agreement that undermine the interests of workers and consumers, as a result of provisions including pharmaceutical monopolies, financial services, and regulatory practices.”

Most importantly for the AFL-CIO, the deal lacks rules that would “create greater confidence” the labor chapter would be “swiftly of certainly enforced,” the comments state. Accordingly, it has “serious doubts that the improved rules will make a meaningful difference to North American working families without additional provisions, assured funding, and implementing language.”

The International Brotherhood of Teamsters, meanwhile, was much more sanguine about the new deal.“We conclude that the new NAFTA is a better deal for American workers and our members than the original NAFTA,” the group wrote in Oct. 30 comments.

“However, we must withhold our support until the Commission has published its analysis pursuant to Fast Track and until the administration presents the 116th Congress with implementing legislation that fulfills the promise of the progress made at the negotiating table on our priority issues, especially the protection of workers’ rights under the Labor Chapter,” the Teamsters added.

The Teamsters lauded USMCA language aimed at reforming Mexican labor laws “to ensure workers’ rights to secret ballots in union elections, which will strengthen collective bargaining which, in turn, will create necessary (but not sufficient) conditions for higher wages.” The group also said the increased regional value content and labor value content requirements for autos “will benefit North American workers in vehicle production by putting upward pressure on wage rates.”

The AFL-CIO urged the ITC to “demonstrate that improvement in rules regarding workers’ rights alone will have no impact without effective enforcement; to scrutinize the auto rule of origin to provide a reliable analysis of its potential impacts; and to examine the negative effects of locking excessive pharmaceutical monopolies into NAFTA.”

The group also took aim at provisions included the labor annex and urged the ITC to be skeptical that the language could “effectively promote changes” to Mexico’s laws and practices.

The annex says Mexico must adopt legislation “in accordance with Mexico’s Constitution” by Jan. 1, 2019. That legislation, among other items, would establish “(i) an independent entity for conciliation and union collective bargaining agreement registration and (ii) independent Labor Courts for the adjudication of labor disputes.”

But the AFL-CIO said the U.S. should look at the history of Mexican policies “that purposely undermine wages and obstruct the rights of workers to organize and bargain collectively.”

“The USITC should not assume that the mere presence of such obligations will effectively promote changes to law and practice,” the submission states. “Although the incoming Mexican president has signaled strong support for labor reform, Mexico has not yet enacted the legal changes required, much less put them into practice.

Accordingly, the group recommends “withholding trade benefits for Mexican firms until such time as these obligations have been fulfilled.”

The labor union also addressed language crafted to fix what led to the first and only U.S. loss in a labor dispute settlement case filed under a free trade agreement.

The May 10 Agreement — struck between congressional Democrats and the Bush administration in 2007 — has been used as a foundation for labor chapters in free trade agreements. It says FTA parties must show that a labor violation occurred because of a “sustained or recurring course of action or inaction” and in a “manner affecting trade or investment between the parties.” The USMCA includes footnotes clarifying the definitions of those pillars, as Inside U.S. Trade reported in April.

But the AFL-CIO says the text “retains objectionable limitations” outlining the ways in which a violation must occur under an FTA, though it believes the clarifying footnotes are a step in the right direction.

“While the text retains the objectionable limitations that labor violations under the agreement must be in a ‘manner affecting trade or investment’ (which likely excludes much of the public sector) and occur in a ‘sustained or recurring course of action or inaction’ (which excludes egregious but one-time acts such as murder or torture), the footnotes clarifying these standards are welcome improvements,” the submission states.

The AFL-CIO also lamented “strict” language in the USMCA’s Good Regulatory Practices Chapter, which the group claims “locks in current executive orders regarding how the United States creates regulations in general — preventing this and future Congresses from improving our processes for creating and modifying regulations unless those changes conform to the strict rules promulgated in the Good Regulatory Practices Chapter.”

The USMCA is the first trade agreement to ever include an entire chapter on good regulatory practices, but the AFL-CIO said some of its regulatory language is “short sighted.”

