By Katie Micik
DTN Markets Editor
SARASOTA, Fla. (DTN) -- The North American Free Trade Agreement (NAFTA) changed Mexican agriculture for the better despite deeply held fears the agreement would erode its corn market, longtime U.S. Grains Council director Julio Hernandez said.
The country's corn quota was intended to protect domestic farmers, but it didn't. Imports always exceeded the quota, Hernandez said, and some companies even used a loophole by importing cracked corn.
"For sure, some of the industries were affected, and actually, that's the purpose of free trade agreements -- to shake everybody up. You have to be more practical and more efficient, and that's the only way to do it," he said.
The end result was a more modern and efficient Mexican agricultural sector.
Past and future multilateral free trade agreements dominated Monday morning's discussion at the U.S. Grains Council meeting. Several speakers examined the long-term benefits of NAFTA to the grain industry and discussed potential benefits from the Trans-Pacific Partnership (TPP).
Neil Campbell, a Canadian consultant for the U.S. Grains Council, said Canada's experience with NAFTA has been very positive. His animal nutrition business was able to hire scientists from Mexico and the U.S., a move that allowed the business to grow.
"In the 1990s, American farmers wanted to build farrowing barns for pigs in Western Canada, and then ship the weanlings and feeder pigs down to the U.S. That's a good example of how two markets working together could be best for people on both sides of the border," he said.
But he thinks TPP can benefit from something that was missing in NAFTA -- a speedy dispute resolution system. The World Trade Organization took years to resolve Canada and Mexico's complaints about the U.S.' country-of-origin labeling policy.
Darci Vetter, U.S. ambassador and chief agricultural trade negotiator for the U.S. Trade Representative, addressed the group via FaceTime and noted a swifter dispute resolution system is among the many benefits of TPP.
"It also contains an opportunity -- when we think a country hasn't adopted measures in a scientific or transparent way -- to request more rapid consultations with trade and regulatory officials, to sit down and try to resolve those issues in a period of weeks or months, rather than years," Vetter said. Unlike previous free trade agreements, TPP sets up its own framework instead of relying on the WTO.
The 12 countries that negotiated the TPP agreement represent more than 40% of global gross domestic product, Vetter said. The agreement cuts tariffs and improves U.S. access to markets, such as Canada's dairy market and Japan's livestock sector. It also establishes new, science-based sanitary and phytosanitary rules, includes a framework for low-level presence of biotech traits and sets high standards for labor, environment and intellectual property protections. It will reduce the cost and risk of doing business in a comprehensive way, she said.
"Frankly, our biggest export from TPP will be the way we do business," she said. The U.S. won't have to change major laws to comply with TPP, just make changes to the tariff codes and procedures. "Other countries, for the sake of this alliance, are willing to make major changes ... so we will get to set the playing field in this dynamic region, if we can get TPP passed."
Trade agreements are usually not an easy sell, so Vetter encouraged farmers to work to educate their congressmen about the importance of exports and trade to farmers' bottom lines. Opponents of free trade agreements are already well organized, and it's important that farmers and the agriculture industry maintain "a steady drumbeat of support."
Katie Micik can be reached at katie.micik@dtn.com
Follow Katie Micik on Twitter @KatieMDTN
(AG/CZ)
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