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RENEGOTIATING NAFTA: OPPORTUNITIES FOR 

AGRICULTURE 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JULY 26, 2017 

Serial No. 115–11 

( 

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

K. MICHAEL CONAWAY, Texas, Chairman 

GLENN THOMPSON, Pennsylvania 

Vice Chairman 

BOB GOODLATTE, Virginia, 

FRANK D. LUCAS, Oklahoma 

STEVE KING, Iowa 

MIKE ROGERS, Alabama 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

SCOTT DESJARLAIS, Tennessee 

VICKY HARTZLER, Missouri 

JEFF DENHAM, California 

DOUG LAMALFA, California 

RODNEY DAVIS, Illinois 

TED S. YOHO, Florida 

RICK W. ALLEN, Georgia 

MIKE BOST, Illinois 

DAVID ROUZER, North Carolina 

RALPH LEE ABRAHAM, Louisiana 

TRENT KELLY, Mississippi 

JAMES COMER, Kentucky 

ROGER W. MARSHALL, Kansas 

DON BACON, Nebraska 

JOHN J. FASO, New York 

NEAL P. DUNN, Florida 

JODEY C. ARRINGTON, Texas 

COLLIN C. PETERSON, Minnesota, Ranking 

Minority Member 

DAVID SCOTT, Georgia 

JIM COSTA, California 

TIMOTHY J. WALZ, Minnesota 

MARCIA L. FUDGE, Ohio 

JAMES P. MCGOVERN, Massachusetts 

FILEMON VELA, Texas, Vice Ranking 

Minority Member 

MICHELLE LUJAN GRISHAM, New Mexico 

ANN M. KUSTER, New Hampshire 

RICHARD M. NOLAN, Minnesota 

CHERI BUSTOS, Illinois 

SEAN PATRICK MALONEY, New York 

STACEY E. PLASKETT, Virgin Islands 

ALMA S. ADAMS, North Carolina 

DWIGHT EVANS, Pennsylvania 

AL LAWSON, JR., Florida 

TOM O’HALLERAN, Arizona 

JIMMY PANETTA, California 

DARREN SOTO, Florida 

LISA BLUNT ROCHESTER, Delaware 

MATTHEW S. SCHERTZ, Staff Director 

ANNE SIMMONS, Minority Staff Director 

(II) 

(III) 

C O N T E N T S 

Page 

Conaway, Hon. K. Michael, a Representative in Congress from Texas, opening 

statement .............................................................................................................. 1 

Prepared statement .......................................................................................... 2 

Peterson, Hon. Collin C., a Representative in Congress from Minnesota, opening statement ........................................................................................................ 3 

WITNESSES

Vilsack, Hon. Thomas ‘‘Tom’’ J., President and Chief Executive Officer, U.S. 

Dairy Export Council, Arlington, VA ................................................................. 4 

Prepared statement .......................................................................................... 5 

Frazier, Kendal, Chief Executive Officer, National Cattlemen’s Beef Association, Centennial, CO ............................................................................................ 15 

Prepared statement .......................................................................................... 16 

Brosch, J.D., Kevin J., Principal, BroschTrade LLC, Woodville, VA; on behalf 

of National Chicken Council; National Turkey Federation; USA Poultry 

& Egg Export Council .......................................................................................... 25 

Prepared statement .......................................................................................... 26 

Gaibler, Floyd D., Director, Trade Policy and Biotechnology, U.S. Grains 

Council, Washington, D.C. .................................................................................. 30 

Prepared statement .......................................................................................... 32 

Hammer, Thomas A., President, National Oilseed Processors Association, 

Washington, D.C. ................................................................................................. 36 

Prepared statement .......................................................................................... 38 

Brown, Reginald L., Executive Vice President, Florida Tomato Exchange, 

Maitland, FL; on behalf of Florida Fruit and Vegetable Association .............. 42 

Prepared statement .......................................................................................... 44 

(1) 

RENEGOTIATING NAFTA: OPPORTUNITIES 

FOR AGRICULTURE 

WEDNESDAY, JULY 26, 2017 

HOUSE OF REPRESENTATIVES, COMMITTEE ON AGRICULTURE, Washington, D.C. 

The Committee met, pursuant to call, at 10:00 a.m., in Room 

1300 of the Longworth House Office Building, Hon. K. Michael 

Conaway [Chairman of the Committee] presiding. 

Members present: Representatives Conaway, Thompson, Lucas, 

Gibbs, Austin Scott of Georgia, Crawford, DesJarlais, LaMalfa, 

Davis, Yoho, Allen, Bost, Rouzer, Kelly, Comer, Marshall, Faso, 

Dunn, Arrington, Peterson, David Scott of Georgia, Costa, Walz, 

Fudge, McGovern, Vela, Lujan Grisham, Kuster, Nolan, Bustos, 

Plaskett, Adams, Evans, Lawson, O’Halleran, Panetta, and Soto. 

Staff present: Bart Fischer, Darryl Blakey, Jackie Barber, Matthew S. Schertz, Rachel Millard, Stephanie Addison, Anne Simmons, Liz Friedlander, Mary Knigge, Matthew MacKenzie, Mike 

Stranz, John Konya, Nicole Scott, and Carly Reedholm. 

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A 

REPRESENTATIVE IN CONGRESS FROM TEXAS 

The CHAIRMAN. Good morning. This hearing of the Committee on 

Agriculture entitled, Renegotiating NAFTA: Opportunities for Agriculture, will come to order. I have asked G.T. Thompson to offer up 

the prayer. G.T.? 

Mr. THOMPSON. Thank you, Mr. Chairman. 

Heavenly Father, we just thank You for this blessed day, the rest 

of the night, and this new day. Lord, we come together as individuals who share a passion and commitment for agriculture, for rural 

America, and what rural America provides to all of America and 

much of the world. And so Lord, we just ask Your blessings over 

these proceedings. We gather here to celebrate all the blessings 

that You have given us in terms of access to bountiful, affordable 

food and clothing materials and building materials and energy, all 

of the resources that you have blessed us with and charged us to 

utilize. We just ask your blessings over these proceedings, and I 

ask this in the name of my savior, Jesus Christ. Amen. 

The CHAIRMAN. Thank you, G.T. 

I want to start by welcoming our witnesses today. Thank you for 

taking time out of your schedules to share your thoughts with us 

today. 

As we have noted often, American farmers and ranchers are the 

most efficient, productive and competitive producers in the world. 

2 

Their ability to meet the rapidly-growing and ever-changing demands both at home and abroad has allowed our country to become 

one of the world’s most open agricultural economies, supplying our 

trading partners with a safe and affordable food and fiber supply. 

These trade relationships have become an essential part of the 

U.S. agricultural industry, and nowhere is trade more important 

than in our relationships with our neighbors to the north and 

south. 

For more than 20 years, NAFTA has governed trade among our 

three countries, and in that time U.S. agricultural exports to Canada and Mexico have nearly quadrupled. Both countries have remained essential trading partners for the U.S., accounting for 

roughly 28 percent of total U.S. agricultural trade. 

While Canada and Mexico regularly are two of our top three export destinations for agricultural products, they also remain the 

United States’ largest suppliers of agricultural inputs. In 2016, 

while the U.S. continued to run an overall trade surplus in agriculture, we managed to run a trade imbalance with both Canada 

and Mexico, totaling over $6 billion. 

A lot has changed since the 1994 agreement was signed. All 

three economies are much larger and production agriculture has 

evolved and improved, growing to meet ever-changing consumer demands and technological advances. And it is against this backdrop 

that the Trump Administration prepares to renegotiate the terms 

of NAFTA. 

I recognize there is a certain level of angst about renegotiating 

the terms of our agreement. But let me reiterate, we have no interest in reversing any of production agriculture’s hard-fought gains, 

and the Administration has made clear that it doesn’t either. In 

fact, the recently-published renegotiation objectives affirmed the 

importance of maintaining existing reciprocal duty-free market access for agricultural goods. 

Whether you are focused on maintaining current market access 

or you are eager for prospects of expanded trade opportunities, production agriculture stands to benefit from a modernized trade 

agreement with our neighbors to the north and south. As always, 

we must stay vigilant and all work together to ensure we achieve 

the best deal possible for American agriculture. 

[The prepared statement of Mr. Conaway follows:] 

PREPARED STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE IN

CONGRESS FROM TEXAS

I want to start by welcoming all of our witnesses. Thank you for taking time out 

of your busy schedules to share your thoughts with us today. 

As we have noted time and again, America’s farmers and ranchers are the most 

efficient, productive and competitive producers in the world. Their ability to meet 

the rapidly-growing and ever-changing demands both at home and abroad has allowed our country to become one of the world’s most open agricultural economies, 

supplying our trading partners with a safe and affordable food and fiber supply. 

These trade relationships have become an essential part of the U.S. agricultural 

industry, and nowhere is trade more important than in our relationship with our 

neighbors to the north and south. 

For more than 20 years, NAFTA has governed trade among our three countries, 

and in that time has nearly quadrupled U.S. agricultural exports to Canada and 

Mexico. Both countries have remained essential trading partners for the U.S., accounting for roughly 28 percent of total U.S. agricultural exports in 2016. 

3 

While Canada and Mexico regularly are two of our top three export destinations 

for agricultural products, they also remain the United States’ largest suppliers of 

agricultural inputs. In 2016, while the U.S. continued to run an overall trade surplus in agriculture, we managed to run a trade imbalance with both Canada and 

Mexico, totaling over $6 billion. 

So, a lot has changed since the 1994 agreement was signed. All three economies 

are much larger and production agriculture has evolved and improved, growing to 

meet changing consumer demands and technological advances. And it’s against this 

backdrop that the Trump Administration prepares to renegotiate the terms of 

NAFTA. 

I recognize there is a certain level of angst about renegotiating the terms of our 

agreement. But let me reiterate, we have no interest in reversing any of production 

agriculture’s hard-fought gains, and the Administration has made it clear that it 

doesn’t either. In fact, the recently-published renegotiation objectives affirmed the 

importance of maintaining existing reciprocal duty-free market access for agricultural goods. 

Whether you’re focused on maintaining current market access or you are eager 

for the prospects of expanded trade opportunities, production agriculture stands to 

benefit from a modernized trade agreement with our neighbors to the north and 

south. As always, we must stay vigilant and all work together to ensure we achieve 

the best deal possible for American agriculture. 

With that, I yield to the Ranking Member for any opening remarks he would like 

to make. 

The CHAIRMAN. And with that, I yield to the Ranking Member 

for any comments he would like to make. 

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A 

REPRESENTATIVE IN CONGRESS FROM MINNESOTA 

Mr. PETERSON. Thank you, Mr. Chairman, and I also want to 

welcome the witnesses to today’s hearing. We have a diverse group 

of industry representatives, and they will share their opinions on 

changes in NAFTA. 

I am supportive of efforts to renegotiate NAFTA, but we need to 

make sure that the end result will work for agriculture. As well, 

my producers have said just make sure we do no harm with whatever we end up doing. 

I am concerned about some of the issues arising with respect to 

the agriculture exports from Mexico as a result of some of the rhetoric and uncertainty around this negotiation, but the biggest issue 

that I have had with NAFTA is the fact that Canada has been allowed to continue their supply management system for dairy and 

poultry. When they did the original negotiation, they did not have 

ultra-filtered milk and that was not protected under the agreement, and this Class VII was established and the market was 

shopped around to some of our producers, and even though it was 

a month-to-month thing, and then Canada figured out this is undermining their situation and they stopped it. It is part of the problem we have when dealing with them with their supply management system. 

The biggest problem, though, is the number three and number 

five largest dairy companies in the United States are now owned 

by Canadians, and one of those is actually a Canadian co-op. We 

have a Canadian co-op that is bigger than Land O’Lakes and DFA 

and our co-ops, which I am not sure is a good thing for the longterm in the United States. 

This is an issue that I have raised with the USTR Ambassador, 

with Secretary Ross. They are both aware of what is going on, and 

they said they would work to address it; but, in the last couple of 

4 

months, I have met with the Canadians, both government higher 

officials and some of the Agriculture Committee people, and given 

their response, I am not holding my breath. I hope that in this negotiation we can get some kind of path to get this supply management thing so that we have a level playing field with the Canadians. 

Our farmers need a good deal, and that is why we are here to 

listen to testimony today. I hope that everybody is listening, especially the Administration, as we begin renegotiating NAFTA and 

that, again, whatever we end up doing, we don’t do any harm to 

the markets that we have been able to establish. 

I yield back. 

The CHAIRMAN. I thank the gentleman. 

I would like to now welcome our witnesses to the hearing this 

morning. 

First off, we have the Honorable Tom Vilsack, President and 

CEO of U.S. Dairy Export Council, Arlington, Virginia. Mr. Secretary, welcome back. It should be a little bit different for you this 

morning than we have been to you in the past. 

Mr. Kendal Frazier, who is Chief Executive Officer of the National Cattlemen’s Beef Association, Centennial, Colorado. 

Mr. Kevin Brosch, who is the Principal of BroschTrade, LLC, 

Woodville, Virginia. He is here on behalf of the National Chicken 

Council, the National Turkey Federation, and the U.S. Poultry and 

Egg Export Council. 

Mr. Floyd Gaibler, Director, Trade Policy and Biotechnology, U.S. 

Grains Council here in Washington. 

Mr. Thomas Hammer, who is the President, National Oilseed 

Producers Association in DC. 

And Mr. Reggie Brown, who is the Executive Vice President, 

Florida Tomato Growers Exchange, Maitland, Florida, on behalf of 

the Florida Fruit and Vegetable Association. 

Again, gentlemen, thank you for being here. Secretary Vilsack, 

when you are ready. 

STATEMENT OF HON. THOMAS ‘‘TOM’’ J. VILSACK, PRESIDENT 

AND CHIEF EXECUTIVE OFFICER, U.S. DAIRY EXPORT 

COUNCIL, ARLINGTON, VA 

Mr. VILSACK. Mr. Chairman, I want to thank you and the Ranking Member of the Committee for the opportunity to be here today 

on behalf of the nearly 42,000 dairy operators in the United States, 

the 1,300 plants that process dairy products, and over 100,000 employees that are employed as a result of ag exports, providing a 

safe, stable, and sustainably produced supply of dairy products. 

