Tag Archives: NAFTA

Talks between Canada and the U.S. regarding the North American Free Trade Agreement are intensifying in Washington, D.C. Bloomberg says Canadian dairy farmers recently told Prime Minister Justin Trudeau not to use access to the protected Canadian dairy market as a bargaining chip.

The Dairy Farmers of Canada says it’s already lost $193 million because of past trade agreements and they won’t accept more losses. “The work of our lives seems to have been reduced to a bargaining chip,” says Dairy Farmers of Canada president Pierre Lampron. The group, along with the Dairy Producers of Manitoba, says farmers will hold Trudeau accountable for his promise to defend the supply-management system. The threat may have added strength because of Canadian national elections which come in about a year.

They say Canada’s market is too small to accommodate U.S. overproduction, saying the Class Seven milk targeted by President Donald Trump is worth protecting. Both groups issued a statement saying, “We will hold our prime minister accountable for saying he will defend supply management and dairy in the NAFTA negotiations. We have articulated clearly that the support means no access will be given to the Canadian dairy market.”

Foreign Affairs Minister Chrystia Freeland is back in Washington — and back in search of a way to bridge the divide that’s keeping Canada out of a new North American free trade pact.

Freeland flew back to the U.S. capital Tuesday as a prominent congressional ally of President Donald Trump made it clear that American lawmakers are growing weary of what they see as Canadian intransigence.

House of Representatives majority whip Steve Scalise (R-La.) is warning of “growing frustration” on Capitol Hill with what he calls Canada’s “negotiating tactics.”

Trade observers say that while many in Congress want Canada to be part of a three-way trade deal, they may not be willing to sacrifice an agreement in principle between Mexico and the U.S. negotiated earlier this year.

That deal is widely seen to require congressional approval before Dec. 1 in order to survive the arrival of an incoming Mexican government whose supporters have mixed feelings about the deal.

Canada, meanwhile, has been pushing back against deadlines declared by the Trump administration — first the end of August, then the end of September.

“While we would all like to see Canada remain part of this three-country coalition, there is not an unlimited amount of time for it to be part of this new agreement,” Scalise said in a statement.

“Mexico negotiated in good faith and in a timely manner, and if Canada does not co-operate in the negotiations, Congress will have no choice but to consider options about how best to move forward and stand up for American workers.”

Freeland, who will be joined at the table today by U.S. Trade Representative Robert Lighthizer, says Canada has been negotiating in good faith throughout the process, which is about to enter its 14th month.

“From the outset of these modernization negotiations, Canada has been extremely co-operative,” Freeland said Tuesday. “Canada is very good at negotiating trade deals. Canada is very good at finding creative compromises. We have been extremely engaged.”

Negotiators have been working “extremely hard” and are committed to doing the necessary work to reach an agreement, she added — but they aren’t about to settle for just any agreement.

“It is our duty — it’s my duty — to stand up for the national interest and I will always do that.”

Trump, for his part, sounded a familiar note, accusing Canada of having long taken advantage of the U.S. even as he sang the praises of his country’s northern neighbour.

“We love Canada. We love it,” he told a news conference. “Love the people of Canada, but they are in a position that is not a good position for Canada. They cannot continue to charge us 300 per cent tariff on dairy products, and that’s what they’re doing.”

Ottawa has privately expressed frustration with Mexico’s decision to go it alone last month. But one source familiar with how the negotiations have progressed, speaking on condition of anonymity in order to discuss details freely, says Canada transgressed first with a surprise auto proposal last spring.

Mexico still wants Canada in a three-way deal — so much so that the language in the deal with the U.S. was written to facilitate a trilateral agreement, the source said. And Mexico feels their agreement works in Canada’s favour on a number of fronts.

While Canada has been pushing for wording in NAFTA aimed at strengthening labour protections and gender equality, the overall negotiations are said to have stalled over Canada’s insistence that an agreement contain an independent dispute-settlement mechanism.