“The idea of locking in not only current rules, but current methods of creating new rules, is not only short sighted, it interferes with the right of citizens to use the levers of democracy to make different choices,” the group wrote. “Imagine if the U.S. government of 1878, 150 years ago, had attempted to lock in through an international agreement not only certain regulations, but the processes to create those regulations. Such a scheme would have interfered with the passage of fundamental laws such as the 1906 Food and Drugs Act and the 1938 Federal Food, Drug, and Cosmetic Act.”

The chapter includes review mechanisms including “mechanisms to conduct retrospective reviews of its regulations in order to determine whether modification or repeal is appropriate,” according to USMCA.

The labor union also says intellectual property provisions — such as Articles 20.F.13 and 20.F.14 — could “undermine access to affordable medicines” and are “poised” to extend “economically inefficient monopolies and price-gouging.”

Those provisions, the AFL-CIO continued, “require countries to establish periods of test or other data exclusivity for chemical and biologic drugs that could lead to delays in the introduction of generic competition.” The expansion of IP exclusivity for biologics to 10 years “would primarily benefit those who seek to delay domestic market access to lower cost prescription alternatives and would prevent the United States from changing its domestic exclusivity period to less than 10 years.”

Public comments and hearings beginning on Nov. 15 will be used to inform an ITC study on the economic impact of the USMCA, which is due within 105 days of the president’s signing of the deal.

Isabelle Hoagland (ihoagland@iwpnews.com)

“New NAFTA”: New red tape for regulators?

Understanding the regulatory practices and cooperation provisions of “New NAFTA” and what they could mean for food safety, worker and environmental protections in the United States and Canada.

Screen Shot 2018-11-20 at 4.51.02 PMWatch the recording of the “New NAFTA”: New red tape for regulators? webinar with Sharon Treat of the Institute for Agriculture and Trade Policy (IATP) and Stuart Trew of the Canadian Centre for Policy Alternative.

Several chapters in the USMCA (United States-Mexico-Canada Agreement), or “New NAFTA,” create new hurdles for governments and regulators trying to protect people, animals and the environment from harmful food products and practices, while creating additional opportunities for lobbyists to shape regulations at the outset. In this IATP webinar, Sharon Treat, Senior Attorney at the Institute for Agriculture and Trade Policy, and Stuart Trew, Senior Editor of The Monitor at the Canadian Centre for Policy Alternatives, pinpoint these provisions of the “New NAFTA”—in the Good Regulatory Practices and Technical Barriers to Trade chapters and their sectoral annexes—and urge food and environmental activists to work together to resist this expansion of the corporate trade agenda.

 In addition to watching the replay, check out the presentations, additional resources recommended by the presenters and submit a comment to the Regulatory Cooperation Council (RCC) by December 10, 2018.

View the presentations

Other resources

Contact the presenters

Submit comments to the Regulatory Cooperation Council (RCC) by December 10 for the Federal Registrar Notice.
The Office of Information and Regulatory Affairs (OIRA), part of the Office of Management and Budget, is seeking public input on how the US federal government “may reduce or eliminate unnecessary regulatory differences between the United States and Canada.” This request for information relates to the future activities of the US-Canada Regulatory Cooperation Council (RCC), which was discussed in the IATP webinar. The OIRA has specifically requested proposals to “modify or repeal existing agency requirements to increase efficiency related to economic activity” and “reduce or eliminate unnecessary or unjustified regulatory burdens, or simplify regulatory compliance while continuing to meet agency missions and statutory requirements.” The federal register notes, however, that the RCC is a way to fulfill deregulatory goals of the Trump administration including the Executive Order calling for repealing 2 regulations for every one that is adopted. 
This is an opportunity to make sure that the record resulting from this consultation includes submissions from civil society supporting high standards and harmonization upwards to the most protective standards, and not just industry submissions supporting deregulation and the lowest common denominator.

Ag Co-ops Are More Than Seeds And Sales, They’re Boosting Rural Economies

Farmers started forming co-ops nearly a century ago, primarily to get better prices for their crops. They pooled their resources, put up storage bins and gained leverage with buyers Harvest Public Media’s Amy Mayer explored the growing role of co-ops in rural development.