Mr. Chairman, I want to emphasize the importance of exports to the dairy industry. Since 1994, we have seen an increase of $36 billion to the bottom line for producers and processors as a result of 

exports. It has added about $1.25 per hundredweight, and one out 

of every seven tankers today on the road is headed to an export 

market. It is important for us to focus on trade, and we appreciate 

the opportunity to comment about the renegotiation and modernization of NAFTA. 

We think this offers an opportunity to preserve what is working 

in NAFTA, to strengthen what can be better, and to fix what is 

5 

currently not working with our trade relationships with Mexico and 

Canada. Let me talk briefly about all three. 

We need to preserve the reciprocal duty free market access and 

opportunity that is presented as a result of NAFTA. We have seen 

the benefit of that, particularly in the Mexican market. Nearly 1⁄3

of all of our dairy exports go to Mexico. It now represents 73 percent of all of the imported dairy products that go into Mexico come 

from the U.S. It is an amazing opportunity for us that can grow 

over time. 

We need to strengthen the SPS provisions of NAFTA to ensure 

that science-based rules continue to be established in a transparent 

way. We need to focus on rules of origin, and we need to strengthen 

the geographic indications provisions protecting the use of common 

names, particularly for cheese products. 

Finally, we need to fix, Mr. Chairman, the trade distorting practices that have been implemented by Canada to protect their supply management and their market opportunities. This offers an opportunity and the capacity to enact policies and regulations that 

will encourage and not inhibit imports from the U.S. The most recent example of Canadian action is the adoption of Class VI and 

Class VII, which has created a serious problem in our dairy industry. 

Mr. Chairman, I appreciate the opportunity to be back here. I 

look forward to the questions from the Committee, and I yield back 

the balance of my time. 

[The prepared statement of Mr. Vilsack follows:] 

PREPARED STATEMENT OF HON. THOMAS ‘‘TOM’’ J. VILSACK, PRESIDENT AND CHIEF

EXECUTIVE OFFICER, U.S. DAIRY EXPORT COUNCIL, ARLINGTON, VA 

Hearing on the North American Free Trade Agreement 

I am Secretary Thomas Vilsack, President and CEO of the U.S. Dairy Export 

Council (USDEC). USDEC is a nonprofit, independent membership organization 

that represents the export trade interests of U.S. milk producers, proprietary processors, dairy cooperatives, and export traders. The Council’s mission is to build global demand for U.S. dairy products and assist the industry in increasing the volume 

and value of exports. 

I very much appreciate the opportunity to testify before this Committee today 

about the importance of the North American Free Trade Agreement (NAFTA), its 

benefits to the U.S. dairy industry, and key areas in urgent need of improvement. 

Today I will share my perspectives as someone who has worked within the parameters of NAFTA almost since its inception. This important agreement has created 

both opportunities and challenges for myself and the people I have represented as 

a two-term farm state Governor, during 8 years as U.S. Secretary of Agriculture, 

and today as leader of a dairy export organization that counts Mexico as its largest 

export trade partner. 

Vibrant growth in dairy exports over the last 10 to 15 years has had a net impact 

of about a $1.25 per hundredweight increased price on milk produced in the U.S. 

That’s an additional $36 billion our nation’s 42,000 dairy farmers have received 

thanks to growth in dairy exports, and is further compounded when one accounts 

for value-added processing at our nation’s 1,300 dairy processing facilities. More 

than 100,000 Americans livelihoods depend on jobs created by expanding markets 

for U.S. dairy exports, which now account for about 15 percent of all U.S. milk produced. 

Executive Summary of Testimony 

Within the agricultural sector the three NAFTA partners each have a unique set 

of needs and expectations. We operate under different economic systems. Yet we all 

serve consumers who look to the agricultural sectors of their own nations and 

NAFTA partners to meet their food, fiber and fuel needs as efficiently as possible. 

Dynamic duty-free North American trade under NAFTA has helped better satisfy 

6 

North American consumer needs since the agreement’s inception and that has resulted in increased demand for dairy products throughout North America. But 

NAFTA can be made so much better, for the betterment of all. 

Within the U.S. dairy sector, NAFTA has been enormously beneficial in liberalizing dairy trade with Mexico. Under NAFTA, Mexico has grown to become the largest export market for U.S. dairy exports. Through close cooperation, the U.S. and 

Mexican dairy industries have grown together in a mutually beneficial manner. 

They are our brethren in a cross-border effort to grow both primary dairy product 

production and consumption, as well as value-added food production for export. 

Canada unfortunately has created a dairy trade relationship with the United 

States that can best be described as heavily strained. Whenever the U.S. begins to 

create a small foothold in Canada’s dairy market, the Canadian Government creates 

new classifications, categories or standards to make U.S. dairy exports non-competitive with domestic product. The most recent manifestation of this practice was witnessed earlier this year with Canada’s new pricing scheme that essentially wiped 

out an export market for ultra-filtered milk that U.S. processors had developed and 

for which many U.S. dairy farmers had come to rely upon as a market for their 

milk? 

Canada argues that they import large quantities of U.S. dairy product. However, 

what Canada is not transparent about is how these imports are coming under a report program that forces the equivalent amount of dairy coming into Canada to be 

re-exported in many cases back to the United States. Canada’s special class [VII], 

intended to promote their own production of milk powders, goes against any common sense discussion. How come a country that has supply management, and has 

one of the highest farm gate dairy prices manages to export product at the lowest 

prices in the world? 

Furthermore, Canada undermine the intellectual property laws of their own country as well as international agreements like NAFTA through the acceptance of 

trade-limiting geographic cheese names. In short, the United States has a tremendous amount of unfinished business with Canada with respect to NAFTA. 

While this hearing will deal with improvements needed to make NAFTA more of 

a true North American Free Trade Agreement with respect to the agricultural sector, I cannot overstate both the urgency and importance negotiating NAFTA language that addresses the EU’s global attempt to win further acceptance of geographic indicators. Canada already recognizes GIs. The EU is talking to Mexico 

about GIs. And, just recently, Japan struck an agreement with the EU that recognizes Geographic Indicators. Geographical indications can and should be used when 

they bring value to the consumer to better define a product, but not when they exist 

solely as a tool for exporters in one country or region to create monopolies and pricesetting cartels on what are otherwise common types of cheeses and dairy goods. 

The U.S. dairy industry is united in its desire to preserve what is working under 

NAFTA with Mexico and to address what is not working with Canada. We appreciate the Administration’s support for our key priorities, as reflected in the recently 

released NAFTA trade objectives, and we look forward to working closely with this 

Committee to help ensure that the United States achieves its stated objectives in 

a renegotiated NAFTA. 

Benefits of Trade and NAFTA to U.S. Dairy Industry 

Trade is critical to the U.S. dairy sector. The equivalent of 1 day’s worth of milk 

production each week now gets turned into products that are exported all around 

the world. The expansion of U.S. dairy exports since 2004 has increased our farmers’ milk prices by an average of $1.25 a hundredweight. In other words, rising exports have increased farmers’ milk sales income by roughly $36 billion over what 

they would have gotten in that period if exports had held steady from 2004. 

Just as importantly, U.S. dairy exports support up to 100,000 American jobs and 

cover every state of the Union. Impairing our export sales would therefore deliver 

a devastating employment hit not only to farmers, but also to workers in companies 

supplying inputs and services, and downstream processing plant jobs, as well as cities with large port facilities heavily dependent on trade. 

As we look at how to ensure we can continue a positive track record of export 

sales supporting farms and good jobs back here at home, NAFTA, and the ongoing 

discussions pertaining to modernizing it, is essential to that goal. Mexico is by far 

the leading export market for U.S. dairy products while Canada clocks in at number 

two, although a sizable portion of U.S. product shipped to Canada is for further 

processing and ultimate re-export outside of Canada, including back to the United 

States. 

Last year the U.S. shipped $1.2 billion worth of dairy products to Mexico, up from 

just $124 million in 1995. For much, if not all, of this we have NAFTA to thank. 

7 

Mexico now is the U.S.’s largest export customer, by far. Sales to Mexico are roughly 

triple those to China, our third largest export market, demonstrating just how irreplaceable the Mexican market is. For example, in 2016 Mexico accounted for 47% 

of U.S. exports of nonfat dry milk, 31% of cheese, and 38% of butterfat. Before 

NAFTA and before Mexico joined the predecessor to the WTO (the GATT) the only 

dairy-related U.S. exports to Mexico were some non-fat dry milk shipments for government feeding programs and a small number of breeding cattle. 

NAFTA has been the driving force behind this remarkable growth and is the reason the U.S. share of Mexico’s total dairy imports is 73% today. As mentioned earlier, total U.S. dairy exports support some 100,000 jobs in the U.S.; our exports to 

Mexico support roughly a quarter of them. Preserving those sales is therefore essential not only to American dairy farmers, but also to the workers in companies supplying inputs and services, and downstream processing plant jobs all across this 

country. 

Without NAFTA, the duty-free access U.S. companies enjoy into Mexico could 

evaporate and be replaced by WTO Most-Favored Nation (MFN) tariff levels. These 

are the rates that other major dairy exporters are currently required to pay. On an 

applied basis, Mexico’s over-quota MFN tariffs can currently reach as much as 45% 

for skim milk powder and 60% for cheese (with even in-quota rates for cheese applied at 45%). Mexico has the right, however, to raise its MFN rates to considerably 

higher over-quota tariff levels of 125% for both powder and cheese. 

Changes to that preferential tariff situation would dramatically undermine a core 

advantage of U.S. suppliers as the only major dairy supplier to Mexico currently 

benefiting from free trade. As we speak, Mexico is negotiating with the European 

Union (EU) which is actively working to secure its own preferential access to the 

Mexican market while New Zealand and Australia discuss with Mexico how to move 

forward with the Trans-Pacific Partnership with the remaining countries. Conceivably, all three of our major competitors could see improved access to the Mexican 

market in the coming years. 

That is what makes NAFTA absolutely essential for our industry—it currently 

provides U.S. exporters with uniquely preferential access to the Mexican dairy market and, looking forward, is the vehicle the U.S. will need to ensure that we remain 

competitive in that market should Mexico decide to use its ongoing FTA discussions 

with major dairy exporting nations to open up new inroads to its market for them. 

Because of NAFTA and Mexico’s commitment to a mutually beneficial trading relationship, we currently have very few trade problems with Mexico in dairy—it is 

our goal to use these discussions to help keep it that way. NAFTA has enabled the 

development of a partnership with Mexico that’s benefited not only the U.S. dairy 

industry, but also the Mexican dairy sector. 

Since 1994, Mexican milk production has increased by 58% which has helped meet 

the ever-increasing demand of Mexican consumers and visitors to Mexico while at 

the same time continuing to provide market opportunities for American producers 

as well. Together, Mexico and the U.S. have collectively grown consumption for a 

large variety of products offered at affordable prices for both the Mexican and U.S. 

consumer. 

Areas for Improvement 

NAFTA has accomplished a great deal over the past 2+ decades, but it has also 

been overtaken by new, unanticipated forms of trade and trade problems. Our industry looks forward to working with this Committee and with the Administration 

to explore ways to preserve and strengthen NAFTA to address those issues. 

As noted above, NAFTA achieved substantial liberalization in dairy trade between 

the United States and Mexico, and our aim is to ensure that that open trade remains in place—both with respect to tariffs and non-tariff measures. At the same 

time, NAFTA left sizable barriers on trade between the U.S. and Canada largely 

untouched. With Canada’s restrictions already in place, reflected in much higher 

tariffs facing U.S. dairy exports, an imbalance in market access obligations in the 

sector has existed for over 2 decades. Moreover, Canada has taken additional steps 

over the years to limit imports whenever Canada’s already highly restrictive import 

restrictions were deemed to be insufficiently limiting. 

Here below, I would like to spotlight a few areas on our trading relationships with 

Mexico and Canada that would benefit from improvement as we update this critically important trade agreement. 

Canada: Removing Trade-Distorting Policies and Opening a Sheltered Market 

Canada’s exorbitant dairy tariffs are well known. Over-quota tariffs top the charts 

at 241% for fluid milk, 201% for skim milk powder, 298% for butter and 245% for 

cheese. Among the developed world, only the island nation of Japan in addition to 

8 

countries such as Norway and Switzerland have maintained similar dairy fortress 

walls with the U.S. Under NAFTA many are aware of the unfortunate fact that U.S. 

dairy exports are one of the very few sectors that do not enjoy duty-free access to 

the Canadian market. 

What may be less well known by all Members of this Committee is a more recent 

threat that has emerged as a result of Canadian policies trialed in Ontario last 

spring and instituted across Canada this February: Classes [VI] and [VII] respectively. These classes are part of the new Canadian National Ingredients Pricing 

Strategy. 

NAFTA modernization discussions are an unmissable opportunity to address just 

that type of unfinished business in order to truly open up the North American market and put our dairy exports to Canada on par with the vast majority of the rest 

of the U.S. economy. 

Canada, as a high price country that has refused to enter into the global markets 

with milk prices at global levels, adopted a new pricing scheme (Class [VII]) to effectively subsidize protein commodity exports without compromising the internal farm 

price of milk. These new pricing regulations and the broader Pricing Strategy have 

already negatively impacted bilateral trade with Canada. Most concerning, however, 

they are poised to unfairly take away the global markets that are our industry’s lifeblood. 

The new Canadian policies effectively subsidize exports and are already being 

used to undercut U.S. dairy exports of milk proteins not just to Canada but even 

more importantly to a number of other export markets around the world. Because 

the U.S. dairy industry depends on a healthy global export market, Canada’s strategy poses a very grave threat to America’s dairy farmers by unfairly underbidding 

world market prices. 

The shift in Canadian pricing tools has been driven by an uptick in Canadian demand for butter and cream. Rather than meeting this new domestic-demand growth 

through imports in order to keep its so-called supply management system in balance, Canada has used its government-dictated milk production system to encourage 

more of its own milk production, therefore supplying more butterfat, while simultaneously creating a surplus of skim milk, as milk contains both products. 