Prime Minister Justin Trudeau has also vowed to protect Canada’s so-called supply management system for dairy and poultry products against U.S. demands for greater access by its farmers to Canada’s dairy market. Sources say Canada has offered some limited concessions on access while also ring-fencing the system itself.

A spokesman for Trudeau tweeted late Tuesday that the prime minister had spoken with Trump to convey his condolences on the loss of life from hurricane Florence, which has left 37 people dead in three states. Cameron Ahmad wrote that the two leaders also discussed the ongoing NAFTA talks, with Trudeau reaffirming “his commitment to a deal that works for both countries.”

Supply management has been a big issue in the provincial election campaign in Quebec, home to about half of Canada’s dairy farms. Quebec Liberal Leader Philippe Couillard has warned there will be “serious political consequences” if there is any further dismantling of the protections for dairy farmers through NAFTA negotiations.

That has some trade watchers suspicious that Ottawa may be trying to get past Oct. 1, which is election day in Quebec, as well as a latest congressional deadline.

“The rumblings around Washington have been Canada may attempt to push any deal beyond Oct. 1, largely due to the Quebec election,” said Dan Ujczo, an Ohio trade lawyer with Dickinson Wright.

“Rep. Scalise is putting down the marker that these are real deadlines.”

The United States still demands a dairy fix in the North American Free Trade Agreement, but Canada still wants to protect its dairy industry.

While Canada may be ready to give some concessions on dairy market access, Prime Minister Justin Trudeau and his allies have strong political motivations to stand firm. A trade lawyer told Politico this week that much of the focus is on Canada’s Class 7 milk, a class created last year that has disrupted trade between the U.S. and Canada.

The trade expert says those talks are “highly technical” and will take days to complete, but suggested an agreement is still possible, “even likely this week.” Talks between the U.S. and Canada are expected to continue with an overall goal to complete the agreement by the end of this month. Mexico officials are also back in Washington, DC to propel the handshake agreement between the U.S. and Mexico forward.

The North American Free Trade Agreement talks between the U.S. and Canada continue as farm leaders remain hopeful an agreement will be made soon.

A small group of state Farm Bureau President’s met with the administration this week and walked away with a positive view that an agreement could quickly be made, along with the future of trade talks with Japan, the European Union and even China. President Donald Trump continues to pressure Canada into reaching an agreement “over the next day or two,” threatening that Canada would “be the loser from any failure” to reach an agreement during that time.

Canadian Prime Minister Justin Trudeau says NAFTA must include the chapter 19 dispute settlement to protect Canada from President Trump, calling the U.S. leader a rule breaker. Negotiators seemed upbeat recently, according to Reuters. However, neither said has named areas of disagreement and neither detailed the progress that had been made.

MONTREAL – Nearly 1,000 kilometres from Washington, where a team of top Canadian negotiators sit in 11th-hour NAFTA discussions, Peter Strebel works under a cloud of concern at the rural Quebec dairy farm his father founded in 1976.

The Quebec milk producer is worried that rumblings that Canada may sacrifice part of the sacred cow of supply management as a concession in trade negotiations with the United States would “punish” the dairy industry, open the floodgates to American milk products and prompt thousands of farm closures north of the border.

“There would be lots of bankruptcies … It would be devastating,” he said from his farm south of Montreal.

“We’ll probably have to cut back on investment, maybe lay off a couple workers. I don’t know how it would be done.”

Canadian dairy operates under a supply management system, in which farmers are protected from competition because the government blocks out foreign production with high tariffs and sets quotas to limit production and prevent market saturation. With traditional market forces removed, the government decides how much farmers are paid for their production, helping to keep farmers’ incomes stable.

The protectionist policy, a staple of Canadian agriculture for more than 40 years, has come under periodic attack from U.S. President Donald Trump.

And as trade talks hit a fever pitch ahead of a pending Friday deadline, Strebel and others fear that the Canadian government is ready to make concessions on dairy.

More than 15 per cent of the Canadian dairy market is already opening up to imports under terms of the Trans-Pacific Partnership signed in March. Any further dents to supply-side protection would imperil the business, said Strebel, who represents his region on the board of the Milk Producers of Quebec.