102118-am-coops-combining“Cooperatives were created to provide a marketing outlet for producers in an era when they generally didn’t have a lot of options in marketing their grain,” said Keri Jacobs, an agricultural economist at Iowa State University.

But co-ops, no matter their size or focus, must share profits with the members who own and run them. That’s helped make the country’s 2,000 or so agricultural co-ops a driving force in rural economies, creating jobs and filling community coffers with property taxes.

Ag co-ops compete head-to-head with the biggest private grain buyers including Cargill and ADM. Plus, they’re much more than just the place where farmers buy seeds and sell grain; many offer a wide range of services.

“They now take care of a host of activities that a farmer used to do on their own,” said Johnathan Hladik of the Center for Rural Affairs in Lyons, Nebraska. Those activities include spraying pesticides, applying fertilizer and custom harvesting.

“And these cooperatives employ a lot of people,” he added.

Iowa’s 49 grain co-ops employ 8,000 people across 650 locations, according to David Holm of the Iowa Institute for Cooperatives. Hladik noted that some employees work seasonally while operating their own farms and others have year-round, full-time co-op jobs.

The role of taxes

Even though co-ops offer a variety of services throughout the year, harvest remains a busy time. Persistent rain in Central Iowa delayed the harvest this year, but on a clear, windy October day, trucks were lined up to empty grain into the pit at Key Cooperative in Roland.

When a driver positioned a semi over the pit, Steve Webb cranked open the hopper so freshly harvested soybeans could flow down, landing on a conveyor that would move them into one of the large storage silos.

Key Cooperative member Branon Osmundson farms a bit north of this elevator and said selling to the co-op potentially means getting money back. That’s because co-ops invest their profits back in the business and then use a dividend-like system called patronage to return some amount to members.

There are also potential tax benefits to selling to a co-op. After Congress shook up the tax code late last year, it briefly looked like co-ops could be big, if inadvertent, winners. Osmundson said membership applications suddenly flooded in from farmers who already sold to Key.

“And you’d see some of the names and you’d be like, ‘I would have just assumed they were a member because they’ve been doing business here so long,’” Osmundson said.

Congress further amended the tax law to adjust its impact on co-ops and other grain elevators, fixing the so-called “grain glitch.” So while the tax implications of selling to a co-op are pretty similar to before, some farm businesses may benefit from selling to a private elevator that offers a slightly higher price than a co-op.

Osmundson said he’s sticking with the co-op and he expects many other farmers will, too.

“A lot of times with farmers, we are stubborn,” he said, “so we tend to do things a certain way and we don’t like to change things too much.”

Rural investment

Co-ops are everywhere: Think credit unions, many local grocery stores and some retirement communities. Members make important decisions, such as how or whether to expand the business or when to buyout a competitor.

In some rural communities, the ag co-op is the largest employer and the biggest property taxpayer. A co-op that updates or replaces an antiquated elevator can rejuvenate the economy.

“Luther, Iowa is a good example. Very small town, we spent $10 million there,” said Mike Helland, a farmer near Huxley, Iowa, who serves on the board of Heartland Co-op. “That’s $100,000 per year property tax to the town. So that’s property tax that goes on every year for a long time, as long as that elevator’s in use.”

Helland said Heartland has built new elevators in other small communities or bought-out private ones when a company that answers to distant shareholders no longer wanted to invest in the location.

Helland said the board makes decisions about what seeds to sell, which additional services or products to offer and how to best serve the greatest number of members. But Heartland is also committed to investing in infrastructure that more broadly supports rural communities.

“The bottom line is, we’ve spent millions and millions of dollars in rural areas,” he said.

And beyond agriculture, co-ops are having a moment in the United States and abroad.

Jacobs, the economist, went to a meeting about cooperatives in the Netherlands this summer. She said she heard a theory that as people have less trust in things like traditional markets, government or large businesses, they turn to what’s closer to home. Co-op membership can help people feel more empowered and less vulnerable.

“People find it easy, I think, to trust a cooperative organization,” Jacobs said, “because they recognize it’s being run by people who are a lot like them.”