Since Canada had to find a way to ‘‘solve’’ this surplus problem of its own creation 

and rid itself of the excess milk proteins, it has been using its government-controlled 

system to keep domestic milk prices at almost double the world and comparable 

U.S. prices, while creating a new scheme to push surplus milk proteins onto world 

markets and push out competition in its domestic market. 

Canada implemented the new Class [VII] pricing system in February 2017. The 

Class [VII] establishes a protein price based on the lowest of U.S., EU, and Oceania 

skim milk prices, and then subtracts a very generous processor margin. In recent 

months, this means that Canada has priced milk proteins available to its processors 

under Class [VII] for export at approximately 15% less than what U.S. processors 

typically pay. That incentivizes processors to utilize subsidized Canadian milk proteins to modernize and expand their protein business. 

Reports to date from various markets around the world indicate that product is 

being offered even below the lowest world market price. This below cost pricing avenue applies to the manufacture of skim milk powder (SMP), whole milk powder 

(WMP), milk protein concentrate (MPC), ultra-filtered milk (UFM) and similar dairy 

protein products. 

This recently introduced provision of below market price milk to produce the listed dairy products provides an incentive to substitute those products for their imported counterparts in Canada while enabling the export of Canada’s structural surplus of SMP at below the cost of production. It flies in the face of common sense 

that a country with one of the world’s highest milk prices would be offering a commodity product at levels far below those offered by all other major dairy suppliers. 

As a result, these pricing schemes have already harmed U.S. exports to Canada 

of ultra-filtered milk and have begun facilitating the dumping of milk powder onto 

the commercial global markets on which the U.S. so strongly relies. This is the latest in a series of narrowly targeted milk classes that have been created over the 

past few years specifically to displace imports, with the added harm of now also displacing U.S. exports to other markets. 

Canada is not alone in having different classes for milk usage and the mere existence of milk classes is not an inherent problem. However, the way Canada has utilized its milk class system is unique and very problematic. Canada’s milk class system is regularly evolving in order to constrain imports and—in the latest case—provide an incentive to export. The new Class [VII] pricing allows processors of nonfluid domestic products to allocate or use a proportion of their milk protein to the 

new Class [VII] pricing. That effectively ensures processors will now use some of the 

9 

lower priced skim in lieu of imported U.S. milk proteins. We expect that the balance 

not used internally will likely be used to process a reduced-price exportable surplus 

of subsidized protein products such as skim milk powder and dried milk protein concentrates. 

These special pricing classes are put in place by the Canadian Milk Supply Management Committee (CMSMC), whose voting members are provincial boards and 

provincial governments and which is responsible for policy determination and supervision of the provisions of the National Milk Marketing Plan. The way in which 

Canada is operating its milk class pricing system indicates a government policy intention to erect trade barriers and distort global markets. 

The production and sales data underscore what a pressing concern this program 

poses to the international milk powder market that is so critical to U.S. dairy farmers and companies. The full size and scope of the threat to the U.S. dairy industry 

is not reflected only in what Canada is doing today through its new pricing programs but rather is seen in the sharp surge in production, exports and utilization 

of the new Class [VII] pricing scheme. 

For years, Canada’s milk production was relatively stable, a situation that should 

not be surprising for a country that claims to manage its supply to meet internal 

demand. From 2000 to 2010 for instance, Canadian milk production rose only 2.5% 

over that decade. However, a distinct upward trend line has more recently emerged 

with 4% growth per year over the last 2 years. 

In some areas this has spiked even further: five leading provincial marketing 

boards in the East of Canada, working in concert, have collectively increased their 

government-dictated milk production quotas by an astronomical 12% between August 2016 and July 2017 with the latest hike this month being 5%. Were these responses to normal commercial market signals—as is the case in the U.S. and in 

most other major dairy producing countries—these may not be problematic. 

In contrast to this, typical milk production growth in the U.S. is in a range of 

1–2%, even in years with highest prices. In addition to its magnitude on a percentage basis, the dramatic Canadian expansion is so problematic because it is the direct result of government-run programs in a supply management system with some 

of the highest milk prices in the world. 

Likewise, trade data demonstrates a large basis for concern as well. Canadian 

milk powder exports have surged in recent times. Canada’s 2016 SMP exports set 

a record at approximately 24,000 MTs, a jump of roughly 75% over the prior year’s 

total. (Reminder: Ontario’s Class [VI], effectively a pilot program for the national 

Class [VII], was put in place in the spring of 2016.) The first 5 months of 2017 

showed a further year-on-year increase in Canadian SMP exports of 271% to almost 

20,000 MT with over 8,000 taking place in May alone—a new monthly record for 

Canada. 

Those SMP exports are going to various markets around the world including Algeria, Mexico, Egypt, Malaysia and Bangladesh, top markets for the U.S. dairy industry. In addition to the substantial increase in SMP exports, Canada is also seeing 

a spike in milk protein concentrate (MPC) exports with January to May 2017 sales 

of MPC up 48% over the same period in 2016. 

Despite limited information provided by Canada about the Class [VII] program, 

since the February 7 implementation of the pricing scheme, the volume of highpriced milk used to make domestic non-fluid products has declined, whereas the volume of milk protein going into Class [VII] has risen. During February–April 2017, 

Canada reported that 24% of the milk volume and 31% of the protein is now allocated to Class [VII]. Not surprisingly, the farm price of milk between last year and 

this year (since Class [VII] has been implemented) dropped less than one percent 

despite that sizable shift towards the new lower-priced Class [VII]. That’s because 

other prices under Canada’s strict government-calculated class prices have been 

raised. This still works to the net benefit of Canada’s dairy farmers given the surging milk quotas the government is granting (thereby permitting that 1% lower price 

to be paid on a much larger volume of milk and so generate greater total returns 

to farmers). 

As a result of the new Class [VII] pricing scheme and a 5% expansion in the milk 

production quota in 2017 to date, Canada is poised to create an even more significant exportable surplus of milk proteins than we’ve seen take place to date. Furthermore, taking into account not only Class [VII]’s export disposal goal of moving the 

remaining excess protein product onto world markets at cut-rate prices, but also its 

twin goal of import substitution through the displacement of U.S. protein exports 

from its market, the total impact to the rest of the world’s protein markets will be 

even greater still. 

What is most concerning here is the trend line, with a harmful situation creating 

greater damage to our producers over time and a trend line expected to get even 

10 

worse as time goes on. That’s particularly the case if milk quotas continue to be permitted to similarly grow over time. 

It is this escalating threat to global dairy markets that united ten of the world’s 

leading dairy associations, including USDEC, from around the world last month to 

collectively write to their six respective Trade Ministers, including Ambassador 

Lighthizer, urging prompt action to exhaust all available options to put a stop to 

Class [VI] & [VII] in light of their violation of Canada’s international commitments. 

As the joint industries letter noted: ‘‘Canada’s increasingly protectionist policies are 

diverting trade with attendant global price-depressing impacts, and are in conflict 

with the principles of free markets and fair and transparent trade.’’ (See attached.) 

Examples cited in that letter of united international concern included the following: 

• ‘‘In December of 2015 at Nairobi, Kenya, Canada became a signatory to the Export Competition Ministerial Decision, thereby undertaking to terminate all 

scheduled export subsidies by the end of 2020, maintain a quantity standstill 

at 2003–05 levels until then, and refrain from applying export subsidies to new 

products or new markets. The 2016 Canadian exports of 23.7 thousand tonnes, 

noted above, is an amount in excess of the Nairobi standstill agreement 

amount.’’ 

• ‘‘As part of the 2003 resolution of the WTO dispute settlement case brought by 

the United States and New Zealand against Canada’s special milk class for exports, Canada agreed ‘that, for the marketing year beginning 1 August 2003, 

and thereafter, Canada’s exports of dairy products for which export subsidies 

have been granted will not exceed the quantities and budgetary outlays specified in its WTO Schedule. The upward trend in Canada’s exports of SMP, reported above, is rapidly approaching the 44.9 thousand tonnes Uruguay Round 

annual quantity commitment.’ ’’ 

Canada’s National Ingredient Strategy and Class [VI]/[VII] contravene the spirit 

of Canada’s World Trade Organization and NAFTA trade commitments. After all, 

does it make sense that a high-priced milk producer with a closed domestic market 

using a government-sanctioned export program should take market share from 

countries with a commercially-based and lower cost of production, like the U.S.? The 

answer is no. 

We must see a repeal of Classes [VI] and [VII] and steps taken to ensure similar 

programs do not spring up in their place. If Canada wishes to retain a governmentrun system of micro-managing its milk supply, that is its prerogative but that does 

not give it the right to use the high returns from that system to disrupt the commercial dairy markets on which competitors in the U.S. and elsewhere rely. If left 

unchecked, these Canadian programs will grow to become bigger and bigger threats 

to U.S. exports around the world. 

These latest actions are most concerning because they represent a shift by Canada from using policy tools to impede imports into Canada to now also disrupting 

export markets. Altogether, however, Canada has for years intentionally tried to 

shirk its dairy commitments, using one policy or regulatory tool after another to 

chip away at access granted. Another example of this consistent trade-distorting 

pattern was Canada’s decision in its FTA with the EU to impose new restrictions 

on the use of a number of generic cheese terms (i.e., asiago, feta, fontina, gorgonzola 

and muenster). Canada provided direct protection to a number of European GIs that 

have been common names (in order words, generic) in Canada and the United 

States for decades. By taking this action, Canada abandoned any pretense of due 

process and the integrity of its own intellectual property system. NAFTA would offer 

a prime chance to press Canada to hold U.S. companies harmless from this unwarranted non-tariff barrier on U.S. cheese exports. 

Given Canada’s deliberate creation of an environment of policy uncertainty, there 

can be no clarity on whether or not current dairy sales to Canada—nor new sales 

established under the NAFTA modernization process—will be allowed by Canada to 

take place in the future without addressing this underlying problem of Canada’s habitual use of policy tools to distort trade. 

We greatly welcomed the Administration’s NAFTA Objectives’ recognition of the 

importance of these issues in its Agricultural Goods area in particular. 

Mexico: Preventing New Barriers to Trade: Geographical Indications (GIs) and Common Names (CNs) 

As I have stressed above, with respect to Mexico our charge is largely to do no 

harm to market access opportunities. That’s relevant not only on the tariff side of 

the equation but particularly important on the non-tariff barrier portions as well. 

11 

The latter is a particularly timely concern given ongoing FTA extension negotiations between Mexico, the U.S.’s largest and most diverse cheese export market, and 

the EU. 

As it seeks to do through all its FTAs, the EU has been attempting to use that 

process to impose de facto barriers to trade and competition on various common 

name products that the EU falsely claims as GIs. 

It is essential that ongoing engagement with Mexico and NAFTA modernization 

discussions make it clear that the U.S. is vehemently opposed to the imposition of 

any new restrictions on the market access opportunities for U.S. products relying 

on common names. We must require that Mexico uphold the letter and spirit of its 

NAFTA market access commitments in order to ensure it does not impair the value 

of its prior market concessions to the U.S. 

In parallel to these FTA negotiations, Mexico is also dealing with GIs that impact 

the use of common name products in other avenues as well such as through domestic legislation and ongoing court cases. Each of these venues is an important forum 

for shaping how Mexico will uphold its market access commitments to the United 

States. 

Mexico & Canada: Improving NAFTA Rules in Key Areas 

Improving Upon the WTO-Plus Sanitary & Phytosanitary (SPS) Agreement 

To ensure for predictability of trading conditions moving forward and a sciencebased approach to the development of new regulations impacting trade, NAFTA 

modernization efforts should incorporate work done in this area within TPP and 

build further upon that base of ‘‘WTO SPS-Plus’’ commitments. This is needed to 

guard against the prospect of future problems and also to ensure that the updated 

NAFTA text can serve as a strong model for future U.S. bilateral FTAs as well. 

Stronger SPS provisions may have prevented a barrier to the export of U.S. raw 

milk for pasteurization that Mexico erected a few years ago despite a food safety 

basis for concern with those exports. We look forward to seeing this issue as well 

as others that arise from unscientific foreign requirements addressed through the 

negotiations. 

Improving upon the existing WTO SPS rules was cited as a key Trade Promotion 

Authority (TPA) priority for negotiations and would help to address concerns by agricultural organizations across the board about spotlighting the importance of transparency, predictability and science-based decision-making on SPS matters. We believe this remains a critical area and were glad to see it highlighted accordingly in 

the Administration’s recently published NAFTA objectives document. 

Establishing Fair Due Process Systems and Market Access Safeguards for Common 

Names Through Text on Geographical Indications (GIs) 

As noted above, there are unique situations on GIs and Common Names issues 

with both Mexico and Canada that need to be dealt with appropriately on a bilateral 

basis. In addition to those efforts, however, NAFTA modernization efforts should incorporate text on the issue of GIs and common names, in keeping with the TPA directive to address this issue. In order to build upon the progress made to date with 

our trading partners on this issue, the TPP text on GIs should be used as a starting 

point and further improved upon to effectively preserve U.S. market access opportunities for common name products despite foreign governments’ efforts to misuse GIs 

to erect barriers to those products. 

This area too benefited from a clear intended focus in the published NAFTA objectives developed by the Administration; we see this as a very welcome acknowledgement of the critical importance of this issue. 

Preserving Dairy Rules of Origin (ROO) Approach to Uphold Integrity of NAFTA 

Benefits 

The driving goal in NAFTA dairy-specific ROO with Mexico for most dairy products was to seek to ensure that high dairy-content products traded under the agreement were being produced from milk from the exporting country. As such, for instance, the U.S. cannot import milk powder from Europe to make cheese and ship 

that to Mexico, and vice versa. Likewise, Mexico should not be able to import concentrated butterfat from outside the NAFTA region, add sugar or cocoa to it, and 

sell it into the U.S. as a food preparation. The open trade is intended to be between 

and to benefit the dairy sectors that have opened their markets under the agreement—a goal that is particularly important for a product that is easily traded in 

various ingredient forms. 

