As the North American Free
trade Agreement (NAFTA) reached its tenth anniversary, observers say
it has created some winners and losers in the vegetable trade arena.
The free trade push, in general, has created a wide variety of challenges
and opportunities for American agriculture.
From 1993 to 2001, U.S. agricultural exports to Mexico and Canada
increased by 73 percent to $15.4 billion. That growth is higher than
that of any other export market. At the same time, Mexico and Canada
are now the largest source of U.S. agricultural imports. Unfortunately
for the produce industry, leading the list of imports are fruits and
vegetables followed by animal products.
Canadian vegetables and food preparations were the fastest growing
groups of U.S. imports since 1993. Vegetable imports more than quadrupled
and food preparations tripled. Imports of fresh and prepared vegetables
from Mexico also grew by 89 percent.
One of the losers in NAFTA was probably the small, independent Florida
tomato grower, according to industry sources.
“The tomato folks are probably the ones that have been the most
impacted by NAFTA,” Pat Cockrell, Florida Farm Bureau’s
director of the group’s Ag Policy Division, said.
“What we’ve saw as a result of NAFTA is that our tomato
acreage is probably the same as it was,” Cockrell said. “But,
but we had a lot of small independent growers tied to the packing
and what we see today is that our packers are now more vertically
integrated. We have seen a dramatic change in the dynamics of the
tomato industry.”
Florida once shipped 95 percent of all the winter vegetables consumed
in the U.S., by 1996, Mexico was shipping 68 percent of the U.S. market
for winter vegetables.
Skip Jonas with the Florida Tomato Committee said that since NAFTA
24 tomato packing houses and more than 100 tomato growers have gone
out of business. The industry responded with an anti-dumping case
filed against Mexico that resulted in preliminary findings indicating
that Mexico had dumped tomatoes into the United States.
The asparagus industry, as well, has seen tough times since NAFTA’s
introduction. Imports of asparagus totaled almost $120 million in
2001, up from $22.3 million in 1993. Imports from Mexico accounted
for over half of total imports in 2001, according to the California
Farm Bureau (CFB). The value of asparagus exports from Mexico was
nearly $65 million in 2001, double its pre-NAFTA level.
The CFB reported last year that the trade agreement produced commodity
winners and losers. “Though the agreement has resulted in a
slightly positive overall impact on California agriculture, this is
not the case for every commodity, industry segment and/or for every
farm,” Lisa Dillabo, director of international trade for CFB,
said.
California has also seen increased competition in the broccoli market,
as well, Dillabo pointed out. Almost all broccoli shipments to the
United States come from the NAFTA partners, according to the CFB.
Mexico supplied 86.7 percent and Canada 12.8 percent of all imports
in 2001.Total imports have risen sharply over the past twelve years.
Valued at $6.3 million in 1989, shipments increased to $41.5 million
in 2001. Mexican shipments of broccoli to the United States quadrupled
from $6.7 million in 1993 to $36 million. Imports from Canada have
been increasing as well from $200,000 in 1989 to $5.3 million in 2001.
On the other side of the coin, the potato industry has met with some
success. But, industry leaders say it is still trying to work out
problems, ten years later.
“Its has allowed for our export tariff to go to zero, which
is a good thing,” John Keeling, Executive Director of the National
Potato Council, said. But the groups is always wary of changes in
trade, adding that the group was carefully watching the details of
the Central American Free Trade Agreement.
“As far as reducing tariffs, in that sense, it has been a success.
We’ve also been successful in reopening the Mexican market by
cooperating on phytosanitary issues, separate from NAFTA.”
If there are remaining NAFTA challenges for the potato industry, they
come from the expansion of imports from Canada, the migration of potato
processing facilities to Canada and the Canadian creation of a law
referred to as a ministerial exemption. The law, which allows any
province to approve or deny the importation of processing potatoes,
has put up a barrier to exporting potatoes to Canada, industry sources
say.
“We continue to see domestic internal subsidies or market restrictions
like the ministerial exemption, or the bulk easement,” Keeling
said. “These laws have restricted our ability to access those
markets. You would have thought we could have moved to a harmonized
trading system more quickly. We’ve made progress, but we haven’t
got there.”
The law that a Canadian potato processor in British Colombia that
wants to buy potatoes from Washington, allow the provincial government
in Manitoba to object and send their own province’s potatoes
instead. The law is in effect even if the potatoes are more expensive,
he said.
“They can force that same processor to take russet potatoes
of inferior quality from their province,” Keeling said. The
law has left U.S. growers waiting until most Canadian potatoes are
used up before they can ship potatoes to markets there.
All impacts considered, Keeling said that the potato industry was
not hurt too bad in the NAFTA deal. “Based on the gross numbers
of potatoes being exported, the potato industry’s ag exports
have increased slightly since NAFTA.”
Age of
negotiation
Agriculture entered the age of intense trade negotiation with the
introduction of the North American Free Trade Agreement. And there
is no sign of turning back with the introduction of the Central American
Free Trade Agreement.
“We would of hoped that issues like Canada’s bulk easement
and ministerial exemption would have been resolved by now,”
John Keeling said, executive director of the National Potato Council.
“When the Canadian processors have to continue to take inferior
Canadian potatoes until they are gone, while our potatoes sit in storages,
that is hardly what one would view as a free trade concept.”
Lisa Dillabo, international trade director with California Farm Bureau,
said that trade negotiation have become much more important and intense
than they were ten years ago. Science based protocols have also become
one of the core concerns as the trading borders have become more pourous.
“The key to satisfactory dispute resolution is for NAFTA partners
to acknowledge and emphasize the importance of objective, science-based
sanitary and phytosanitary protocols,” she said.
“When we asked grower to identify trade barriers respondents
pointed to sanitary and phytosanitary restrictions (28 percent), price
competition (18 percent), border “gratuity” (15.7 percent),
transportation concerns (12.6 percent), tariffs (12 percent) and packing
and labeling requirements (10.4 percent),” she said.
“Our members are also seeking relief in the following trade
policy areas: improved and consistently regulated sanitary and phytosanitary
measures, speedy resolution of trade disputes and the need to label
imported products based on country of origin.”