TRUMP TRADE REVEALED – ANOTHER RIGGED CORPORATE DEAL

The Framework Remains Trade For Corporations While Undermining Health, The Environment, Food, And Worker Rights

unnamedSince the Clinton era, when the North American Free Trade Agreement (NAFTA) was created, global trade has been written by and for big corporations at the expense of people’s health, worker’s rights and the environment. Trump Trade – through the renegotiation of NAFTA – continues that approach.

In some areas, people might argue the new United States-Mexico-Canada Agreement (USMCA) makes improvements over NAFTA, although many details are still being withheld. From what we do know, overall, it is a step backward for people and planet. And it undermines the US’ relationship with Canada and Mexico, as Geoffrey Getz of the neo-liberal Brooking’s Institution writes, “Trump’s aggressive, threatening approach succeeded in eliciting modest concessions from two of its closest trading partners.”

Trump is claiming a political victory merely by reaching an agreement, but it is not a victory for people or planet, as will be described below. Trump Trade should be rejectedIf we are to achieve a new model of trade that protects the environment, workers and democracy, we need to demonstrate that rigged corporate trade will be rejected every time it is brought forward. The time to organize to stop this agreement is now.

Energy and the Environment

Trump withdrew from the Trans Pacific Partnership (TPP) because a mass social movement made it unacceptable and it could not pass in Congress. Some of the provisions in the TPP are included in the USMCA.

Like the TPP, the USMCA contains polluter-friendly non-binding terms on the environment, e.g., the text “recognizes that air pollution is a serious threat to public health,” but includes no single binding rule to reduce air pollution.

The Sierra Club reports the USMCA takes a significant step backward from environmental protections included in the last four trade deals by failing to reinforce a standard set of seven Multilateral Environmental Agreements that protect everything from wetlands to sea turtles. The absence of environmental enforcement continues the failed corporate trade of the Clinton-Obama eras.

Trade agreements could be designed to reduce greenhouse gas emissions, but climate change is not even mentioned in the USMCA. Greenhouse gas emissions will increase. The Sierra Club reports the deal’s lack of binding environmental standards allows corporations to evade US environmental laws by shifting jobs and toxic pollution to Mexico where environmental policies are weaker. It reinforces the US’ status as the world’s largest outsourcer of climate pollution.

Some keys to preventing greenhouse gas emissions are ‘Buy American’ and ‘Buy Local’ laws that provide incentives for locally-produced goods. The USMCA negates those laws, requiring that industries based in Canada and Mexico be given equal access to US government contracts.

The USMCA exempts oil and gas corporations that have, or may have, government contracts for offshore drilling, fracking, oil and gas pipelines, refineries, or other polluting activities from reforms to Investor State Dispute Settlement (ISDS) provisions. These intensely polluting corporations would be allowed to challenge environmental protections in rigged corporate trade tribunals.

Trump Trade  preserves a NAFTA rule that prevents the US government from determining whether gas exports to Mexico are in the public interest. This creates an automatic gas export guarantee, which will increase fracking, expand cross-border gas pipelines, and increase dependency on Mexican climate-polluting gas.

The USMCA gives corporations extra opportunities to challenge proposed regulations before they are final, and to repeal existing regulations. This makes it harder to put in place environmental regulations or rollback the pro-polluting regulations of the Trump era.

Food and Water Watch summarizes: “The energy provisions will encourage more pipelines and exports of natural gas and oil that would further expand fracking in the United States and Mexico. The text also provides new avenues for polluters to challenge and try and roll back proposed environmental safeguards, cementing Trump’s pro-polluter agenda in the trade deal.”

Food and Health

The USMCA undermines food safety and health by making it more difficult to regulate and inspect foods. It limits inspections and allows food that fails to meet US safety standards to be imported. Food and Water Watch states that it requires the US to “accept imports from Mexico with less scrutiny than from other countries. The deal even creates new ways for Canada and Mexico to second-guess US border inspectors that halt suspicious food shipments, which would have a dangerously chilling effect on food safety enforcement.”

USMCA does not require Country Of Origin Labeling (COOL), nor dolphin-safe labeling and makes GMO labeling more difficult. It uses the requirement that food labels reflect ‘sound science’ to prevent accurate labeling.