Given that the lines most clearly associated as dairy such as those for cheese, butter and yogurt, all require the product to be made from dairy from the exporting 

country, it is reasonable to insist that other processed food lines also should be subVerDate Aug 31 2005 12:02 Aug 31, 2017 Jkt 041481 PO 00000 Frm 00015 Fmt 6633 Sfmt 6621 P:\DOCS\115-11\26495.TXT BRIAN
12 

ject to these same provisions in cases where they contain a very high level of dairy 

content. It is important to ensure that Mexico is not a platform for other major 

dairy exporters to ship butterfat simply as a conduit to inappropriately access the 

U.S. market. Based on customs rulings and trade data with Mexico and New Zealand this is a reasonable cause for concern. 

In addition to the need for movement towards greater consistency in the dairy 

ROO, we would also encourage negotiators to examine how to improve the process 

for investigating potential ROO violations to make it easier to chase down potential 

violations of the ROO. In our view, these measures are a critical element of the 

agreement and ensuring that the effectiveness of the ROO in concentrating the 

agreement’s benefits on its Parties that have chosen to open their markets to one 

another is a vital part of ensuring that NAFTA remains such a strongly successful 

FTA. 

We believe that the goals articulated in the Administration’s NAFTA objectives 

document would help to address these concerns. 

In Closing 

NAFTA is indisputably the most important U.S. FTA. An agreement that has 

done this much good and that supports tens of thousands of jobs in the dairy sector 

alone must be preserved. That is why we believe we must ensure that no new trade 

restrictions arise through the NAFTA modernization discussions and that talks are 

instead focused on pursuing improvements to the agreement that preserve our open 

trade relationship with Mexico and address Canada’s flouting of its trade commitments. 

Even as the U.S. negotiates improvements to this critical FTA, however, we believe it’s also essential to move forward on other fronts as well. Our competitors are 

very active all around the world in negotiating their own agreement. This month’s 

news of the EU-Japan agreement in principle is a fresh reminder that the world 

is not standing still. Given that, if the U.S. stands still, we will slip behind. 

We urgently need a proactive trade policy agenda with key agriculture-importing 

countries in Asia such as Japan, Vietnam and others in order to keep pace in that 

growing area of the world. In order to ensure that U.S. negotiating time is best concentrated on agreements likely to yield net agricultural benefits for the U.S. with 

ag-importing countries, we would also strongly caution against sinking scarce U.S. 

resources into negotiations with countries unlikely to lead to net dairy and agricultural export gains for the United States. There are only so many staff at our government agencies and only so much time in the day; we need to focus it where it can 

yield the most benefits to American agriculture. 

As we stand poised to commence NAFTA modernization discussions in the very 

near future, the U.S. Dairy Export Council looks forward to working closely with 

this Committee and with the Administration to make improvements to this beneficial FTA so that we can continue to deepen our trade relationships throughout 

North America. 

Thank you for the opportunity to testify before this Committee. 

ATTACHMENT

June 27, 2017 

Hon. STEVEN CIOBO MP, CECILIA MALMSTRO ̈ M, 

Minister for Trade, Tourism and Investment, EU Commissioner for Trade, 

European Commission, 

Parliament House, Brussels, Belgium; 

Canberra ACT; 

Hon. ILDEFONSO GUAJARDO, Hon. TODD MCCLAY, 

Mexico Secretary of Economy, Minister of Trade, 

Col. Jua ́ rez, Del. Cuauhte ́moc, Parliament Buildings, 

Ciudad de Me ́xico. C.P.; Wellington; 

Hon. ROBERT LIGHTHIZER, Hon. MIGUEL BRAUN, 

United States Trade Representative, Secretary of Trade, 

Washington, D.C.; CABA, Argentina. 

Dear Secretary Braun, Minister Ciobo, Commissioner Malmstro ̈m, Secretary 

Guajardo, Minister McClay, and Ambassador Lighthizer: 

13 

Canada: Access for Dairy Products 

Last September the undersigned representatives of the dairy industries of Australia, the EU, Mexico, New Zealand and the U.S. wrote to you (or your predecessor) 

to express our concern at Canadian dairy policy developments. Specifically, we were 

concerned that the ‘‘Agreement in Principle’’ that had recently been reached between Canada’s dairy producers and processors was designed to incentivize the substitution of Canadian domestic origin dairy ingredients for dairy ingredients imported from our countries, and to position the export of Canadian dairy products to 

unfairly compete against our products in third country markets. With Canada’s 

adoption of the new special milk Class [VII], that Agreement has become reality; 

and so too have the substitution of Canadian ingredients for our imports and the 

undercutting by Canadian protein exports of our exports in third country markets. 

We are now writing, joined by a representative of the dairy industry of Argentina, 

to ask the authorities in Argentina, Australia, the EU, Mexico, New Zealand and 

the U.S. to pursue all avenues available to challenge these measures, including 

WTO dispute settlement and bilateral trade agreement relationships. In the absence 

of such efforts Canada’s Class [VII] policy will seriously further distort and disrupt 

international dairy trade, causing harm to our fa[r]mers. 

Background 

The present structure of Canada’s supply managed dairy industry dates from the 

early 1970s. As we noted in our earlier correspondence, the system operates by allocating production quotas, setting prices that vary through a range of milk classes, 

and controlling imports with tariff rate quotas on imports varying between 200% 

and 300%. Canadian milk production levels were maintained between 74.8 million 

hectoliters in 2000 and 76.7 million hectoliters in 2010, with no discernible trend 

line. However, a distinct upward trend line has now emerged with 4% growth per 

annum over the last 2 years, and 2016 production of 84.7 million hectoliters being 

the highest in Canadian history. This might not be problematic if there was a market for this additional milk in Canada, but that is not the case. The upward trend 

in milk production is the result of production quotas being set on estimated butter 

consumption, which has been growing rapidly. However, the coproduct of butter production—milk protein—has not seen a similar increase in demand. This has resulted in a structural surplus of milk protein, exemplified by excess production of 

skim milk powder (SMP), ballooning to over 100,000 MT per annum. 

Canada’s Response 

To address this structural surplus a new ingredient milk class—initially Ontario 

Class [VI] and now National Class [VII]—was created, with milk priced to processors at the lowest world price to produce dairy protein ingredients. The impact 

has been two-fold: first, the substitution of Canadian dairy ingredients for imported 

milk proteins, and second, an increase in non-WTO-compliant Canadian exports of 

milk protein. The first is evidenced by the widely reported cancellation of contracts 

by Canadian cheese makers for U.S. sourced ultra-filtered (UF) milk. The second, 

by a review of Canadian exports of skim milk powder (SMP), the most easily produced milk protein product. 

Between 2009 and 2014 Canadian exports of SMP increased irregularly from 10.1 

thousand tonnes to 12.7 thousand tonnes, and again modestly to 13.6 thousand 

tonnes in 2015. The adoption of Ontario’s Class [VI] in April of 2016 saw 2016 SMP 

exports jump 74% to 23.7 thousand tonnes. The first 4 months of 2017 showed a 

further year on year increase of 273% to 11.9 thousand tonnes. Moving this protein 

onto the thinly traded global market of around 2 million MT of SMP per annum 

will add to the already swelling global supply of milk protein and depress market 

prices for farmers around the world. 

Canada’s Obligations 

The adoption of Class [VII] (and Ontario Class [VI] before it) is a measure which 

is inconsistent with a number of commitments that Canada has undertaken. For example: 

• In December of 2015 at Nairobi, Kenya, Canada became a signatory to the Export Competition Ministerial Decision, thereby undertaking to terminate all 

scheduled export subsidies by the end of 2020, maintain a quantity standstill 

at 2003–05 levels until then, and refrain from applying export subsidies to new 

products or new markets. The 2016 Canadian exports of 23.7 thousand tonnes, 

noted above, is an amount in excess of the Nairobi standstill agreement 

amount. 

• As part of the 2003 resolution of the WTO dispute settlement case brought by 

the United States and New Zealand against Canada’s special milk class for exVerDate Aug 31 2005 12:02 Aug 31, 2017 Jkt 041481 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 P:\DOCS\115-11\26495.TXT BRIAN
14 

ports, Canada agreed ‘‘that, for the marketing year beginning 1 August 2003, 

and thereafter, Canada’s exports of dairy products for which export subsidies 

have been granted will not exceed the quantities and budgetary outlays specified in its WTO Schedule. The upward trend in Canada’s exports of SMP, reported above, is rapidly approaching the 44.9 thousand tonnes Uruguay Round 

annual quantity commitment.’’ 

Conclusion 

Our respective dairy industries are firmly of the view that the operation of 

Ontario’s Class [VI] and Canada’s Class [VII] contravene Canada’s international 

commitments. Canada’s increasingly protectionist policies are diverting trade with 

attendant global price-depressing impacts, and are in conflict with the principles of 

free markets and fair and transparent trade. We therefore request the authorities 

of Argentina, Australia, the EU, Mexico, New Zealand, and the U.S. to take all steps 

available to them to resolve this issue and ensure that Canada complies with its 

international obligations. 

With best regards, 

[TERRY RICHARDSON,] [ALEXANDER ANTON,] 

President, Secretary General, 

Australian Dairy Industry Council 

(ADIC); 

European Dairy Association (EDA); 

[BE ́ NE ́ DICTE MASURE,] [JUKKA LIKITALO,] 

Secretary General, Secretary General, 

European Whey Products Association 

(EWPA); 

European Association of Dairy Trade 

(Eucolait); 

[KIMBERLY CREWTHER,] [MATT MCKNIGHT,] 

Executive Director, Chief Operating Officer, 

Dairy Companies Association of New 

Zealand (DCANZ); 

U.S. Dairy Export Council (USDEC); 

[MICHAEL DYKES, D.V.M.,] [JIM MULHERN,] 

President & CEO, President & CEO, 

International Dairy Foods Association 

Federation (IDFA); 

National Milk Producers Federation 

(NMPF); 

[RENE ́ FONSECA MEDINA,] [MIGUEL PAULO ́ N,] 

General Director, President, 

Camara Nacional De Industriales de la 

Leche (Canilec) (Mexico National 

Chamber of Industrial Milk); 

Centro De La Industria Lechera (CIL) 

(Centre of the Argentine Dairy Processing Industry). 


11511001.eps 11511002.eps 11511003.eps 11511004.eps 11511005.eps
15 

CC: 

The Honorable BARNABY JOYCE MP, Deputy Prime Minister, Minister for Agriculture and Water Resources, Australia; 

Mr. PHIL HOGAN, EU Commissioner for Agriculture & Rural Development, European Commission; 

Mr. JEAN-LUC DEMARTY, Director-General for Trade, European Commission; 

Mr. JERZY BOGDAN PLEWA, Director-General for Agriculture & Rural Development, European Commission; 

The Honorable NATHAN GUY, Minister of Primary Industries, New Zealand; 

Mr. MARTYN DUNNE, Director General, Ministry for Primary Industries, New 

Zealand; 

Mr. VANGELIS VITALIS, Deputy Secretary Trade and Economic, Ministry of Foreign Affairs & Trade, New Zealand; 

The Honorable SONNY PERDUE, Secretary, U.S. Department of Agriculture; 

The Honorable JUAN CARLOS BAKER, Deputy Secretary of Trade, Mexico. 

The CHAIRMAN. Well thank you, Mr. Secretary. 

Mr. Frazier, 5 minutes. 

STATEMENT OF KENDAL FRAZIER, CHIEF EXECUTIVE 

OFFICER, NATIONAL CATTLEMEN’S BEEF ASSOCIATION, 

CENTENNIAL, CO 

Mr. FRAZIER. Good morning. My name is Kendal Frazier and I 

am the CEO of the National Cattlemen’s Beef Association, the oldest and largest national association of cattlemen. I am honored to 

provide you with our perspective on the importance of the North 

American Free Trade Agreement, and the risk we face if the U.S. 

beef industry is saddled with changes to NAFTA that may jeopardize our current access to Canada and Mexico. 

According to USDA, the U.S. beef industry consists today of 

around 900,000 cattle and calf operations, a national herd size of 

about 100 million head of cattle, accounting for roughly $67.5 billion in annual farm gate receipts. In 2016, our industry sold over 

$6.3 billion in beef products around the world, with exports alone 

accounting for over $300 per head for every fed steer and heifer. 

NCBA strongly supports NAFTA because the terms of NAFTA 

developed Canada and Mexico into two very important export markets for U.S. beef. While there may be cause from other segments 

of agriculture and other industries to update or renegotiate the 

terms of NAFTA, we strongly encourage our negotiators to focus 

their efforts on those specific areas and leave alone the terms of 

NAFTA that have greatly benefitted the U.S. beef and cattle industry. Quite frankly, it is difficult to improve upon duty free, unlimited access to Canada and Mexico, and we are pleased to see that 

USTR announced its support for continued reciprocal duty free access. 

Even still, our message remains the same. Please do no harm 

and do not jeopardize our access. 

On average, Canada and Mexico have been two of our top five 

export markets, with approximately $1 billion each in annual sales. 

While Canada has been a high value market for muscle cuts, Mexico has proven to be an excellent market for things like skirts, 

tongues, and other cuts that Americans find less desirable. 

Now opponents to NAFTA try to paint a dark picture of uneven 

beef trade, saying NAFTA has been our downfall for over 20 years. 

Opponents pin all our problems on NAFTA, but they fail to acknowledge other key factors that our industry has faced, like a 

16 

BSE case in 2003, severe drought that caused beef and cattle shortages, the strength of the U.S. dollar, and continuation of tax policies that encourage the break up of multi-generational cattle operations. Simply put, opponents view NAFTA as a zero sum game 

and fail to consider important factors such as our incredible growth 

in global exports and the value that exports bring to all segments 

of our industry. This view is a great disservice to all producers. 

In addition, the NCBA strongly opposes any attempts to use 

NAFTA as a vehicle to resurrect failed policies of the past, such as 

mandatory Country-of-Origin Labeling, also known as COOL. 

COOL was a U.S. law for over 6 years, and failed to deliver on its 

promises to build consumer confidence and add value to our products. Instead, COOL resulted in long battle with the World Trade 

Organization with the United States facing the promise of more 

than $1 billion in retaliatory tariffs from Mexico and Canada unless COOL was repealed. Canada and Mexico still have the authority to retaliate against the United States if COOL is brought back 

into effect, and rest assured, they will retaliate against us if necessary. 

