Magazine article SourceMex Economic News & Analysis on Mexico

President Vicente Fox Agrees to Seek Changes to Agriculture Sections of North American Free Trade Agreement

Magazine article SourceMex Economic News & Analysis on Mexico

President Vicente Fox Agrees to Seek Changes to Agriculture Sections of North American Free Trade Agreement

Article excerpt

President Vicente Fox's administration has agreed to seek major changes in the North American Free Trade Agreement (NAFTA) to help Mexican agriculture producers. Under an accord reached with leaders of agriculture organizations, the administration pledged to seek to negotiate a side agreement that would exempt beans and some corn varieties from the tariff-elimination process.

In the 90-page agreement, the administration agreed to explore the possibility of exempting corn and beans from NAFTA tariff elimination or at least to pursue tighter restrictions for the two products, which are staples of the Mexican diet.

"The federal executive...will begin immediate consultations with the governments of the United States and Canada with the objective of revising the tariff-lifting process on white corn and beans established under NAFTA and to substitute it with a permanent administrative mechanism for imports," read the text of the agreement, known as the Acuerdo Nacional para el Campo.

Mexico could seek tariff exemptions for white corn, beans

Under one proposal discussed with farm groups, Mexico would seek to eliminate all imports of white corn from the US, except in cases of severe shortages. Agriculture producers have blamed imports for low domestic prices. In some instances, the government came under criticism for importing corn at levels above the annual quota, affecting prices to domestic producers (see SourceMex, 1999-09-29).

Tariffs on corn have been reduced gradually from 200% when NAFTA was implemented in 1994 to 127% in 2001. They were scheduled to be eliminated completely by 2008.

In the case of beans, the Fox administration pledged to implement safeguards that would prevent imports at below- market prices. In March of this year, the administration imposed an embargo on bean imports from the US, Canada, and Nicaragua. This embargo was to prevent third countries from smuggling beans into the country through countries that have a trade agreement with Mexico (see SourceMex, 2003-03-12).

The president said the changes to NAFTA could be negotiated when Mexican, US, and Canadian representatives meet in June at an undisclosed location to review the agreement. At that time, said Fox, the three countries will be drafting a "new vision" for NAFTA for the next 10 years.

"We want to go beyond what NAFTA represents in trade as well as political and social relations," Fox told foreign correspondents. "Of course, we also want to make advances in the area of human resources and migration."

Most importantly, Fox said, the discussions would include the possibility of "enhancing" the agriculture sections of NAFTA.

Fox's commitment to seek modifications in NAFTA is a shift in policy for the administration, which had long insisted that no changes were needed to the trade accord. The change is seen as a response to the constant pressure from the agriculture sector to improve the farm sector, which has remained depressed for many years. Many studies indicate that very few agriculture producers have benefitted from NAFTA (see SourceMex, 1999-02-03).

The pressure from agriculture organizations has been especially strong this year, when tariffs were eliminated from all US and Canadian agricultural imports except on white corn, beans, and powdered milk.

Fox negotiates agriculture agreement with farm groups

The president sought to reduce the impact of the increased imports by negotiating the Acuerdo Nacional para el Campo with organizations like El Campo No Aguanta Mas, the Confederacion Nacional de Propietarios Rurales (CNPR), the Confederacion Nacional Campesina (CNC), the Central Campesina Independiente (CCI), the Congreso Agrario Permanente (CAP), and El Barzon. Among other things, the accord would boost financial assistance to the farm sector and develop other mechanisms to assist agriculture producers.

Still, the participating organizations threatened to reject any agreement that did not include some renegotiation of the agriculture sections of NAFTA (see 2002-12-04). …

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