USMCA serves Monsanto and other giant agro-chemical corporations by allowing unregulated GMOs, rolling back Mexico’s regulation of GMOs, and letting chemical giants like Monsanto and Dow keep data on the safety of their pesticides secret for 10 years. USMCA is designed for agribusiness, not family farmers and consumers.

Like the TPP, the USMCA increases the cost of pharmaceutical drugs through intellectual property protections that go “significantly beyond” NAFTA. USMCA gives pharmaceutical companies at minimum 10 years of market exclusivity for biologic drugs and protects US-based drug companies from generic competition, driving up the price of medicine at home and abroad.

Worker Rights and Jobs

The Labor Advisory Committee on Trade Policy and Trade Negotiations (LAC) explained  they do not oppose trade, but, “We oppose a set of rules made largely by and for global corporations that reward greed and irresponsibility at the expense of hardworking families across the globe.” They describe the USMCA as moving backwards from the original NAFTA in many areas important to working families:

“including with respect to ‘Good Regulatory Practices’ (code for using this trade agreement to
attack important consumer, health, safety, and environmental protections), Financial Services (providing new tools for Wall Street to attack efforts to rein in its continuing abuses), and affordable medicines (extending monopolies for brand name pharmaceuticals at the expense of affordability).”

Similar to the environment sections, the labor sections do not provide enforcement mechanisms. Citizen’s Trade Campaign writes, “There is a ground breaking labor annex that could help eliminate Mexican protection contracts and boost labor rights there — but only if currently absent enforcement mechanisms are added.” As the Labor Advisory Committee states, “Unenforced rules are not worth the paper they are written on.”

Summarizing the impact of USMCA, Citizen’s Trade Campaign states:

“Mexican workers will continue to be horribly exploited, American jobs will continue to be outsourced, the environment will continue to be degraded and the wages for workers in all three NAFTA countries will continue to decline.”

Corporate Trade Tribunals

A major area of concern has been ISDS, trade tribunals where corporations can sue governments if new laws or regulations undermine their profits. ISDS empowers corporations to attack environmental and health laws in trade tribunals made up of three corporate lawyers and receive monetary judgments worth billions from tax dollars. The USMCA reduces but does not eliminate the unjustifiable and indefensible ISDS settlement mechanism, which privileges foreign investors over communities regarding access to justice.

After three years, ISDS would be eliminated with Canada and dramatically scaled back with Mexico with some unacceptable exceptions. After that, US and Canadian investors would use domestic courts or administrative bodies to settle investment disputes with another government. Are there workarounds to this ISDS reform that protect investors, e.g. will domestic courts seize assets within their country to repay investors, as a US court did for a Canadian mining company this year?

Regarding Mexico, the new process is designed to protect oil and gas industry investors from the privatization of Mexico’s oil and gas sector. Global Trade Watch writes, “several additional sectors were added, including railways and infrastructure. . . followed by an open-ended list, which could provide problematic flexibility for investors to argue that their investments qualify.” In other words, what looks like ISDS reform contains a giant loophole for corporations to continue to sue governments.

Under NAFTA, corporations can receive exorbitant awards for “expected lost profits.” Under USMCA, investors can only be compensated for losses that they can prove on the “basis of satisfactory evidence and that is not inherently speculative.” How this is interpreted is up to the courts.

USMCA Continues US Imperialism & Corporatism

Popular movements in Mexico urge the incoming government to reject USMCA in an Open Letter To Andrés Manuel López Obrador And The Legislators Of MORENA. They decry the secret nature of the negotiation and the agreement as an attack on Mexico’s sovereignty. They argue the agreement will “further open up our economy for the sole benefit of the large U.S. transnational corporations, with an even greater subordination of our government to the dictates of U.S. foreign policy and its measures of internal security and migration.”

The letter describes the election of MORENA and Obrador as the people voting “to expel the oligarchy that has governed us, along with their paid servants.” The incoming government was given a clear mandate that includes rejecting corporate trade agreements. To create the transformation promised in the election requires Mexico to have full control of its resources and wealth to ensure the well-being of the population, with full rights and liberties. They see rejection of USMCA as a “first step toward reclaiming our nation.”