We encourage you to build on the success that current NAFTA 

provisions have given U.S. beef producers. I thank you for asking 

me to appear this morning. 

[The prepared statement of Mr. Frazier follows:] 

PREPARED STATEMENT OF KENDAL FRAZIER, CHIEF EXECUTIVE OFFICER, NATIONAL

CATTLEMEN’S BEEF ASSOCIATION, CENTENNIAL, CO 

On behalf of the National Cattlemen’s Beef Association (NCBA), I submit to you 

the following comments regarding the North American Free Trade Agreement. 

Comments of the National Cattlemen’s Beef Association Regarding Negotiating Objectives Regarding Modernization of the North American Free 

Trade Agreement With Canada and Mexico 

The National Cattlemen’s Beef Association (NCBA) has represented America’s 

cattlemen and women since 1898, preserving the heritage and strength of the industry through education and public policy. As the largest and oldest national association of cattle producers, NCBA represents a very diverse beef industry that strives 

to meet demand in emerging markets and increase demand for beef. NCBA appreciates the opportunity to provide comments for the Office of the United States Trade 

Representative (USTR) regarding USTR–2017–0006, ‘‘Negotiating Objectives Regarding Modernization of the North American Free Trade Agreement With Canada 

and Mexico’’. 

Brief Summary of U.S. Beef Industry’s Position on ‘‘NAFTA Negotiations’’ 

NCBA strongly supports the North American Free Trade Agreement (NAFTA) because the terms of NAFTA have made it possible for the U.S. beef and cattle industry to develop two very important export markets in Canada and Mexico as well as 

allowing all sectors of the U.S. beef and cattle industry to compete and operate at 

optimal levels when trade-restrictive policies were eliminated and repealed. While 

we understand that there may be calls from other segments of the agriculture industry and other industries to update or renegotiate the terms of NAFTA, NCBA 

strongly encourages you to focus and contain your efforts on those areas and leave 

alone the terms of NAFTA that have greatly benefitted the U.S. beef and cattle industry. Quite frankly, it is difficult to improve upon duty-free, unlimited access to 

Canada and Mexico—two of the top five export markets for U.S. beef. Furthermore, 

NCBA strongly opposes any attempt to use NAFTA as a vehicle to resurrect failed 

protectionist policies of the past including mandatory Country-of-Origin Labeling 

(MCOOL). MCOOL was U.S. law for over 6 years and failed to deliver on its promises to build consumer confidence and add value to our producers. Instead, MCOOL 

resulted in a long battle in the World Trade Organization with the United States 

facing the promise of $1 billion in retaliatory tariffs from Mexico and Canada unless 

MCOOL was repealed by Congress. We must learn from the mistakes of the past 

17 

and not repeat them. NCBA hopes that negotiations with Canada and Mexico will 

be swift and successful and will build upon the success that current NAFTA provisions have given U.S. beef producers. 

Overview of Imports and Exports in Beef and Cattle Trade 

Over the past 7 years we have seen a significant growth in U.S. beef exports due 

to the implementation of free trade agreements and the lifting of non-science based 

restrictions on U.S. beef specifically in countries in Asia and Latin America. While 

Canada and Mexico have traditionally battled for first and second place among U.S. 

beef export markets, they have been surpassed by growing demand in Japan and 

Korea who currently top the list as top export markets for U.S. beef. According to 

the U.S. Census Bureau the total world population is estimated at nearly 7.4 billion 

people. Of that total the United States accounts for 325 million people, Mexico’s population is estimated at 130 million people, and Canada surpassed 35 million people 

in 2016. While North America represents a small fraction of the global population, 

it also represents a strong consumer base for beef. Throughout its lifetime, NAFTA 

has developed all of North America into a premium market for U.S. beef sales. Another benefit of NAFTA has been the development of an efficient and competitive 

supply chain that allows each sector of the supply chain, from cow/calf producer to 

feed yard to retail, to capitalize U.S. beef sales to the 96 percent of the global consumers who reside outside our borders, especially those consumers who will pay a 

premium for U.S. beef products that are undervalued in our domestic market. For 

U.S. beef producers, the value of exports alone accounted for $339 per head in the 

first quarter of 2017. 

Beef and Offal Exports (U.S.$/Hd) 

According to the U.S. Meat Export Federation (USMEF), the top five export markets for U.S. beef in 2016: 

Country Sales Volume (metric tons) 

(1) Japan $1.5 billion 258,653 MT 

(2) Korea $1.06 billion 179,280 MT 

(3) Mexico $975 million 242,373 MT 

(4) Canada $758 million 116,266 MT 

(5) Hong Kong $684 million 112,770 MT 


11511006.eps
18 

Beef Industry Export Values 

Annual 

Data Source: USDA–FAS, Compiled & Analysis by LMIC; I–N–70, 3–22– 

17. 

Livestock Marketing Information Center. 

The United States is also one of the top beef importers in the world. The common 

misconception is that we import the same ‘‘beef’’ that we export, but the truth is 

we export higher-value cuts like tongues and other offals while we import grass-finished beef trimmings to mix with our fattier trimmings to meet U.S. ground beef 

demand in commercial markets. Without beef imports we could not meet domestic 

demand for commercial ground beef and would likely lose those consumers to other 

lesser-value proteins. 

Beef Industry Imports Values 

Annual 

Data Source: USDA–FAS, Compiled & Analysis by LMIC; I–N–71, 3–22– 

17. 

Livestock Marketing Information Center. 

Summary of Beef Trade with Canada and Mexico 

Without question, the North American Free Trade Agreement (NAFTA) has given 

U.S. beef a strong advantage over other countries in competition for North American 

consumers. Today, Mexico and Canada are two of the leading export markets for 

U.S. beef. Duty-free access, close proximity, and our vast transportation infrastructure system are a few of the main reasons why Canada and Mexico are such strong 

markets for U.S. beef. According to the U.S. Department of Agriculture’s Foreign 

Agriculture Service, the 1993 pre-NAFTA level of U.S. beef exports to Mexico was 


11511007.eps 11511008.eps
19 

39,000 tons valued at $116 million. As a result of NAFTA, Mexico eliminated its 

15 percent tariff on live slaughter cattle, its 20 percent tariff on chilled beef and 

its 25 percent tariff on frozen beef. According to USMEF, Mexican consumers purchased 242,373 metric tons of U.S. beef at a total of $975 million in 2016. Likewise, 

Canadian consumers purchased 116,266 metric tons of U.S. beef at a value of $758 

million. 

The United States has a significantly larger human population and work force, 

cattle herd, beef-production industrial complex, and a vastly superior transportation 

infrastructure system that allows U.S. beef and cattle to move freely and efficiently 

to meet beef demand all across North America. These are a few reasons why approximately 85 percent of U.S. beef production is destined for the U.S. market. The 

U.S. customer likes our grain-finished flavor profile and is willing to pay some of 

the best prices in the world for U.S. beef. American consumers prefer higher value 

cuts such as tenderloins and ribeyes, and we have found that while Canadian customers have similar preferences, Mexico has become a high-volume high-value market for cuts like rounds, skirts, tongues, intestines, and other cuts that Americans 

find less desirable. 

In 2016 the United States became a net importer of beef from Canada and Mexico, one of the rare occasions under NAFTA. 

2016 Beef Export Sales to Canada = $758 million 

2016 Beef Imports from Canada = $1.23 billion 

2016 Beef Export Sales to Mexico = $975 million 

2016 Beef Imports from Mexico = $1.05 billion 

While opponents of NAFTA will point to the recent decline in sales as another 

reason to put in place trade barriers to restrict imports it is important to remember 

that Americans will not absorb the exports we would lose to Canada and Mexico. 

If Americans wanted to purchase these cuts it would be evident in the market. Who 

else will absorb that volume and value of beef we export to Canada and Mexico? 

Furthermore, restricting imports from Mexico and Canada would also result in 

those markets becoming restricted for U.S. pork and poultry exports which would 

ultimately come back on the U.S. market and depress protein prices even further. 

Is it worthwhile to jeopardize our access to Canada and Mexico? Absolutely not. 

Imposing tariffs or quotas will do nothing to offset the power of the U.S. dollar 

in cross-border trade with Mexico or Canada. It’s a simple fact that having cheaper 

currency value makes a country’s exports more competitive. This is the case for 

Canada and Mexican beef exports to the United States. Restricting trade will only 

have negative repercussions on the U.S. beef industry because it will either lead to 

the imposition of restrictive tariffs or quotas on U.S. beef exports and it will encourage Canada and Mexico to trade with other countries who may have cheaper currencies than the United States. 

Perhaps we should pay closer attention to the investments that Canada and Mexico are making in their cattle feeding and packing sectors to become more competitive with the United States. In recent years there has been an increased effort in 

Mexico to transition packing facilities from municipally inspected facilities to federally inspected facilities. Beef that is produced in Mexico and is packaged in a federally inspected facility is eligible for export. The Mexican beef industry has invested 

heavily in building its packing sector and expanding feedyard operations in Northern Mexico. The goal is to transition from being a low-cost supplier of cattle to the 

United States and develop the feedyard and packing sectors to capitalize on higher 

valued beef exports to U.S. consumers. We cannot afford to have protectionist policies that encourage the market consolidation of the U.S. feedyard and packing sectors, or we very well may become the low-cost suppliers of cattle to Canada and 

Mexico. 

20 

U.S. Beef Trade: Mexico 

Source: USDA–FAS. 

Monthly Average Exchange Rates: Mexican Pesos per U.S. Dollar 

Source: Pacific Exchange Rate Services. 


11511009.eps 11511010.eps
21 

Exchange Rate 

U.S. Dollar Base, Monthly 

Data Source: Pacific Exchange Rate Service[s], Univ. of B.C., Compiled by 

LMIC; 06/02/17. 

Livestock Marketing Information Center. 

Exchange Rate 

U.S. Dollar Base, Monthly 

Data Source: Pacific Exchange Rate Service[s], Univ. of B.C., Compiled by 

LMIC; 06/02/17. 

Livestock Marketing Information Center. 

Summary of Cattle Trade with Canada and Mexico 

The United States has been trading live cattle with Mexico and Canada for hundreds of years. In fact, most of our western traditions are deeply rooted in the traditions of the vaqueros coupled with English and American technology and innovation. 

According to USDA, in January 2017 the United States cattle herd totaled 93.5 million head while Mexico’s cattle herd totaled 16.5 million head and Canada’s herd 

totaled 12.1 million head. On average, we import about two million head of cattle 

from Mexico and Canada. This small number of cattle has been the source of contention within the U.S. beef industry for decades, but before we discuss that, we should 

consider why we import cattle into the United States. 

Simply put, we import cattle from Mexico and Canada to supplement shortages 

in our herds and to help our feed yards and packing facilities run at optimal levels. 

We import these cattle, invest American resources in these cattle, and they are 

slaughtered as American cattle, returning value to the U.S. producers who invested 

in them. For example, in 2016 there were 943,043 head of cattle imported from Canada at a value of $1,033,960,257. During the same time there were 764,970 head 

of cattle imported from Mexico at a value of $584,858,261. 


11511011.eps 11511012.eps
22 

Top 5 Destinations for Canadian Cattle Imports 

(1) Washington $341 million 

(2) Pennsylvania $162 million 

(3) Utah $162 million 

(4) Minnesota $102 million 

(5) Nebraska $97 million 

Top 5 Destinations for Mexican Cattle Imports 

(1) Texas $396 million 

(2) Arizona $138 million 

(3) New Mexico $35 million 

(4) Nevada $10 million 

(5) California $4.2 million 

Some of the opponents of NAFTA claim that NAFTA created a massive deficit in 

North American Cattle trade, but if you look at the annual imports the total numbers have not changed much since before NAFTA was implemented. 

Cattle Imports from Canada and Mexico 

Annual 

Data Source: USDA–ERS & USDA–FAS, Compiled by LMIC; I–N–13, 3/ 

22/17. 

Livestock Marketing Information Center. 

One of the oldest internal battles within the U.S. beef industry is rooted in live 

cattle trade between the United States, Canada, and Mexico. For many years there 

have been small segments of the U.S. beef industry who have supported trade-restrictive policies on live cattle trade with the argument that restricting cattle imports would somehow yield higher prices for U.S. cattle. These protectionists 

claimed that cattle born in Canada or Mexico that enter the United States were 

flooding the market and driving down the cost of live cattle. It was there hope that 

putting in trade-restrictive policies such as MCOOL would result in the U.S. beef 

producer seeing greater prices in the long run. MCOOL was also a ruse that was 

sold to consumer groups as a food safety crisis to garner their support and deep 

pockets. These short-sighted efforts did not result in higher values for producers or 

a safer food supply, in some cases their efforts backfired by forcing feedyards and 

some packing facilities to close down permanently, leading to further consolidation 

in the U.S. beef industry and job loss in the beef industry. Feedyards and packing 

facilities are expensive ventures that cannot be easily restored once they have been 

moth-balled. When they close it means there are fewer people competing for our cattle and this consolidation makes it less competitive for the cow/calf and stocker sectors. Furthermore, feedyards and packing facilities are major employers in rural 

communities across America, and when they are forced to close some communities 

have a difficult time recovering from the negative economic impact. 

Learning from Past Mistakes: NAFTA 2.0 Has No Place for MCOOL 2.0 

The proponents of MCOOL see the renegotiation of NAFTA as another opportunity to restore a failed law and a failed government marketing program that was 


11511013.eps
23 

a waste of taxpayer dollars and a waste of valuable time of USTR and USDA staff. 

MCOOL was neither a measure of food safety nor a food safety nor a consumer information program, but rather a failed government marketing program that failed 

to encourage the purchase of U.S. beef. The United States has a robust food safety 

system in place to ensure that all beef sold in America, regardless of where the animal originated, is safe. Here are a few reminders why MCOOL has no place in 

NAFTA. 

