Renegotiation of NAFTA Agriculture Sections Seen Unlikely

SourceMex Economic News & Analysis on Mexico, September 6, 2006 | Go to article overview

Renegotiation of NAFTA Agriculture Sections Seen Unlikely


By Carlos Navarro from Austin, Texas

LADB Staff Writer

The pending elimination of import tariffs for corn, beans, powdered milk, and sugar under the North American Trade Agreement (NAFTA) has raised some red flags in Mexico, but agriculture officials from Chihuahua and Baja California see no chance that the accord will be renegotiated. Under the NAFTA timetable, the tariffs will no longer be in place as of Jan. 1, 2008. In the first phase of the opening of the agriculture market, the three NAFTA partners eliminated tariffs on most agricultural products, effective Jan. 1, 2003 (see SourceMex, 2002-09-04).

"Practically all trade in agriculture is already free under NAFTA," Baja California agriculture secretary Juan Pablo Hernandez Diaz said in an interview with the Latin America Data Base (LADB) at the 24th annual Border Governors Conference in Austin Aug. 24-25.

The subject of renegotiating the agriculture sections of NAFTA was not on the agenda of the conference, with an agriculture working group looking mostly at issues related to health inspection, transportation, logistics, and customs.

All six Mexican governors attending the conference are members of the Confederacion Nacional de Gobernadores (CONAGO), which endorsed renegotiating the NAFTA agriculture sections at a meeting in Morelia, Michoacan state, in 2003. One of those governors, Eduardo Bours Castelo of Sonora, participated in the negotiations of the agriculture sections of NAFTA in the late 1990s.

As in the years leading to the opening of the agriculture sector in 2003, key agriculture organizations like the Confederacion Nacional Campesina (CNC) are pushing the Mexican government to negotiate a postponement or even a full exemption to the opening of the agriculture market.

The Mexican Senate proposed a resolution in 2003 to enact a one-year moratorium on market-opening measures but abandoned that plan just weeks before the initial round of agriculture market-opening measures was to go into effect (see SourceMex, (see SourceMex, 2002-12-18).

Corn, beans no longer subject to tariffs in 2008

A strong symbolic difference exists between the market-opening measures that went into effect in 2003 and the ones scheduled for 2008. "We are talking about beans and corn, two commodities that are very sensitive for our country," said Hernandez Diaz.

The Coordinadora Nacional de Fundaciones Produce (COFUPRO) notes that tariffs have been eliminated for 27 products thus far, affecting only 25% of Mexican producers. In contrast, the scheduled opening of the corn, bean, sugar, and powdered milk markets in 2008 will affect 75% of Mexican producers.

"We are facing a very complicated situation," COFUPRO director Raul Romo told the Mexico City daily newspaper Excelsior in June, noting that Mexico is obliged to comply with the terms of NAFTA and yet is not prepared for the opening of the market.

In 2003, President Vicente Fox?s administration agreed to consider seeking an exemption for corn and beans under NAFTA (see SourceMex, 2003-04-23), but it never followed up on that proposal.

Hernandez Diaz said there was little chance that the NAFTA agriculture sector would be renegotiated. Instead, he noted, a trilateral commission comprising state and federal agriculture officials from the three NAFTA countries has met several times in recent years to consider measures to reduce the impact of eliminating tariffs on corn, beans, and powdered milk on the Mexican agriculture sector.

"We cannot reopen the agriculture sections of the accord because this would imply a full renegotiation of NAFTA," said Hernandez Diaz. "But we need to review the possible steps that can be implemented so that opening the agriculture sector does not have such a negative effect on Mexico."

The Baja California agriculture secretary said NAFTA has been beneficial for Mexico because it has promoted development and created jobs, but the benefits have been confined to larger metropolitan communities or the US-Mexico border. …

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