They urge incoming President Obrador to see this as part of the “mafia of power” that he ran against. They describe how Trump pressured the weakest negotiator, Mexico, with the right wing Peña Nieto administration, and used that to threaten Canada with exclusion and 25% tariffs if they did not agree.

Roger Jordan writes, the new agreement is an act of corporate imperialism by the United States:

“Under the new deal, both Mexico, a country historically oppressed by US imperialism, and Canada, a lesser imperialist power that has long been a key US ally, made significant concessions in the face of US demands that the continental pact be refashioned to make it an even more explicit US-led protectionist trade bloc.”

As the US struggles to retain power as a global empire, UMCA shows that “through ‘America First’ economic nationalism and the ruthless assertion of its interests against ostensible allies and rivals alike,” it will do what it must “to prevail in the struggle for markets and profits.”

Just as the TPP was President Obama’s attempt at economic domination of Asia, USMCA is part of President Trump’s economic war against China, which has already included “tariffs on $250 billion worth of Chinese goods.” Jordan explains how USMCA sent a message to China, writing:

“It grants the US effective veto power over any attempt by Canada or Mexico to negotiate a free trade pact with a ‘non-market economy,’ a clear reference to China. This includes the right to transform USMCA into a bilateral agreement, excluding the third member if it has ratified such a free trade deal.”

Stop Corporate Trade

There is still time to stop USMCA. Leaders are expected to sign the deal on December 1 at the G-20 meeting. Then President Trump has 60 days to report to Congress on changes to US law that are required by the agreement. Within 105 days of the agreement being signed, the US International Trade Commission (ITC) must complete a study of the agreement’s economic impact. Congress will have to pass legislation to implement USMCA.  After Congress receives the final bill from the president, it has 90 days of being in session to act on it under Fast Track rules. It is unlikely that all this can be accomplished before the 2019 legislative session.

Now that we know more about the contents of the new NAFTA, we need to mobilize to stop its ratification and implementation by Congress. If we are to win a new model of trade that raises the bar on protection of workers, the environment and democracy, we must show, as we did with the TPP, that rigged corporate trade will be stopped by a popular movement.

By Kevin Zeese and Margaret Flowers, Popular Resistance

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Q&A: The USMCA, explained

After over a year of negotiations over the North American Free Trade Agreement (NAFTA), the United States, Canada, and Mexico finally reached an agreement about the future of trade within North America: enter, the United States-Mexico-Canada Agreement (USMCA).

Chystia_Freeland_cc_wikicommons_cred_TTCFANBOYjpgThe three countries are expected to sign the renegotiated deal by the end of November 2018. But in the midsts of tariff wars,  questions still remain about what the USMCA will mean for Canadians and how it’s different than its predecessor, NAFTA.

To understand the extent of the new trade deal, the Fulcrum sat down with Anthony VanDuzer, an international trade professor at the University of Ontario.

The Fulcrum: Can you explain how the USMCA came to be?

VanDuzer: The USMCA is essentially a replacement for NAFTA, which Canada, the U.S., and Mexico negotiated in the early 1990s. It was the first comprehensive trade agreement in North America.

NAFTA was really about establishing free trade within North America. It wasn’t perfect, it didn’t eliminate all barriers to trade, but it substantially created free trade amongst the three countries. This facilitated business across international borders and encouraged businesses to come to North America.

President Trump was concerned that the interests of the United States were not well-served by NAFTA. In particular, I think he was concerned that it had encouraged U.S. businesses to invest in Mexico, meaning manufacturing capacity in the U.S. moved to Mexico which meant of course fewer jobs for American workers. When he arrived in the president’s office he talked about the possibility of just terminating NAFTA, which you can do with six months’ notice. What ultimately happened was an agreement between the three after party states renegotiated the treaty, which took a little more than a year. They started in summer of 2017 and came up with this agreement that was signed by the three governments on Sept. 30.

F: Which industries do you think will be most affected by it?