MCOOL was a mandatory, government-run program which required all beef sold 

in grocery stores to be labeled to show where the animal (from which the roast 

below was cut) was born, raised, and slaughtered. Grocery stores had the option of 

using the word ‘‘harvested’’ in lieu of ‘‘slaughtered’’. 

Proponents of MCOOL claimed that adding this label to cuts of beef would drive 

consumers to only buy beef from the United States and, in turn, provide a premium 

price for our product that would be passed back to the producer. After 6 years of 

implementation, that was not the case and Congress repealed MCOOL in December 

2015. In hindsight, MCOOL was a failed government marketing program. 

We believe in the power of the marketplace, therefore we remain opposed to mandatory, government-run MCOOL. In fact, the beef industry currently has many voluntary, consumer-driven and industry-led marketing programs. These programs 

focus on the fundamentals of marketing by creating the specifications for the type 

of beef they want to sell (breed-specific, natural, organic, guaranteed tender, born 

and raised in the USA, etc.). Then, they build a label specific to that program which 

‘‘brands’’ the meat and provides an eye-catching symbol recognizable by the consumer, thus building loyalty and demand for that brand. Ultimately, the success of 

that brand results in financial premiums paid back to producers who supply the animals. 


11511014.eps
24 

The proponents of a mandatory, government-run MCOOL program claim that consumers want to know where their beef comes from. We don’t dispute that. We agree 

that a random poll asking people if they want to know where their meat comes from 

would show that the majority of them would like to know. Polls, however, can show 

many things depending on how the question is asked. Therefore, you can’t look at 

polls alone to falsely assume that all Americans want a mandatory, government-run 

MCOOL program. Kansas State University took the study of MCOOL beyond just 

a simple poll. They used several different approaches to determine what the consumer actually considers when they go to the grocery store to purchase meat. The 

results were clear, consumers placed quality, appearance, and value at greater priority than country-of-origin. And another unfortunate blow to the proponents of 

MCOOL, the Kansas State University study ultimately found that demand for meat 

products had not increased since the implementation of MCOOL, and typical Americans are unaware of MCOOL and don’t look for meat origin information when they 

make their purchase. 

Ultimately, this means that our industry has spent millions of dollars complying 

with a MCOOL law that, after 6 years, the consumer doesn’t even look for. Cost 

without benefit is not a smart business plan, but it is exactly what you expect from 

a mandatory, government-run program. 

The argument that consumers have a right to know where their food comes from 

is an argument that proponents of MCOOL are using to try to save MCOOL, but 

it is a red herring once you consider the exemptions to MCOOL. MCOOL only applies to beef sold in grocery stores. It does not apply to beef sold in food service, 

restaurants, or beef that has been processed. How can you say it is a consumer’s 

right to know only in the grocery store and not when they go out to eat? That argument doesn’t hold up. In fact, most of the beef imported into the U.S. is sold in food 

service and not in grocery stores. If consumers want to know more about their food 

we have private marketing labels that already address their concerns. 

Finally, MCOOL violated international trade laws and led to a WTO dispute that 

nearly resulted in a trade war with Mexico and Canada. After implementation of 

MCOOL, both Canada and Mexico claimed MCOOL violated our trade agreements 

and filed a case against the United States with the World Trade Organization 

(WTO). The WTO found in favor of Canada and Mexico. The WTO found in their 

favor again after the United States appealed the first decision. Because of the ruling 


11511015.eps
25 

and appeal, the United States was instructed by the WTO to change MCOOL in 

order to come into compliance. The United States failed at multiple appeals efforts 

and ultimately Canada and Mexico were given the approval to assess $1 billion in 

retaliatory tariffs against the United States if Congress did not repeal the MCOOL 

law. The risk of starting a trade war with Canada and Mexico compelled Congress 

to finally repeal MCOOL and allowed us to narrowly avoid retaliation. Canada and 

Mexico still have the authority to retaliate against the United States if MCOOL is 

brought back into effect. 

Conclusion 

Opponents of NAFTA try to paint a very dark picture of disproportionate beef 

trade as the cause of many wrongdoings faced by U.S. beef producers over the past 

25 years. Unfortunately many of these anti-trade advocates use the same misguided 

logic and over-simplified arguments to push these unsupported claims on an audience that is looking for simple answers to complex economic realities. They want 

you to think that we should export more cattle and more beef to Mexico and Canada 

year after year in order for NAFTA to be viewed as a success. But to view NAFTA 

as a zero-sum game does the U.S. beef and cattle industry a great disservice because it discounts all the vast benefits our producers receive from both exports and 

imports from Canada and Mexico and the role they play in helping us meet global 

beef demand. 

The opponents of NAFTA fail to realize that walking away from or compromising 

the beef and cattle terms of NAFTA will place U.S. beef producers at significant disadvantage to competitors who are currently trying to take U.S. market share in the 

beef markets of Canada and Mexico. Canada and Mexico are negotiating trade 

agreements with our competitors in South America and Europe, not to mention the 

Australian and New Zealand producers who are trying to move multi-lateral trade 

agreements without the United States. 

For these reasons, NCBA encourages the U.S. Government to keep the renegotiation of NAFTA to a narrow scope of issues that will not jeopardize the beneficial 

parts of NAFTA, especially the beef and cattle terms of trade. 

Should you have any questions or desire any further information please contact 

Kent Bacus, NCBA’s Director of International Trade and Market Access at (202) 

347–0228. 

Sincerely, 

KENDAL FRAZIER, 

Chief Executive Officer, 

National Cattlemen’s Beef Association, 

Denver, Colorado. 

The CHAIRMAN. Thank you, Mr. Frazier. 

Mr. Brosch, did I mispronounce your name, or is that close? 

Mr. BROSCH. That is just fine. 

The CHAIRMAN. All right, 5 minutes. 

STATEMENT OF KEVIN J. BROSCH, J.D., PRINCIPAL, 

BROSCHTRADE LLC, WOODVILLE, VA; ON BEHALF OF 

NATIONAL CHICKEN COUNCIL; NATIONAL TURKEY 

FEDERATION; USA POULTRY & EGG EXPORT COUNCIL 

Mr. BROSCH. Thank you. Thank you, Mr. Chairman, and Members of the Committee. My name is Kevin Brosch. I am a lawyer 

here who has been practicing international trade law in Washington with a concentration in agricultural products for about 35 

years. From 1989 to 1997, I was the Deputy Assistant General 

Counsel at the Department of Agriculture, and I served as USDA’s 

legal advisor during the GATT Uruguay Round negotiations in the 

formation of the World Trade Organization. I also supervised the 

legal work and participated in the original NAFTA negotiations in 


11511016.eps
26 

the early 1990s. In 1997–1998, I served as special trade counsel for 

the Senate Agriculture Committee and its Chairman, Dick Lugar 

of Indiana. I am here today on behalf of the National Chicken 

Council, the National Turkey Federation, and USA Poultry and 

Egg Export Council. Between these three organizations, they represent more than 95 percent of all the poultry produced and exported from the United States. 

I want to make the point initially that poultry is the most world 

competitive product that we have here in U.S. agriculture. We have 

no government programs. We have no government subsidies. We 

are number one in the world in the production of poultry. We have 

about 20 percent of the world’s poultry production. We exceed 

China, which is number two. We are currently number one in exports of poultry. Last year, we pushed ahead of Brazil once again. 

We export to more than 100 countries. We have 300,000 jobs in agriculture, and there are 1.4 million related industry jobs that are 

tied to poultry production and poultry export. We also are one of 

the biggest exporters of soybeans and corn. Every time we export 

a 6 pound chicken, we are exporting 12 pounds of soybeans and 

corns with feathers on it. We are a great value-added export that 

assists not only the poultry producers and the poultry processors, 

but also, our grain and the soybean people. 

NAFTA has been a godsend for U.S. poultry. We went from almost no exports to Mexico—that is hard to believe, but before 

NAFTA, we had almost no exports. We now have more than 1 million metric tons of exports, if you count all the poultry products, 

chicken, turkey, eggs, duck, together. 

For broiler chicken exports, Mexico is our number one market, 

Canada is our number two market. For turkey, Mexico is our number one market, Canada is our number three market. Mexico now 

represents 24 percent of our exports of broiler chicken and related 

chicken products, Canada, 16 percent. We have had good cooperation and relationships with both the Canadian and Mexican industries, and with their governments. We have had ups and downs 

over the time, but we have managed to work through those and 

NAFTA has provided us with the mechanisms to do so. 

Our message is the same as our colleagues from the beef industry. Please, do no harm. This is a critical industry for United 

States agriculture, not only for the poultry producers, but for our 

grain suppliers. We have lots of jobs in states that you are familiar 

with: Arkansas and Georgia, Mississippi, North Carolina, Iowa, 

Minnesota. I could go on and on. Those jobs depend upon the continued prosperity of these companies and their ability to export to 

markets, and Mexico and Canada are the most important ones. 

Thank you. 

[The prepared statement of Mr. Brosch follows:] 

PREPARED STATEMENT OF KEVIN J. BROSCH, J.D., PRINCIPAL, BROSCHTRADE LLC, 

WOODVILLE, VA; ON BEHALF OF NATIONAL CHICKEN COUNCIL; NATIONAL TURKEY

FEDERATION; USA POULTRY & EGG EXPORT COUNCIL

Mr. Chairman and Members of the Committee: 

Thank you for your invitation to appear here today and provide testimony on behalf of USA Poultry & Egg Export Council (USAPEEC), the National Turkey Federation (NTF), and National Chicken Council (NCC), in anticipation of the proposed 

renegotiations of the North American Free Trade Agreement (NAFTA). My name is 

27 

Kevin J. Brosch. I have been practicing international trade law, with almost exclusive emphasis on trade in agricultural products, for the past 35 years here in Washington. I have done so both in private practice and in government service. I began 

my practice in 1981 at the Washington, D.C. law firm of Steptoe & Johnson. From 

1989 to 1997, I served as Deputy Assistant General Counsel for International Trade 

at the U.S. Department of Agriculture (USDA), and was USDA’s legal advisor during the GATT Uruguay Round negotiations that concluded in the formation of the 

World Trade Organization. I also supervised USDA’s legal work for, and participated in, the NAFTA negotiations in the early 1990’s. In 1997–98, I served as special trade counsel to the Senate Committee on Agriculture, Nutrition and Forestry 

and its Chairman, Senator Dick Lugar of Indiana. For 12 years, I was a partner 

in DTB Associates, a specialty law and consulting firm concentrating on agricultural 

trade. I currently am the principal in my own law and consulting business, 

BroschTrade, LLC and advise a number of agricultural and horticultural clients on 

matters of international trade and agricultural law. 

NCC is the national association based in Washington, D.C. that represents the 

broiler chicken production industry of the United States. NCC member companies 

include chicken producer/processors, poultry distributors, and allied industry firms 

that account for approximately 95 percent of the chickens produced in the United 

States. 

NTF, also headquartered in Washington, D.C. represents nearly 100 percent of all 

turkey processors, growers, breeders, hatchery owners and allied companies. It is 

the only national trade association representing the turkey industry exclusively 

USAPEEC is the national association based in Stone Mountain, Georgia that represents the export interests of the U.S. chicken, turkey, eggs and duck industries. 

USAPEEC has more than 200 members companies—poultry producers, processors, 

export trading companies, cold storage operators, freight forwarders and other associated businesses—who account for approximately 95% of our country’s very significant poultry and egg export trade. The United States exports poultry products to 

more than 100 foreign countries. 

When the term ‘‘poultry’’ is used in these comments, it refers to all of these products. 

The U.S. poultry industry has perennially been among America’s most important 

and successful production and export sectors. In 2015, the U.S. industry produced 

almost nine billion broiler chickens, weighing 53 billion pounds, live-weight; and 

more than 40 billion pounds of chicken product were marketed. In addition, U.S. 

poultry production includes nearly 5.76 billion pounds of turkey, approximately 100 

billion eggs, and nearly 220 Million pounds of duck. The poultry industry employs 

more than 300,000 U.S. workers directly, and more than 1.4 million jobs in the U.S. 

economy are related to poultry. 

Poultry is vital to our farm economy. Annually, U.S. poultry consumes more than 

49 million MT of the U.S. corn crop, and more than 26 million MT of U.S. soybean 

production. In 2014, U.S. broiler chicken production, wholesale value, was an estimated $90 billion; table eggs, $10.4 billion; turkey $6.7 billion; and duck, $158 million. The United States has one of the most efficient poultry industries in the world. 

The U.S. is the largest producer of poultry meat with about 20% of the world’s production (China is second with approximately 17%). 

The United States is also one of the two leading poultry exporting nations. The 

United States and Brazil each account for about 1⁄3 of the world’s broiler exports. 

Poultry exports are among the most important of all U.S. agricultural exports. In 

the most recent year for which full data is available, the U.S. exported approximately 3.7 million metric tons of chicken products, with a value of nearly $4.6 billion, to more than 100 counties; and exports of turkey valued at almost $500 million. While the situation in different markets varies from year to year, over the past 

decade two of our five most important poultry export markets have been Mexico and 

Canada. 

In a recent letter to the current Administration, the North American Agriculture 

and Trade Coalition referred to the North American Free Trade Agreement 

(‘‘NAFTA’’) as a ‘‘bonanza for American Agriculture.’’ NCC, NTF and USAPEEC 

agree with that assessment. NAFTA has been particularly important for U.S. poultry exports. NAFTA, of course, began as an initiative during the Administration of 

President Ronald Reagan when talks with Canada were first launched in 1984. The 

U.S.-Canada Free Trade Agreement was signed at the end of President Reagan’s 

second term in 1988. Talks with Mexico to expand that agreement to the entire 

North American continent began during the term of his successor, President George 

H.W. Bush, and were successfully concluded by the end of his term in 1992. The 

policy of pursuing free trade began under President Reagan has been continually 

pursued during the ensuing four Administrations. 

28 

Initially, we must emphasize that with respect to poultry trade, there is no trade 

deficit. The United States is the most efficient producer of poultry products in the 

world. Our comparative advantage in producing and marketing these products derives from both our access to America’s abundant production of high quality feed 

grain and soybean products which are used to feed our chicken and turkey flocks; 

and from America’s technological leadership in poultry genetics and breeding, feed 

compounding, and animal health practices. Because of our significant comparative 

advantage in this product, the United States exports poultry to more than 100 countries, and imports very little poultry products. 

