Trump and Mexico back down on farmer protections in NAFTA

Tomato on vine

As NAFTA negotiations race toward the finish line, reports indicate the Trump administration has dropped an important provision to protect farmers from the harmful practice of export dumping (selling at prices below the cost of production). Powerful agribusiness firms operating in both the United States and Mexico strongly opposed the proposal that would allow farmers growing seasonal crops to more easily challenge export dumping. The proposal was pushed by Florida legislators representing tomato growers who have been consistently undercut by Mexican imports, but the provision would have served farmers in all three NAFTA countries.

Current anti-dumping rules require that harm be shown to the majority of producers in a country, usually over a three-year period. The tomato growers’ proposal would have allowed anti-dumping cases to be brought when harm is shown to farmers growing seasonal agricultural products in only one region of the country (like tomatoes, strawberries or peppers grown in the Southeast) in any given year.

Produce companies operating in both the U.S. and Mexico heavily object to the proposal. Companies such as Driscoll’s and Wonderful warned the USTR that the Mexican produce industry would begin bringing antidumping cases against the U.S. (Mexico is the number one export market for U.S. apples, pears and sweet cherries.) Agriculture commodity groups like the American Soybean Association, the National Corn Growers Association and the U.S. Meat Export Federation also called for USTR to drop the proposal, stating that it “would be seized upon by trading partners across the globe” who would demand similar farmer protections in U.S. trade deals—and warned that retaliation cases could expand beyond the produce industry to other parts of the agriculture sector.

Agriculture export dumping has been one of the most harmful outcomes of NAFTA, impacting farmers in the U.S., Mexico and Canada. IATP has documented widespread agriculture dumping of commodity crops by U.S. agribusiness firms for more than two decades. Based on Mexican Census data, Tufts University researcher Tim Wise estimates that more than two million Mexicans left agriculture in the wake of NAFTA’s flood of imports (much of it corn), or as much as one-quarter of the farming population.

U.S. fruit and vegetable markets have also been affected. In the year before NAFTA, the U.S. was largely a net fruit and vegetable exporter. Now the U.S. is a net importer by a wide margin. Mexico’s export of fruits and vegetables to the U.S. more than tripled post-NAFTA. (See our primer on NAFTA and agriculture for more details.)

The flood of underpriced Mexican-grown tomatoes into the U.S. has been the target of Florida growers multiple times under NAFTA. Producers charge that Mexico unfairly subsidizes tomato exports, artificially lowering their prices. While a series of tomato agreements between the two countries set a minimum price reference point for Mexican tomatoes entering into the U.S. in 2012, Florida growers argued the agreement wasn’t working and called for an anti-dumping investigation—which the Obama administration eventually launched. In 2013, an updated agreement was reached between the two countries, but tensions remain.

Mexican negotiators also opposed the seasonal dumping proposal, expressing concerns about how it would affect agribusiness exporters in Mexico. The dropping of the anti-dumping proposal, along with promises not to utilize safeguards authorized at the WTO, could undermine efforts by incoming Mexican President Andrés Manuel Lopez Obrador to implement new agricultural reforms to restore local production of basic grains and other foods. Efforts to rebuild local production and food systems in Mexico would continue to be threatened by export dumping.

NAFTA is often touted as a big win for U.S. farmers, but it would be more accurate to say it has been a win for global agribusiness firms who trade across borders. Since 1992, the U.S. has lost more than 250,000 small and medium-sized farms and now has an agricultural trade deficit with Mexico and Canada. The proposed seasonal anti-dumping provision wouldn’t have solved all the problems with NAFTA—but it would have been a significant step toward balancing a playing field that tilts overboard toward agribusiness and away from farmers.