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NAFTA strongly supported by FPAA trade panel

TUBAC, AZ -- Common sense and a broad view of the successful history of the North American Free Trade Agreement are key components in evaluating the treaty going forward.

This was the bottom line of a NAFTA panel presentation moderated by FPAA President Lance Jungmeyer at the 49th Produce Convention & Golf Tournament. The Nov. 2-4 meeting was presented by the Fresh Produce Association of the Americas. NAFTA-panelThe NAFTA panel at the 49th Produce Convention & Golf Tournament: Ron Lemaire, president of the Canadian Produce Marketing Association; Martin Ley, president of Fresh Evolution; Veronica Nigh, trade economist for American Farm Bureau Federation; Javier Badillo, managing member at Fresh International; and panel moderator Lance Jungmeyer, president of the FPAA.

The panelists were Ron Lemaire, president of the Canadian Produce Marketing Association; Martin Ley, president of Fresh Evolution; Javier Badillo, managing member at Fresh International; and Veronica Nigh, trade economist for American Farm Bureau Federation.

Nigh said that U.S. produce exports to Canada and Mexico in NAFTA’s 23 years are up 200 percent and noted that the two U.S. neighbors provided 20 percent of U.S. produce imports before the treaty; now that is 40 percent.

She noted that in the U.S. political arena, “Mexico keeps getting it on the chin,” while “Canada may have more long-term issues” to face in assuring fair trade with the U.S.

Acknowledging that NAFTA may need some tweaking, Nigh asked, “How many people have been married 23 years who wouldn’t want to improve the relationship?”

Lemaire noted that “divorce looks mighty close” if NAFTA is opened to allow individual U.S. commodity groups to sue for anti-dumping regulations, as the Florida tomato industry has done over the life of NAFTA. Such lawsuits would fall under NAFTA Chapter 19, which deals with “review and dispute settlement in antidumping and countervailing duty matters.”

This would essentially force bilateral negotiations, losing the benefits of accessibility, availability and affordability created by NAFTA, Lemaire said.

But Lemaire praised the ongoing efforts to standardize and coordinate food-safety and food security inspections between NAFTA countries. He and Ley both spoke strongly in favor of having a PACA-like trust be part of a renegotiated NAFTA.

Lemaire noted that, despite some U.S. claims against the unfairness of trade under the NAFTA umbrella, Americans spend less than 11 percent of their income on food, which includes eating away from home. Americans spend just 6.6 percent of their income on in-home dining, which makes U.S. food expenditures the lowest in the world. Canadians spend 9.6 percent of their income for food consumed at home and Mexicans spend 23 percent of their income on food.

Of NAFTA, Lemaire said, “We know it works,” while there is the opportunity to improve NAFTA 2.0, a “compromise is key on the macro level we need this without getting lost in the weeds.”

Lemaire encouraged Mexican negotiators to endure the new discussions and talk to U.S. congressmen, who in the end will define -- or shut down -- the treaty. Reasonable discussion and negotiations will mean “we don’t have to find a divorce lawyer.”

Ley, who is an active authority on NAFTA and related North American produce trade issues, said that for Mexico, NAFTA “has been a fabulous tool.”

If beer and tequila are removed from the trade balance equation with the U.S., there is balanced trade, Ley noted. The United States is the largest importer of beer, but he noted that this creates an example of simple trade numbers becoming misleading. For the Mexican beer, “all the hops and raw materials are produced in the U.S.” and exported to Mexico.

Charts and numbers can construe trade imbalances within the fresh produce industry, but Ley said “people look at charts to justify something that is absolutely stupid.”

He said seasonality matters need to be applied to analyzing produce trade within NAFTA and how new Mexican -- and Canadian -- production has raised demand among American consumers.

Mexican and Canadian growers’ investment to create colorful, tasty and new tomato varieties and packaging has increased tomato demand -- and built the U.S. tomato market.

Jungmeyer noted that because of weather events, such as Hurricane Irma in Florida this year, “we couldn’t fill demand” if all three countries were not available for food buyers.

Lemaire supported this, noting that within 24 hours of Irma striking Florida citrus groves “the grapefruit market in Canada totally changed” with buyers contacting growers in Israel and Mexico. “They were able to fulfill supplies for about the same price.”

Lemaire said a drastic change in trade rules will force Canadian and Mexican producers to develop new markets.

Badillo said sweet peppers are another Mexican contribution to North American society, thanks to NAFTA trade opportunities. Badillo credits Wilson Produce in Nogales for introducing the previously unknown sweet pepper.

Jungmeyer added that most U.S. consumers “don’t have a clue” that the source of their food is something other than retail outlets. Thus, there is a huge lack of insight to understand the value of multiple food sources.

Jungmeyer said the industry needs to do a better job of educating U.S. consumers about their food supply.