Second, free trade agreements have been the mechanisms that have helped to sustain U.S. world leadership in poultry exports. Of the 120 countries to which we export our products, 20 are nations who are free trade partners with the United 

States. Those 20 countries now represent more than 1⁄2 of all the sales value of U.S. 

exports of poultry products. As recently as 2007, we had export sales to these 20 

countries of approximately $1 billion—about 28% of our total exports sales, which 

was then nearly $3.6 billion. By 2016, sales to the 20 free trade partner countries 

has increased to nearly $2 billion, even though our total exports sales had increased 

more modestly. 

When NAFTA first came into force, the United States had only limited exports 

to Mexico despite that country’s immediate proximity on our southern border. Although there were initial concerns on the part of the Mexican industry regarding 

free trade with the U.S., we were able to bridge that gap by beginning to open trade 

through an initial 78,000 MT tariff-rate quota for chicken products; and to gain 

duty-free access to the Mexican market for turkey. Exports to Mexico have grown 

ever since, and it is today by far our largest market for U.S. poultry products. [See 

Figures 1 and 2.] For the most recent year for which data is available, U.S. chicken exports to Mexico were 637,888 MT at a value of $515 million; egg exports $27 million; and turkey exports were 152,404 MT at a value of $348 million. Also, Mexico 

is currently the largest export market for U.S. fowl meat, with exports in the most 

recent year of 50,101 MT at a value of $57 million. 

So, as one can see, Mexico is the U.S. poultry industry’s most important market with an export value of approximately $1 billion annually. Our success in the Mexican market is a key component of the profitability of our industry, and means many 

thousands of U.S. jobs. The majority of turkey exports go into Mexico for further 

processing, creating jobs on both sides of the border. 

The United States has never obtained totally free access to the Canadian market 

for poultry. Initially when the United States and Canada negotiated the U.S. Canada-Free Trade Agreement in the mid-1980’s, Canada reserved its rights, as it had 

under the General Agreement on Tariffs and Trade (GATT), to limit imports of certain types of poultry products, including chicken leg quarters, to protect its domestic 

supply control program for those products. When NAFTA came into force, the U.S. 

industry believed that those limits would eventually be eliminated, but discovered 

subsequently that Canada would continue to impose its supply-control limitations. 

The U.S. industry has been disappointed that, while virtually all other product sectors enjoy totally free trade under NAFTA, poultry remains the exception. Nonetheless, NAFTA has also been valuable for the U.S. industry and has helped to grow 

exports to Canada. While certain poultry product lines, including turkey, broilers, 

eggs and egg products are restricted to set import quotas (Canada currently limits 

certain tariff lines of our exports to 7.5% of their domestic market plus whatever 

can be done via their re-export program), other types of poultry products—e.g., fowl 

meat and breeding stock—can access the Canadian market duty free. Canada is currently the U.S.’s second largest market for poultry exports. In the most recent year, 

U.S. chicken exports to Canada were 162,777 MT at a value of $436 million; egg 

exports were $46 million; and turkey exports were 5,439 MT at a value of $22 million. Canada is currently the second largest export market for U.S. fowl meat with 

exports in the most recent year of were 12,954 MT at a value of $42 million. 

The benefits of NAFTA to the U.S. poultry industry stand in stark contrast to our 

experiences in other countries where comparable agreements were never achieved. 

U.S. exports to those other markets have often been much less successful in the 

longer run. For example, in the 1990’s and early 2000’s Russia was by far the U.S.’s 

largest export market for U.S. poultry. However, over the past decade, the Russian 

market has virtually disappeared. At the highest point in 2001, the U.S. exported 

1,119,182 MT to Russia, which represented 36% of total exports. In recent years, 

however, the market has disappeared as the current Russian Administration began 

to subsidize its domestic industry, providing government money for a limited number of insiders who could profit, and by cutting off imports that might present any 

competition. By 2014, U.S. exports of chicken to Russia were about 1⁄10 of what they 

had been in 2001. Since 2015, U.S. exports have dropped to zero. 

29 

While our Russian export market was beginning to decline in the 2000’s, our market in China was increasing. Our poultry exports to China had been just 2,575 MT 

in 1990; by 2008 we were shipping China 797,161 MT, at a value of $679 million. 

Then, in response to U.S. safeguard duties on certain tires made in China to afford 

protection for the U.S. tire industry, China imposed high antidumping duties on 

U.S. poultry exports, and the U.S. industry immediately lost its most important 

market, which at that time was approaching $700 million annually. 

The U.S. has also been unsuccessful in gaining access to other large and potentially valuable markets where there are no free trade arrangements. For example, 

we have no real access to either the Indonesian or Indian markets. Indonesia currently has a population of 260 million, and has the world’s fourth largest middle 

class with 17.3 million households as of 2014. Middle class purchasing power in Indonesia is rising strongly and is projected to reach U.S.$11,300 per household by 

the end of the decade, up from U.S.$6,300 per household in 2014. India currently 

has a population of 1.2 billion, and is on track to pass China and become the globe’s 

most populous country. India currently has nearly 80 million middle class households and both middle class numbers and purchasing power are on the increase. 

These are markets with overwhelming potential for a quality, low-cost sources of 

protein like U.S. chicken, eggs and turkey. But there are no free trade agreements, 

and virtually no access. 

The success of U.S. exports of poultry in the markets to which we have fair access 

has been based on the fundamental principle of comparative advantage. But it has 

become clear that U.S. poultry cannot succeed even with its significant comparative 

economic advantages in many markets because we do not have the free trade agreements. NAFTA has allowed us to be highly successful in Mexico; and has provided 

predictable, even if more limited, market access to the Canadian market. Free trade 

agreements, while not always perfect, are highly preferable because they result 

more often in cooperative and predictable trade relations 

Modernization of the NAFTA 

As mentioned above, after the United States and Canada entered the NAFTA 

partnership in 1994, it became apparent that one area of misunderstanding was the 

degree to which trade in dairy and poultry products would be liberalized. While the 

United States Government, and the U.S. dairy and poultry industries, believed that 

there would be free trade under NAFTA in virtually all products, Canada considered 

that NAFTA allowed Canada to restrict imports in these products to accommodate 

its domestic supply control regimes. As a result, the U.S. poultry industry has enjoyed much more limited access to the Canadian market over the past 2 decades 

than most all other sectors. Nonetheless, also as outlined above, U.S. exports to 

Canada have been significant in some poultry products, and the U.S. poultry industry sees the NAFTA modernization effort as a potential avenue for further improvement. 

In our view, the recent preliminary negotiations between the United States and 

Canada in the context of the proposed Trans-Pacific Partnership (TPP) agreement 

has provided indications where those improvements could occur. Despite the decision of the current Administration to withdraw from the TPP negotiations, the poultry industry considers the progress on poultry trade that had been envisioned in 

those preliminary TPP negotiations as potentially important components in modernizing the NAFTA in several ways. 

First, Canada and the United States had reached preliminary agreement on increasing the quotas for U.S. chicken into Canada. This would represent modest improvements in trade liberalization, but would not represent threats to current domestic policies or create market disruptions. The U.S. poultry industry sees these 

increases as helpful and politically possible on both sides of the border. The U.S. 

industry also believes that there should be similar increases in the market access 

for U.S. turkey and turkey products. Access to the Canadian market for U.S. turkey 

products is currently very small and increased market liberalization is warranted. 

Second, significant progress was made in the course of TPP negotiations to improve and update the Sanitary and Phytosanitary (SPS) rules applicable to free 

trade agreements. This important work should not be lost. The poultry industry 

joins its fellow agricultural industries in urging the United States, Canada and 

Mexico to consider adopting improved SPS provision as a replacement to the SPS 

chapter currently in the NAFTA text. 

Respectfully submitted, 

KEVIN J. BROSCH, 

On behalf of USA Poultry & Egg Export Council, National Chicken Council, and 

National Turkey Federation. 

30 

Figure 1—U.S. Broiler Exports to Mexico 

(In Million U.S. Dollars) 

Figure 2—U.S. Turkey Exports to Mexico 

(In Million U.S. Dollars) 

The CHAIRMAN. The gentleman yields back. 

Mr. Gaibler, 5 minutes. 

STATEMENT OF FLOYD D. GAIBLER, DIRECTOR, TRADE 

POLICY AND BIOTECHNOLOGY, U.S. GRAINS COUNCIL, 

WASHINGTON, D.C. 

Mr. GAIBLER. Good morning, Chairman Conaway, Ranking Minority Member Peterson, Committee Members. On behalf of the 

U.S. Grains Council, I appreciate the opportunity to appear before 

this panel to provide our perspectives on the economic impacts and 

importance of the modernization of NAFTA. 

The U.S. grain sector has significantly benefitted from localized 

trade in the past 30 years, and the Council believes in expanding 

access to export markets will continue to drive growth in American 

agriculture for years to come. In no case has that been more apparent than in our trade relationship with Canada and Mexico. 


11511017.eps 11511018.eps
31 

NAFTA has provided a trade policy basis for the most efficient and 

effective interregional grain and livestock value chain in the world. 

Rising demand for feed and food has created new opportunities for 

grain exports in our hemisphere, which are tariff free, thanks to 

NAFTA. Due to the proximity and natural logistical advantages, 

Mexican feed millers and livestock producers have expanded and 

gained significant efficiencies by utilizing a just-in-time inventory 

management system based on our reliable supply of U.S. grain. 

Because our economies have grown and become so intertwined, 

this trade agreement is in particular critical to our members’ business and during the last several months, it has highlighted how 

important it is to maintain our relationships if we are going to continue to grow. Since March, our CEO and Chairman has traveled 

twice to Mexico to meet with their customer and government officials. We also invited those same customers to the U.S. in May to 

meet with U.S. industry and Members of U.S. Congress, including 

this Committee. And in fact, in June, our Board of Directors went 

to Mexico in June as well. I can tell you from firsthand knowledge, 

in those meetings both here and there, the concerns and resulting 

impacts are real and tangible. They are obviously extremely concerned about what is going on, and confirmed that they are looking 

for alternative sources of supply. 

While we have worked to reassure and advocate for our customers, we have strong but unconfirmed evidence that Mexico is 

slated to purchase corn from South America beginning in August 

and September, and given the political uncertainty, our customers 

have told us that rather than continue taking future positions for 

grain purchases, they could resort to more volatile and risky spot 

markets. This may sound minor, but as a sea change for our industry happening now and that will change how the Mexican industry 

invests in infrastructure and impact our demand for years to come, 

as well as through our value chain. This angst is translated into 

actual impacts with U.S. corn exports down seven percent since the 

1st of the year. 

Keeping in mind the substantial gains we have experienced from 

NAFTA and the close relationships we have built with our customers, both Canada and Mexico, again, I will repeat it is imperative that all parties make every effort to do no harm to our existing 

markets as modernization talks begin. Given these overriding concerns, though, the Council did recently contract to conduct some 

economic analyses to measure the impacts of both improving 

NAFTA, and if negotiations fail. 

In short, improvements that could help facilitate trade and remove non-trade barriers will indeed help yield increased U.S. corn 

production and exports. Conversely, though, we can see that if we 

resort to pre-NAFTA most favored nation tariffs, we could see impacts in terms of lower commodity prices, reduced profit margins, 

lower U.S. corn and grain production, higher farm program payments, and lower U.S. GDP. 

In addition, we hope that whatever negotiations are conducted 

here that agriculture doesn’t end up being caught up as a retaliation target. Moving forward, we believe NAFTA modernization 

should build on the provisions and objectives of the Trans-Pacific 

Partnership. TPP included several important provisions that would 

32 

be well-suited for this agreement. Obviously, the industry has 

changed since the early 1990s, and we believe NAFTA can evolve 

with it, and so we support several of the provisions I have outlined 

in my testimony. 

Finally, it is critical for this process, and again, the discussion 

around NAFTA has caused significant uncertainty in the market. 

We need to get that resolved. 

In closing, I would emphasize that U.S. producers pride themselves on being the supplier of choice. To continue that over time, 

we must have strong policy across the globe, particularly with our 

closest neighbors and customers. Our relationships with Canada 

and Mexico are telling to the rest of the world. If we cannot satisfy 

our top markets, what does that say? 

Thank you again for the opportunity, and I appreciate the opportunity to be here. 

[The prepared statement of Mr. Gaibler follows:] 

PREPARED STATEMENT OF FLOYD D. GAIBLER, DIRECTOR, TRADE POLICY AND

BIOTECHNOLOGY, U.S. GRAINS COUNCIL, WASHINGTON, D.C. 

Statement on the Economic Impacts Regarding the Modernization of the 

North American Free Trade Agreement with Canada and Mexico 

Chairman Conaway, Ranking Minority Member Peterson, Members of the House 

Agriculture Committee, my name is Floyd Gaibler. I am the Director of Trade Policy 

& Biotechnology for the U.S. Grains Council. The Council is a private, nonprofit organization representing U.S. producers of corn, sorghum, barley and co-products 

such as ethanol, distiller’s dried grains with solubles (DDGS), and corn gluten feed 

and meal, and as well as associated agribusinesses. 

Founded in 1960, the Council now has ten international offices, representatives 

in an additional 15 locations and a network of consultants and partnerships that 

support programs in more than 50 countries. Our members, leadership and staff 

fundamentally believe exports are vital to global economic development and to U.S. 

agriculture’s profitability. 

On behalf of the Council, I appreciate the opportunity to appear before the Committee and provide our perspective on the economic implications with respect to the 

modernization of the North American Free Trade Agreement (NAFTA). 

Importance of NAFTA to U.S. Grains and Ethanol Sectors 

NAFTA has had a profound effect on many aspects of North American agriculture. 

With a few exceptions, intraregional agricultural trade is now completely 

free of tariff and quota restrictions, and the agricultural sectors of 

NAFTA’s member countries—Canada, Mexico and the United States—have 

become far more integrated, as is evidenced by rising trade in a wider 

range of agricultural products and substantial levels of cross-border investment. 

The U.S. feed grains industry has benefitted substantially from NAFTA. 

