“The food and agriculture trade relationship with Mexico has declined markedly, a trend the U.S. Mexico Canada’s implementation has not reversed,” according to a letter to Secretary of Agriculture Tom Vilsack and U.S. Trade Representative Katherine Tai from 27 leading food and agriculture associations.
Leading concerns highlighted by the group include a ban on glyphosate and genetically modified corn, increased obstacles to dairy trade, an organic export certification requirement, a state-sponsored campaign disparaging corn sweeteners from the U.S., a cessation of review and approval of biotechnology applications, implications from meat industry market access and geographical indications, a potato export ban, and a new front-of-pack labeling regulation. These issues, along with a high number of investigations on Mexico’s fresh produce exports to the U.S., hamper the competitiveness of U.S. farmers, ranchers, and other members of the food and agriculture sector.
“Mexico is one of America’s most important food and agriculture trade partners. NAFTA has yielded strong benefits to both countries and the U.S.-Mexico-Canada Agreement (USMCA) promises to build upon those gains,” the groups write. “We respectfully urge your attention to this important but quickly deteriorating trade relationship.”
In an exclusive interview with Vilsack, he says one of the first calls he made in his new role was to his counterparts in Canada and then to Mexico. “We had a conversation about genetically modified corn and the importance of at least maintaining it in the feed supply that goes into Mexico and received assurances that was the case,” Vilsack says.
He also received an explanation on what Mexico is doing on glyphosate and other issues that have cropped up. “The good thing about the USMCA is that there’s an enforcement mechanism,” Vilsack says. “There’s a way in which consultation could be triggered.”
The group of associations represent much of the food and agriculture sector that is responsible for roughly one-fifth of the country’s economic activity, directly supporting over 23 million jobs – constituting nearly 15% of total U.S. employment. Signers include the American Farm Bureau Federation, American Soybean Association, Corn Refiners Association, International Dairy Foods Association, North American Meat Institute, National Grain & Feed Association and U.S. Dairy Export Council.
On December 31, 2020, the Mexican government issued a Presidential Decree stating the intention to phase out the use of glyphosate and use of genetically modified corn for human consumption. While the standing of the decree is unclear and the scope is vague, the decree creates a significant risk and uncertainty to cross-border trade of corn and corn products, the letter notes.
“As the largest importer of corn and corn products from the U.S., the decree represents a dramatic shift in U.S.-Mexico trade relations and has the potential to negatively impact a significant portion of U.S. agricultural exports,” the groups note.
Beyond the decree, the Government of Mexico has created significant uncertainty for agricultural biotechnology, ceasing review and approval of any biotechnology applications since May 2018. “As a result, Mexico has become a significant barrier to launching new biotechnology products within North America, potentially restricting U.S. farmer access to new technologies that will assist in addressing critical issues such as sustainability and climate change,” the letter states.
Over the past year, Mexico has undertaken a state-sponsored campaign of disparagement of corn sweeteners from the U.S., which the groups claim is in violation of its trade obligations. There is reason to believe that these actions were coordinated with Mexican sugar industry advertising to disparage U.S. corn sweeteners.
“The public comments inaccurately allege that U.S. corn sweeteners are subsidized in violation of trade obligations, being dumped into Mexico, are uniquely (different from sugar) responsible for poor health outcomes, and that sugar is ‘natural’ while corn sweeteners are a chemical imposter,” the letter adds. “These attacks have included depictions in a federal government-sponsored publication depicting high fructose corn syrup (HFCS) as a ‘poison,’ using a skull and crossbones image. Additionally, Mexican officials have undertaken a ‘native corn’ campaign with the stated objective to eliminate imported U.S. corn.”
The USMCA preserves, and extends, the vital duty-free market access afforded to U.S. meat and poultry exports to Mexico established under NAFTA. Because of this access, and the resulting integration of the North American market for the meat and poultry industry, Mexico has cemented its position as a significant importer of U.S. meat and poultry, finishing 2020 as the third largest value market for U.S. beef and pork products and the top destination for U.S. poultry exports.
The groups expressed concern about policies that would result in retaliation against U.S. meat and poultry exports to Mexico, or other onerous barriers that would unduly restrict trade, cost hard-earned market share, and jeopardize jobs and livelihoods for American meat and poultry industry workers. One such impediment concerns attempts by the European Union to seize exclusive use of common meat terms under its 2018 free trade agreement with Mexico.
“Although USMCA provides important procedural safeguards for the recognition of new geographical indications (GIs), including strong mechanisms designed to prevent issuances of GIs that would block U.S. producers from using common names, meat and poultry producers, packers, and processors are susceptible to EU circumvention and overreach,” the letter states.
On December 16, 2020, the Organic Trade Association was informed by a U.S. accredited organic certifying agency that Mexico’s Health, Food Safety, and Quality Agency (SENASICA) would begin requiring all U.S. organic exports to Mexico to become certified to Mexico’s organic standards (Ley de Producto Organicos – LPO) no later than December 28, 2020.
This requirement has not been notified to the WTO to allow for stakeholder comments and was never formally notified to the U.S. government, the letter explains. Previously, USDA certified organic products could be exported to Mexico and sold as organic without additional certification.
Thanks to USDA and USTR efforts the U.S. was granted an extension until June 26, 2021. However, even this is an extraordinarily short timeline for implementation.
“If this policy is enforced, U.S organic producers will experience significant trade disruptions as certification can take a year or more for organic companies to become certified to a new organic standard,” the groups write. :These un-notified technical barriers to trade will increase costs of exporting to Mexico that include significant staffing expenses, paperwork, and new certification and inspection costs while Mexican exporters continue to enjoy access to U.S. markets.”
Mexico is the second largest market in the world for U.S. organic exports, importing over $117 million dollars of U.S organic goods in 2020. “The current timeline for certification is not feasible for U.S. companies, and if implemented, will cause significant trade disruptions and losses for U.S. organic exporters. SENASICA has not provided clarity on what products specifically will be required for certification, if the policy includes all organics or only a select grouping,” the groups writing, asking for additional time for certification as well as a confirmation on affected products.