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RENEGOTIATING NAFTA--what’s at stake?
Joseph W. Glauber
Senior Research Fellow, IFPRI
28 November 2017
Midwest Agriculture’s Ties to Global Economy Federal Reserve Bank of Chicago
World agricultural exports, 2000-2015
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: WTO 2017
Mil USD
Growth in global trade volumes, selected
product groups
50%
100%
150%
200%
250%
300%
Oilseeds
Wheat
Rice
Feed grains
Beef and veal
Swine
Poultry
Source: USDA, PSD database
Global import penetration
Commodity 2000/2001 2005/2006 2010/2011 2015/2016 2016/2017
Wheat 17.3% 19.0% 20.3% 24.4% 24.5%
Rice 6.1% 7.2% 7.9% 8.6% 8.6%
Sugar 29.4% 34.5% 34.6% 31.0% 32.1%
Soybeans 31.4% 29.6% 36.4% 42.0% 43.1%
Vegetable oil 32.7% 34.1% 38.5% 41.8% 42.8%
Feed grains 12.5% 11.4% 10.8% 13.5% 15.2%
Swine meat 3.6% 5.3% 5.9% 6.6% 7.6%
Poultry meat 9.1% 10.9% 11.6% 11.8% 12.3%
Beef and veal 11.2% 13.2% 13.4% 16.5% 16.0%
Source: USDA, PS&D database
Growth of South-South trade
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
as % of world imports as % of world exports South-South as % of world trade
Source: UNCTAD
US Agricultural Trade
-20
0
20
40
60
80
100
120
140
160
19
35
19
38
19
41
19
44
19
47
19
50
19
53
19
56
19
59
19
62
19
65
19
68
19
71
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
20
07
20
10
20
13
20
16
Balance
Exports
Imports
Bil 2009$
Source: USDA, GATS
US Ag Trade by Destination Bil USD
0
5
10
15
20
25
30
197019721974197619781980198219841986198819901992199419961998200020022004200620082010201220142016
Japan EU Canada Mexico China
Source: USDA, GATS
Top US agricultural export destination
Bil USD
0
5
10
15
20
25
30
European Union Japan Canada China
Source: USDA, GATS
US-Canada agricultural trade
0
5
10
15
20
25
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US exports to Canada Canada exports to US
Bil USD
US-Mexico agricultural trade
0
5
10
15
20
25
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US exports to Mexico Mexico exports to US
Bil USD
0
2
4
6
8
10
12
14
16
18
US-Canada
Canada-US
Bilateral flows with the United States, 2014-16
Bil USD
0
2
4
6
8
10
12
14
16
18
20
US-Mexico
Mexico-US
Bil USD
Bilateral trade with Canada, 2014-16
0.0 1.0 2.0
Other Grain ProdsMisc Hort Products
Other Feeds & FodderBeverages Ex Juice
Other Veg, Prep/PresBeef & Veal Fr/Froz
CoffeeChocolate & Prep
Berries, FrRelated Sugar Prod
Other Veg, FrOther Dairy Prods
Other Veg Oils/WaxesLettuce, Fr
WinePork, Fr/Froz
Pork, Prep/PresEssential Oils
Chickens, Fr/FrozSoybean Meal
US imports from Canada US exports to Canada
0.0 2.0 4.0
Snack Foods
Other Consumer Oriented
Red Meats, FR/CH/FR
Other Intermediate Products
Other Vegetable Oils
Live Animals
Processed Fruit & Vegetables
Fresh Vegetables
Other Bulk Commodities
Coarse Grains
Roasted & Instant Coffee
Wheat
Sugars, Sweeteners, Bev Bases
Feeds & Fodders
Planting Seeds
Bil USD Bil USD
Bilateral trade with Mexico, 2014-16
0 2 4 6
Fresh VegetablesOther Fresh Fruit
Wine and BeerSnack Foods
Processed Fruit &…Red Meats, FR/CH/FR
Other Consumer OrientedTree Nuts
Live AnimalsSugars, Sweeteners, Bev…Raw Beet & Cane Sugar
Fruit & Vegetable JuicesOther Intermediate…
