Milling & Baking News - September 11, 2018 - 22

Washington

U.S.-Canada trade talks resume
with deadline clock ticking
Continued from Page 1

did not join the agreement, he would impose tariffs on Canadian-made cars.
"I think with Canada, frankly, the easiest we can do is to tariff their cars coming
in," he said. "It's a tremendous amount of
money, and it's a very simple negotiation.
It could end in one day, and we take in a
lot of money the following day."
With so many self-imposed deadlines
for concluding an agreement having
come and gone, why now the rush? The
chief difference was said to be political
exigencies attending to the inauguration
of a new administration in Mexico. On
Dec. 1, Andrés Manuel López Obrador
will become president of Mexico, succeeding the current president, Enrique
Peña Nieto. Both Mr. Peña Nieto and Mr.
López Obrador placed a high priority on
Mr. Peña Nieto signing the new trade
agreement before he leaves office. A new
administration may be pressured to find
new priorities, which could extend the
renegotiation, which neither the United
States nor Mexico wanted.
To accommodate that political goal,
the Trump administration faced its own
timetable as required by its "fast-track"
negotiating authority granted by Congress. Under Trade Promotion Authority (fast track), the administration must
notify Congress it has negotiated a new
agreement 90 days before Congress is

required to vote the agreement up or
down. Thirty days after the notification
and 60 days before Congress must vote,
the administration is required to send the
text of the agreement to Congress.
The best outcome of the current talks
between the United States and Canada
would be a meeting of minds that would

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clear the way for Canada joining the
agreement and negotiators successfully
drafting and publishing the entire official
text of the agreement with all its details
so it may be presented to Congress for its
consideration by the end of September,
Oct. 1 at the latest.
Many members of Congress pointed
out the negotiating authority it granted
the administration was for reaching a
new trilateral agreement between the
United States, Mexico and Canada, suggesting there may be opposition or even
questions of legality should Canada be

left out of the agreement. Virtually all
U.S. business, agricultural and even labor
constituencies also emphasized the importance of Canada remaining a party to
any North American trade accord.
But just ahead of last week's talks, Mr.
Trump tweeted, "There is no political necessity to keep Canada in the new NAFTA deal.
If we don't make a fair deal for the United
States after decades of abuse, Canada will
be out. Congress should not interfere (with)
these negotiations or I will simply terminate
NAFTA entirely and we will be better off."
Canadian Prime Minister Justin
Trudeau on Sept. 4, before dispatching
negotiators to Washington, said, "Canada
will not sign a deal unless it is in the interest of Canadian workers, the Canadian
middle class and Canadians in general."
U.S. and Canadian negotiators will have
to discuss and resolve several differences
with three said to be the most contentious.
First, Canada wants to retain its right
to limit dairy imports while the United
States seeks unfettered access to the Canadian market. Second, Canada wants to
retain in a renegotiated NAFTA the current or similar procedure for arbitrating
complaints about trade barriers, including anti-dumping tariffs and countervailing duties, before an independent panel
as contained in Chapter 19 of NAFTA.
The U.S.-Mexico trade agreement would
eliminate Chapter 19. And third, it was
uncertain that the compromise reached
by Mexican and U.S. negotiators over
the lifespan and review of a renegotiated
NAFTA will be acceptable to Canada. MBN

U.S.-Canada NAFTA talks hung up on dispute settlement, dairy
KANSAS CITY - While the United States and Mexico appear to have
resolved issues to "modernize" their portion of the North American Free
Trade Agreement, Canada is just returning to the negotiating table with
two major stumbling blocks: dispute settlement and dairy.
The dispute settlement issue has to do with using domestic courts,
which the United States prefers, or the NAFTA Free Trade Commission and
bilateral panels, with decisions of the latter binding. Dispute settlement is
addressed in Chapter 19 of the NAFTA pact and especially concerns antidumping and countervailing duties. Trade reports note that the dispute
settlement issue far predates the Trump administration.
Dairy is complicated on several fronts. The overarching issue has to do
with Canada's supply management program, which is designed to protect
the domestic dairy industry, both farmers and processors, by preventing an
oversupply of milk and dairy products. The system utilizes domestic production quotas, price controls and tariff-rate import quotas. Tariffs on dairy imports range from zero to as high as 314%, with out-of-quota import tariffs
averaging 218.5%, according to the World Trade Organization.
A recent Nanos Research poll indicated 75% of Canadians support the
supply management system, about 66% think the government should
strongly defend Canada's dairy industry in NAFTA talks, and about 80%
favor politicians who defend the dairy sector, making the issue highly
political.
The Canadian dairy industry, including the Dairy Farmers of Canada and
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the Dairy Processors Association of Canada (DPAC), notes U.S. dairy product exports to Canada were double those of Canadian dairy exports to
the United States in 2017 (about $227 million versus $114 million in U.S.
dollars). The industry also said that it had increased foreign access to its
dairy markets through the Trans-Pacific Partnership, from which President
Donald Trump withdrew in 2017.
Under NAFTA, the U.S. International Dairy Foods Association (I.D.F.A.)
notes that the United States moved from a net importer of dairy products
to one of the world's top exporters, largely due to a five-fold increase in
exports to Mexico. Maintaining Mexico as the largest export market of
U.S. dairy products was the top priority for the U.S. dairy industry in NAFTA
talks. Improving trade terms with Canada was next on the industry's list.
Dairy trade with Canada was not significantly addressed in the original
NAFTA because of Canada's dairy supply management system.
U.S. dairy product trade with Canada was complicated in 2016 and 2017
when Canada created a special ingredient class (Class 7) for ultra-filtered
milk, which did not exist when NAFTA was first signed, and created a pricing strategy that the U.S. dairy industry said subsidized Canadian dairy
products for domestic users and discouraged imports (not just from the
United States). The U.S. dairy industry saw the new class as a way for Canada to block imports of certain dairy products and dump skim milk powder
on the global market below cost of production. The move shut off about
$150 million in U.S. exports of ultra-filtered milk to Canada. MBN
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