V: There’s been a lot of publicity related to the impact on the dairy industry in Canada, which is regulated through a supply management system that controls the domestic supply of dairy products. This tries to ensure that there is supply that is available. It also ensures that farmers have a market for their products and in order to make that work, you have to restrict dairy products coming into the country.

Trump was particularly concerned about supply management. At the same time, dairy farmers, particularly in Ontario and Quebec, want this system to be maintained because if we  abandon it, they feel they would be very negatively affected by a flood of cheap U.S. dairy products coming into Canada.

We agreed to a very limited amount of U.S. dairy products coming into Canada, about 3.5 per cent of the market. It’s also only a half a percent or so more than the U.S. would have got if they’d stayed in the Trans-Pacific Partnership agreement, which they withdrew from when Trump was elected.

So overall it’s not a huge concession, but it is undoubtedly going to have an impact on dairy farmers. The federal government has indicated that they will provide compensation to the dairy farmers for any injury that they suffer as a result of increased competition because we’ve opened up the market.

Most of the other industries I think are not going to be affected in a very dramatic way, in large part because most of what’s in the USMCA was already in NAFTA.

One of the things we agreed to was to data protection for a type of pharmaceutical drugs called biologics (one of the most expensive type of drugs on the market, used to treat cancers and multiple sclerosis). Under the USMCA, the minimum data protection period in Canada went up from eight years to 10 and in the U.S. it’s  12. It would allow manufacturers to limit competition for those additional two years of time in a way they wouldn’t otherwise, and that could have an impact of increasing drug prices for Canadians. It’s a little hard to know exactly what that’s going to look like. Some estimates have said that it might be hundreds of millions of dollars.

F: Do you think that the situation in general is fair, or has the U.S. strong-armed Canada and Mexico into redoing NAFTA?

V: Neither Canada nor Mexico had a particular interest in renegotiating NAFTA, although there was some interest in updating it. It was clearly the Americans that had a concern.

I don’t think Canada overall is going to be significantly worse off and one of the challenges for Mexico I think in the agreement which could have an impact on them certainly is the rules that were agreed to with respect to the auto sector minimum wage. There is now a rule which says that between 40 to 45 per cent of auto production has to be in countries that have a wage for auto workers that is at least $16 U.S. an hour.

It’s possible that in order to conform to that requirement that the North American automakers will shift some production either to the U.S. or Canada and out of Mexico. But it’s hard to predict that really at this stage.

F: Canada insisted that keeping Chapter 19 (dispute resolution) was a big win. How vital do you think it was to keep that clause?

Well I think it’s a useful device for Canada, but it probably wasn’t essential. There are actually a whole lot of different dispute resolution procedures in the agreement and Chapter 19 actually has a fairly narrow focus. It’s only on domestic decisions related to what lawyers call trade remedies, which are decisions about whether goods are being dumped into the country by exporters from outside the country or whether exporters are benefiting from domestic subsidies in the countries in which they operate and then are selling those subsidized goods into the other country.

What Chapter 19 does is essentially it replaces domestic court review with review by a system of binational panels. Members of the panels are appointed from rosters which have been established by each country. It was designed to ensure that the system operates in each country in accordance with its own rules to avoid bias. But domestic court review is supposed to establish the same thing, so it’s redundant in this sense.

I was a little bit surprised that the Canadian government felt that this was the issue that they were going to go to the mat on as compared to all the other things that were concerns.

F: Trump has expressed distaste for Prime Minister Justin Trudeau on numerous occasions. Do you think the outcome of the negotiations would have been different if either party had different leadership?

V: I think the starting point probably is that if President Trump hadn’t been elected, we would never have had a renegotiation in the first place. Hillary Clinton did express some concerns about NAFTA but she might have initiated some kind of a broad-based renegotiation.

President Trump and some of his advisors were highly skeptical about free trade agreements and their value. Their initial concern was Mexico and then Canada was brought in, I think as a bit of an afterthought.

The Trump administration adopted a variety of tactics which are quite unusual and extraordinarily aggressive in the negotiations. The personal dislike that was expressed by the president, that kind of thing is not normally part of international discourse.