Coffee, UnroastedOther Vegetable Oils
Bananas and PlantainsRoasted & Instant CoffeeOther Bulk Commodities
Other Dairy Products
0 1 2
CornSoybeans
Pork, Fr/FrozSoybean Meal
Beef & Veal Fr/FrozMisc Hort ProductsRelated Sugar Prod
Wheat, UnmilledOther Feeds & Fodder
Nonfat Dry MilkChickens, Fr/Froz
CheeseCotton, Ex LintersOther Grain Prods
Seeds, Field/GardenBeverages Ex JuiceRice-Paddy, Milled
Turkeys, Fr/FrozBeef Variety Meats
Feed Grain Prods
US exports to Mexico US imports from Mexico
Bil USD Bil USD
US fresh fruit and vegetables imports from Mexico
0
1
2
3
4
5
6
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Vegetables Fruit
Bil USD
Percent of annual Mexican fresh vegetables exports to the
US by month, 2010-16
0%
2%
4%
6%
8%
10%
12%
14%
US utilization of selected fresh vegetables
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90 100
1993-95 2013-15
Import penetration (%)
Per capita utilization (lbs)
Tomatoes Onions
Leaf lettuce
Brocolli
Bell peppers
Cucumbers
Squash
Garlic Eggplant Asparagus
Artichokes
US per capita utilization
0.0
5.0
10.0
15.0
20.0
25.0
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
20
07
20
10
20
13
20
16
pDomestic Imported
0.0
2.0
4.0
6.0
8.0
10.0
12.0
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
20
07
20
10
20
13
20
16
p
Domestic Imported
Fresh tomatoes Fresh bell peppers lbs lbs
Food processing sales of US affiliates in NAFTA
markets
0
5
10
15
20
25
30
35
40
45
50
2009 2010 2011 2012 2013 2014
Mexico
Canada
Source: US Department of Commerce, Bureau of Economic Analysis
Sales (bil USD)
Global value chains—f&v
Global value chains—livestock, 2014-16
0
200
400
600
800
1,000
1,200
1,400
1,600
Beef Pork
Canada
Mexico
US meat exports Mil USD
0
200
400
600
800
1,000
1,200
1,400
1,600
Cattle and calves Swine
Canada
Mexico
Mil USD US livestock imports
MFN applied duties
0
5
10
15
20
25
30
35
40
45
50
Animalproducts
Dairyproducts
Fruits,vegetableand plants
Coffee, tea Cereals &prep
Oilseeds,fats & oils
Sugar Beveragesand tobacco
Cotton Otheragricultural
products
Canada Mexico US
248.9%
Agricultural tariff profiles—applied MFN rates
0
10
20
30
40
50
60
70
Duty free ≤ 5% 5% - 10% 10% - 15% 15% - 25% 25% - 50% 50% - 100% > 100%
Canada Mexico US
Percent of tariff lines
Trade disputes involving the US and its NAFTA
partners
88
42 55
20
6
16 6
9
0
10
20
30
40
50
60
70
80
90
100
Brought by US againstCanada
Brought by Canadaagainst US
Brought by US againstMexico
Brought by Mexicoagainst US
NAFTA WTO
Looking forward
• Market access gains unlikely (without substantial tradeoffs) – Big tradeoffs necessary: dairy (US, Canada), poultry (Canada), sugar (US) – Seasonal trade remedy actions would be double-edged (f&v versus pork)
• Modernizing NAFTA: – TPP (e-commerce, dispute settlement, SPS, IP) – Greater efforts to harmonize standards, reduce regulatory barriers for trade – Single Window Environments
• “Do no harm” but will the “harm” come from other areas of contention (Chapter 19, rules of origin, domestic content, softwood lumber, …) where agriculture suffers collateral damage?
• Opportunity costs of negotiations: renegotiating the past rather than negotiating the future