Strebel’s 150 cows churn out 5,000 litres of milk per day, which is trucked off to 115 processing facilities — waypoints on the path to products ranging from Yoplait yogurt to local cheese.

Several potential concessions are of particular concern to him and Canada’s 11,000 dairy producers, the vast majority of whom are located in Quebec and Ontario.

One is Canada’s domestic milk ingredient pricing system. The Class 7 pricing agreement struck in 2016 has effectively restricted U.S. exports of ultra-filtered milk used to make dairy products, industry experts say.

The policy allows Canadian dairy processors to buy domestic milk at world market prices instead of higher prices controlled by the national supply management system. U.S. dairy groups argue the policy provides processors with an incentive to cut milk imports and intentionally blocks American products.

But the head of the Dairy Farmers of Ontario believes scrapping Class 7 would be detrimental to the Canadian industry.

“Either we’d try to get less capital cost per unit of milk shipped and try and live that way, or go broke — or just try to ride it out for a few more years and then quit,” said Ralph Dietrich, who chairs the advocacy group and co-owns a dairy farm in southwestern Ontario.

Should supply management suffer a blow at the trade table, Strebel wondered if Canada would compensate with hundreds of millions of dollars in subsidies, or rethink its ban on bovine growth hormone for dairy cows, which the U.S. allows as a means to boost milk production.

Robert Wolfe, a professor emeritus at Queen’s University who specializes in agriculture trade policy, pointed to the possibility of devalued quotas. Much like the medallion system that regulates the number of taxi drivers, quotas mean a farmer has the right to produce a certain amount of the product.

Any new farmer has to buy in, and the rights don’t come cheap — anywhere from $20,000 to $43,000.

“That quota is the right to sell a certain amount of milk. But if anybody can sell milk, then that quota that you’ve spent a lot of money on is worthless,” he said. “For the typical dairy farmer, we’re talking millions.”

Slashing supply management or lowering tariff rates would have a ripple effect, particularly for farmers with recent capital investments and bigger debt loads, said Al Mussell, research lead for Agri-Food Economic Systems in Guelph, Ont.

“There are some farmers that have reinvested in facilities and expanded in more efficient facilities, but are relatively new and financially leveraged who could have a great deal of difficulty in that environment because they’ve lost some of their ability to generate revenue,” Mussell said.

However, supply management is also one of the few cards the Trudeau government has left to play at the bargaining table after the U.S. and Mexico reached their own side deal on Monday.

Defending dairy farmers, who enjoy artificially high prices and exorbitant incomes, threatens to hurt the steel, aluminum and automotive industries during trade negotiations unless concessions are made, said Martha Hall Findlay, president and chief executive of the Canada West Foundation.

“Why are we sacrificing those sectors, those jobs, those Canadians, for a small number of now wealthy producers?” she wrote in a paper released Wednesday.

Findlay called on Ottawa to dismantle supply management, “not because Trump says so, but because it’s in Canada’s best interests.”

WASHINGTON – U.S. Senator Jerry Moran (R-Kan.) today urged President Trump to reengage Canada in trade negotiations and expressed the importance of Canada being part of any final North American trade deal.

 

“Trade with Canada and Mexico has clearly benefited Kansans, and a modernized NAFTA, or re-named trilateral agreement, can present increased economic opportunity and growth to Kansas and the country,” wrote Sen. Moran. “As I continue to study the emerging details of the preliminary agreement with Mexico, it appears there are improvements included that would update the agreement to reflect the 21st century economy. Further negotiations with Canada are necessary to address difficult issues, such as Canada’s protectionist dairy policies that have harmed Kansas farmers. However, any new agreement that excludes Canada would unfortunately be a significant step in the wrong direction compared to the trilateral agreement in place today.”

