U.S. prepared to go slow on NAFTA

The May deadline was unrealistic because the three countries have many outstanding issues to resolve

If anyone was holding out hope for a North American Free Trade deal in 2018, Gregg Doud has dumped a large bucket of cold water on that idea.

Doud, chief agricultural trade negotiator for the Office of the U.S. Trade Representative, shared an update on NAFTA May 22 while speaking at a Farm Foundation forum in Washington.

“Our position on the NAFTA negotiations is obviously you’d rather have it done right than be in a big hurry…. These things take time and we’re going to continue to work on it and get it done when we get it done,” Doud said.

“If that means we don’t get it ratified in this Congress … then we just do it in the next Congress.”

The acknowledgement that a new NAFTA won’t be completed this spring is a stark change in tone from late April and early May.

Mexico, Canada and the United States began formal negotiations last August to modernize the 24-year-old trade deal.

Three weeks ago the mood around the talks was positive and many thought a deal was imminent. U.S. Trade Representative Robert Lighthizer said it was urgent to get an agreement in May because the U.S. Congress needed sufficient time to ratify the deal before the November midterm elections.

If the Democrats regain control of the House of Representatives in November, it could be harder to ratify a NAFTA 2.0.

Doud’s comment suggests the May deadline was unrealistic because the three countries have many outstanding issues to resolve.

Negotiators have now closed nine chapters of a potential NAFTA agreement after nine months of formal talks, Doud said.

Progress has been slow because the business world has evolved since NAFTA was signed in 1994.

“When we did NAFTA, the internet hadn’t really existed,” he said.

“We have to stop and think about that…. So many things have to be updated and changed.”

Besides NAFTA, Doud also mentioned what may be a larger trade issue for U.S. farmers and the American economy — China.

Over the last few months, U.S. President Donald Trump and Chinese leaders have engaged in tit for tat threats around trade.

First, Trump announced tariffs of 25 percent on steel and aluminum imported into America. China fired back with its own tariffs on U.S. pork, fruit, nuts and other products.

Then, in early April the U.S. formally announced $50 billion worth of tariffs on Chinese goods. China rapidly responded with tariffs on 106 U.S. products, including soybeans, vehicles, aircraft and wheat.

The tariffs haven’t been enacted but the uncertainty has riled up American farm groups, who fear losing a key export market for pork, soybeans and other commodities.

As of May 20 there were signs of a truce in the China-U.S. trade war. Trump announced the U.S. would hold off on imposing tariffs because it was negotiating a solution with China.

That’s positive news for U.S. farmers, but Doud’s comments at the Farm Foundation meeting were not friendly toward China.

He said America is weary of China’s trade distorting policies, and U.S. leaders are determined to do something about it.

“In agriculture, where we begin this conversation (about China) is what I think is one of the biggest, if not the biggest, WTO cases in history.”

The U.S. has filed a World Trade Organization complaint, claiming China has exceeded its rightful agricultural subsidization by about $100 billion since it joined the WTO in 2001, Doud said.

Further, the subsidies have led to China controlling an absurd proportion of global grain and oilseed stocks.

He said China now has 38 percent of the world’s residual corn supply, 52 percent of wheat and 22 percent of soybeans.

Together, the subsidies and stocks are deflating world grain prices, Doud said.

“When you have that level, of the world’s residual supply of these agricultural commodities, in one country … it is costing every farmer in the world money,” he said.

“This is something that has to be addressed.”


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