I think that had undoubtedly impaired the effectiveness of the negotiations because the two governments seem to have this mutual dislike. That was undoubtedly a complicating factor and it didn’t help in getting to a resolution. But the USMCA worked out I think in large part because the Canadian government and its representatives, including Prime Minister Trudeau and Foreign Affairs Minister Chrystia Freeland, didn’t stoop to that level in their own discourse and continue to work hard and in a responsible way to achieve an agreement. They’ve salvaged most of the benefits that were available under the original NAFTA.

One thing I would mention that is really quite extraordinary is Trump’s move to impose tariffs on steel and aluminum and his justification was national security.

That was important because under U.S. domestic law, the president does not have authority to just sort of change the tariff rules but he does have the authority under Section 232 to impose tariffs to ensure the protection of national security. Now there is no doubt in anyone’s mind that the real goal of the president was not to protect national security but rather to get leverage in the negotiation for the treaty. And in fact there are statements by the U.S. administration to that effect.

F: Do you think Canada negotiated a good, fair deal? If not, what could they have done differently and what should they have pushed for more?

I’m not sure that they could have done much differently given the position that the Americans had taken.

Not only were they very aggressive, but they lowered the level of discourse to this personal criticism of the leaders of the negotiations on the Canadian side. They also simply weren’t prepared to really negotiate. I mean I think that the position that the Americans tended to take was that this is what we want. And you either accept that or you go away. And of course it didn’t help that from the Canadian perspective that Mexico had agreed  independently to a set of commitments which Trump was prepared to take forward to Congress either with or without Canada. There wasn’t a lot of room for Canada I don’t think to negotiate a better sort of a deal, and as I’ve said, (given) the circumstances I think the outcome is a pretty good one. Not much changed.

F: How will the Canadian public be impacted?

With respect to the dairy industry, the people who are going to experience the hit are the dairy farmers. While they are very well organized politically and they’re an important group of people, they’re relatively small in number. So it’s not going to be consumers that are going to be experiencing the hit. It’s important to bear in mind that I mean 90 per cent of the market is still protected so it’s not like it’s open season in dairy.

One other real concern for some members of the public and some NGOs is the new agreement essentially phases out investor state arbitration for disputes between Canada and the U.S.: that is, U.S. investors complaints against the Canadian government and vice-versa.

Under NAFTA, Americans were frequently bringing complaints against Canada and there were plus or minus 35 complaints that had been filed and some of them have led to damage awards or settlements totalling a little over $200 million. That’s no longer going to be possible. So that kind of flashpoint for public concern between Canada and the U.S. at least is going to disappear. I think that’s going to make this agreement easier for some constituencies to accept.

F: Trump has taken a nationalistic approach to politics, where it’s about putting America first. Do you think this type of negotiation is going to have an impact internationally? Are we going to start seeing more countries negotiating in similar ways with similar agreements?

I think part of the answer is that the U.S. is unique. They’re the biggest economy in the world so they have more flexibility/freedom to adopt these kinds of aggressive positions, whereas other countries don’t. Even if you had someone who wanted to adopt a similar approach to negotiations, they simply don’t have the economic clout to do that.

Now there are some exceptions to that. It’s possible I suppose, at least looking at economic power of the European Union (EU) or China, but I don’t see it happening in the EU as they’re firmly committed to the international system and they’ve repeatedly endorsed it.

China is a little bit unclear. I would say that China is now looking to develop the international system rather than trying to do what the U.S. is doing, which is essentially to try to not only focus on U.S. interests but to focus on developing the internal economy in isolation from the global economy. China’s not doing that.

Characterizing the American position as nationalism is a reasonable characterization and certainly we’re seeing the development of more stridently nationalist governments and a lot of other places including some European countries especially in Eastern Europe. It’s possible that we may see more aggressive negotiations in that way where negotiations are dominated by countries’ strong perceptions of their own selfish national interests.

There could be some sort of overall transformative effect, but I think that you can’t disregard the fact that the U.S. is the most powerful country in the world and the flexibility they have to engage in this kind of negotiating behavior is simply not available to other countries in those contexts.

“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”