Below is the full letter from Senator Moran to President Trump:

Dear Mr. President:

I applaud you for reaching a preliminary agreement between the United States and Mexico on a revamped North American Free Trade Agreement (NAFTA). Any agreement that has been in place for decades should be reviewed and modernized and I support your efforts to get a better deal for the American people. While the preliminary agreement with Mexico represents a significant step forward in your efforts to modernize NAFTA, it is critical to Kansans that Canada be included in any final agreement presented to Congress for approval.

Kansas is an export dependent state – our farmers, ranchers and manufacturers rely on the ability to sell to consumers around the world. North American markets are especially important to my state. In 2017, Canada was the top market for Kansas, accounting for over 22 percent of all exports. Canada and Mexico consistently rank as the number one and two export markets for Kansas and together account for over one-third of overall exports. NAFTA has also resulted in integrated North American supply chains that rely on a free flow of goods and products across the continent. Many jobs in Kansas, including those in the agriculture, aerospace, automobile and other manufacturing industries, would be threatened should these supply chains be disrupted or export markets be diminished.

Trade with Canada and Mexico has clearly benefited Kansans, and a modernized NAFTA, or re-named trilateral agreement, can present increased economic opportunity and growth to Kansas and the country. As I continue to study the emerging details of the preliminary agreement with Mexico, it appears there are improvements included that would update the agreement to reflect the 21st century economy. Further negotiations with Canada are necessary to address difficult issues, such as Canada’s protectionist dairy policies that have harmed Kansas farmers. However, any new agreement that excludes Canada would unfortunately be a significant step in the wrong direction compared to the trilateral agreement in place today.

I understand that you and your administration will engage with Canada in trade discussions following the preliminary agreement reached with Mexico. I fully support continued negotiations and urge you to make certain a final agreement includes Canada to avoid major market disruptions that would harm Kansans. Thank you for your consideration.

Very truly yours,

Senator Jerry Moran

WASHINGTON — The U.S. and Mexico have struck a trade deal outside of the North American Free Trade Agreement, President Donald Trump said in the Oval Office Monday.

“It’s a big day for trade, a big day for our country,” Trump said. “We’ll get rid of the name NAFTA.”

The plan would still have to be approved by Congress to go into effect. Trump said Monday that it remains to be seen whether Canada, which has negotiated on a renewal of NAFTA but resisted some of Trump’s priorities, could be included in the new agreement or come to a separate agreement with the U.S.

The deal is a small step in the direction of Trump’s promise to use American leverage to force its trading partners across the globe to make new concessions.

https://www.nbcnews.com/politics/white-house/trump-says-u-s-has-reached-new-trade-deal-mexico-n904141?cid=eml_nbn_20180827

The U.S. has proposed requiring a greater proportion of a car’s value to be manufactured in North America to qualify for favorable treatment. It has also proposed various rules that would require carmakers to use a certain proportion of steel, aluminum and automobile components made in North America, sources indicate, and to have a certain proportion of a car’s value be made by workers earning at least $16 per hour.

In return, Mexico has asked the U.S. drop a proposal that would let American farmers block Mexican products, notably fruits and vegetables, more easily. Mexican negotiators fought back against the produce plan, saying it was unacceptable and would violate WTO rules.

It has also sought assurances that the Trump administration would lift the tariffs it has already imposed on steel and aluminum shipments from Mexico, and not hit Mexican products with the new tariffs Trump has threatened on imported cars.

That could be a key situation, especially for U.S. exports of pork to Mexico.

The U.S. and Mexico are “very, very close” to reaching a deal to update the North American Free Trade Agreement. A White House economic adviser said this week the negotiation teams were going through the perceived final details.

The U.S. is hopeful a deal with Mexico can be a model for what Canada could accept. Canada remains on the sidelines as the U.S. has been working over the past several weeks to reach an agreement with Mexico. Mexico remains “cautiously optimistic,” according to Politico, that an agreement can be reached, possibly by the end of this month.

If so, the U.S. would then turn to negotiate an agreement with Canada, but some market access differences remain a sticking point when it comes to dairy. The U.S. is hoping to remove Canada’s dairy supply management system as part of the NAFTA talks.