Rising demand for feed and food has created new opportunities for intraregional 

trade in grains and oilseeds. Poultry and hog producers in Mexico, for instance, rely 

heavily on imported feedstuffs to meet their country’s growing demand for meat. 

Due to the proximity and natural logistics advantages, Mexican feed millers and 

livestock producers have expanded and gained significant efficiencies by utilizing a 

‘‘just-in-time’’ inventory management system based on U.S. reliability of supply. 

Mexico is the top market for U.S. corn while Canada ranks as the ninth largest 

customer. Mexico and Canada ranked as the top two markets for U.S. barley in 

marketing year 2015/2016. Mexico is the second largest market for U.S. sorghum. 

Mexico and Canada have become the second and seventh largest markets, respectively, for distiller’s dried grains with solubles (DDGS). In the recent marketing 

year, Canada remained the top market for U.S. ethanol while Mexico was the eighth 

largest customer. 

The United States exported more than 29.3 million metric tons of feed grains in 

all forms to Canada and Mexico in marketing year 2015/2016, valued at $9.9 billion. 

The feed grain in all forms variable accounts for feed grains exported by the United 

States in either unprocessed or value-added forms, which offers a holistic look at 

demand from global customers being met by U.S. farmers. 

33 

Preserve and Protect Market Access 

In our communications with the Executive Branch, we exhorted that all 

efforts should be expended to maintaining all existing commitments in a 

‘‘do no harm’’ manner and expanding upon current market access and 

other provisions that enhance U.S. market share in both the Canadian and Mexican markets, and that promote economic integration and support farm incomes. In 

addition, it is imperative that other negotiating objectives or independent 

trade policy actions that could result in retaliation should be avoided at all 

costs. Agriculture has traditionally been the first target in response to disruptions 

in trading relationships. The 2009 trucking dispute with Mexico and the threat of 

retaliatory duties on U.S. agricultural products as a result of U.S. Country-of-Origin 

Labeling provisions are prime examples of our vulnerability. 

Moreover, the recent furor of the proposed Executive Order to withdraw from 

NAFTA has prompted the Mexican Government to look to Brazil and Argentina for 

alternatives sources of corn and other grain products. We have strong but 

unconfirmed evidence that Mexico is slated to purchase between seven and eight 

cargoes of corn from South America beginning in August and September. Given the 

political uncertainty, our customers have told us that rather than continue to future 

positions for grain purchase, a strategy key to mitigating price risk to purchase corn 

and co-products, they will resort to the more volatile and risky spot market. Those 

decisions have resulted in a 4% decline in corn exports (seven percent in 

terms of value) since the beginning of the year when compared to 2016. We 

expect further erosion if the shipments from South America materialize as 

we anticipate. 

Since March, our President and CEO Tom Sleight and Chairman Chip Councell 

have traveled twice to Mexico to meet with our customers and government officials. 

The Council also invited our top feed and livestock customers to the United States 

in May to meet with U.S. industry as well as Members of the U.S. Congress and 

the U.S. Department of Agriculture. In addition, our board of directors traveled to 

Mexico in June to meet with our customers and government officials. We can tell 

you from firsthand knowledge in participating in the meetings both in Mexico and 

here at home, that the concerns and resultant impacts are real and tangible. 

Economic Implications of NAFTA Negotiations 

To more concretely understand both the risks of ending NAFTA, and the potential 

improvements from a successful modernization of NAFTA, the Council, along with 

the U.S. Soybean Export Council and U.S. Wheat Associates commissioned an econometric analysis led by World Perspectives, Inc. and the assistance of Perdue University. 

With zero tariffs for U.S. feed grains and co-products under the current NAFTA 

agreement increased market access depends on facilitating trade and the reduction 

of non-tariff barriers. There is no good quantitative measure of the levels of nontariff protections or trade costs that can be reduced via negotiating structures, but 

it is feasible to examine the impact of expanded market access at the margin. For 

example, it is possible to experiment with the impact of increasing intra-NAFTA 

market access by a 1% ad valorem tariff equivalent. In other words, take the negative economic impact of Canada and Mexico both imposing a 1% tariff on imports 

of U.S. feed grains and then assume the positive equivalent of that economic impact 

from improving the technical terms of trade (rules of origin, customs clearance, SPS, 

etc.). 

The results demonstrate that the U.S. feed grain industry has the potential to realize gains from improved terms in a modernization of NAFTA, with Mexico a more 

significant contributor to those benefits than Canada. U.S. corn production increases 

in value by $80 million, but less than 1⁄4 of that goes into direct export to Mexico 

and Canada. The majority of the increase in U.S. corn exports to Canada and Mexico is in the form of value-added products from livestock and other foods. So the increase in U.S. feed grain production it utilized under an improved NAFTA demonstrated there is the potential for gains from further reduced barriers to trade, and 

particularly for expanding U.S. feed grain and grain derived product exports to Mexico. 

Conversely, if the negotiations fail and we quit NAFTA, it is unclear what specific 

future polices would be chosen. But one assumption is that all three North American countries would end all North American preferences. This potentially means 

that each country reverts to applying their respective most favored nation (MFN) 

duties. The MFN rates are the maximum tariffs that can be imposed based on 

World Trade Organization (WTO) obligations and they vary from country to country. 

Mexico’s MFN duty rates range from 20–40%; versus 1–10% for the U.S. and Canada. 

34 

The results of the analysis finds that the negative price impact on U.S. corn 

(¥$0.02/bushel) is relatively small since exports to Mexico are a very small share 

(0.0012% of total world utilization. U.S. corn production falls by an average of 150 

million bushels annually, which equates to around $800 million in value or about 

$6/acre. Total U.S. grain production falls by $1.2 billion. 

While the changes in U.S. per profit margins appear modest, (2–3 percent), this 

is because the model assumes a partial offset from the shock in the near term by 

an annual average of $1.2 billion in farm program payments. More pronounced is 

the large macroeconomic impact with U.S. GDP falling by $13 billion. 

Obviously, commodities are fungible and markets adjust over time. In addition, 

impacts extend to other farm product with interlocking relationships, such as livestock products. A drop in overall farm income can have spillover effects that could 

lead to changes in farm structure, the idling of land or its conversion to alternative 

uses—further lowering corn profitability. 

Negotiation Objectives and Priorities 

In our formal comments to the Administration, we advocated that this negotiation 

should build on and strengthen the objectives under the Trans Pacific Partnership (TPP) that was developed to represent a 21st century high level agreement 

that serves as a template for all future trade negotiating architectures. At the same 

time, there were positive elements under the Trans-Atlantic Trade and Investment Partnership (T–TIP) as well as recent U.S. free trade agreements (e.g., 

Korea-U.S. FTA) that should be considered when developing U.S. negotiating objectives. The Council is a member of the U.S. Food and Ag Dialogue for Trade and 

our supportive of their views with respect to negotiating objectives. 

National Treatment and Market Access for Goods 

The Council urged the Administration for the continued elimination of all tariff preferences and/or quotas for corn, corn-co-products (corn gluten feed, 

corn gluten meal, grain sorghum, barley and malt; ethanol and dried distiller grains). 

TPP also provided important provisions that addressed major policy issues and 

merit inclusion in a modernized NAFTA agreement including: Export Subsidies; 

Export Guarantees or Insurance Programs; Agricultural Export State Trading Enterprises; Export Restrictions—Food Security; and Agricultural Safeguards. 

Sanitary and Phytosanitary (SPS) Measures 

The NAFTA agreement included provisions to establish a framework of rules and 

disciplines to guide the development, adoption and enforcement of sanitary and 

phytosanitary measures. While perhaps suitable at that time, subsequent free trade 

agreements have made significant improvements over the foundational SPS language of NAFTA. 

Protectionist sanitary and phytosanitary measures that lack a scientific basis and 

are not based on a risk assessment continue to unjustifiably restrict access for U.S. 

food and agricultural exports in numerous foreign markets. While the WTO Sanitary and Phytosanitary Agreement established important science-based principles to 

challenge such restrictions, enhanced provisions are needed to ensure that SPS 

issues are resolved in a timely manner and do not result in significant unnecessary 

delays to our sector’s perishable exports. 

TPP provided a strong Sanitary and PhytoSanitary (SPS) Chapter that 

builds on the WTO’s 1994 SPS agreement rather than simply reaffirming commitments to the WTO SPS agreement. We would support improving these provisions, 

in particular the following areas: Equivalence; Science and Risk Analysis; Import 

Checks; Transparency: Cooperative Technical Consultations; and when the CTC 

mechanism does not resolve a matter, parties may use provision’s dispute settlement mechanism to enforce most of the SPS commitments. In particular the creation of a rapid response mechanism, including tighter standards and deadlines for 

adverse import checks will be critical in addressing future SPS issues. 

Biotechnology 

While products derived from agricultural biotechnology are grown in 28 countries 

and are traded widely, there remains a lack of synchronicity between countries, particularly countries that approve these products and countries who import them. This 

unpredictable regulatory and trade environment has resulted in trade disruptions 

that have caused economic impacts and delayed opportunities for farmers to have 

access to new technologies. 

The North American Free Trade Agreement (NAFTA) came into force 2 years 

prior to the commercialization of the first biotech crops in 1996. Since that time, 

35 

biotech acreage across multiple crops has grown rapidly because of the increased 

productivity and, environmental benefits associated with this technology. 

Since the NAFTA entered into force, the global regulatory framework for biotech 

crops has expanded, sometimes resulting in redundant measures, leading to an unpredictable, and time-consuming global regulatory environment, which in turn has 

imposed high barriers to efficient trade. Corn and soybean products often are evaluated for their safety by 20 or more governments, all generally following the same 

standards for assessment and evaluating the same data. The timing of approval of 

these products affects the entire crop value chain. If a product is commercialized in 

one plant crop in the absence of globally synchronized regulatory approvals, trade 

disruption may occur in multiple crops and processed products used for food, feed 

and further processing, even though the product has completed a risk assessment 

and been approved in one or more countries. Similarly, asynchronous approvals 

have contributed to the delayed introduction of new technologies for use by agricultural producers, resulting in lost opportunities for farmers and product developers, 

as well as other participants in the value-chain, to capitalize on the introduction of 

new biotech traits. 

Under a modernized NAFTA, the Council advocated efforts that the U.S. Government: (1) enter a mutual recognition agreement with Canada and Mexico on 

the safety determination of biotech crops intended for food, feed and for 

further processing, and (2) develop a consistent approach to managing lowlevel presence (LLP) of products that have undergone a complete safety assessment and are approved for use in a third country (ies) but not yet approved by a NAFTA member. The Council is also a member of the U.S. Biotech 

Crops Alliance and supports their position on this issue. 

Coherent National Renewable Fuel Standards 

Since NAFTA went into effect in 1994, the U.S. ethanol industry has grown dramatically, expanding production more than eleven-fold from a modest 1.2 billion gallons in 1994. Today, the U.S. is now the most reliable and affordable source for 

clean-burning, high-octane ethanol in the world. Our industry supports more than 

340,000 jobs and promotes the growth of rural America and the farm economy 

through the use of more than 5 billion bushels of U.S. corn to make ethanol and 

associated coproducts. In 2016, our industry produced more than 15 billion gallons 

of ethanol and 47 million metric tons of distiller’s grains, contributing more than 

$30 billion to our nation’s economy. In addition, we exported over 1.2 billion gallons 

of ethanol at a value of more than $2 billion and 11.3 million metric tons of DDGS. 

Today, Canada and Mexico are two of the U.S. ethanol industry’s strongest trading partners, with Canada emerging as the destination for more than 25 percent of 

all U.S. ethanol exports, and Mexico recently emerging as the top destination for 

U.S. DDGS exports. Our industry’s successful entry and trade into the Canadian 

and Mexican markets are a direct result of NAFTA’s elimination of tariffs on goods 

such as ethanol and distillers grains. 

NAFTA modernization provides an excellent opportunity to recognize and support modernized energy policy, we recommended to the Administration that 

they maintain the current policy of zero tariffs on ethanol amongst the three 

countries. We would also encouraged them to work to prevent the introduction 

of any potential technical barriers to trade. Currently, while the transportation 

fuel markets and ethanol blend dynamics differ in Canada, Mexico, and even within 

the U.S., there appear to be few, if any, true barriers to trade. We would not want 

any such barriers to be introduced in the future, as we would like to keep these 

fuel markets as open and as workable as possible for our U.S. producers. 

Conclusion 

In conclusion, the U.S. grains sector has significantly benefited from more liberalized trade in the past 30 years, and the Council believes expanding access to export 

markets will continue to drive the success of American agriculture for years to come. 

In no case has this been more apparent than in our trade relationship with Canada and Mexico. NAFTA has provided the trade underpinnings that has resulted in the most efficient and effective interregional grain and livestock 

value chain in the world. 

But to take advantage of this and other emerging export opportunities—and to 

maintain our competitiveness in the global marketplace—trade liberalization must 

continue at all levels, bilateral, regional and multilateral. Trade agreements hold 

the key to opening markets and resolving tariff and non-tariff barriers to 

allow the movement of coarse grains, co-products in all forms and other agricultural exports to where they are demanded. With effective policies in 

place and followed, trade works—and the world wins. 

36 

U.S. Exports of Corn In All Forms to Mexico and Canada 

Source: USDA FAS GATS/USGC. 

The CHAIRMAN. Thank you, sir. 

Mr. Hammer, 5 minutes. 

STATEMENT OF THOMAS A. HAMMER, PRESIDENT, NATIONAL 

OILSEED PROCESSORS ASSOCIATION, WASHINGTON, D.C. 

Mr. HAMMER. All right. Good morning, Chairman Conaway, 

Ranking Member Peterson, and Members of the Committee. Thank 

you for calling this important hearing today to discuss renegotiating the North American Free Trade Agreement, and the opportunities to achieve the best deal possible for American agriculture. 

My name is Tom Hammer. I am President of the National Oilseed Processors Association. NOPA is a national trade association 

representing 13 members engaged in the production of food, feed, 

and renewable fuels from oilseeds. It is noteworthy that our members process over 95 percent of the U.S. soybean crush annually. 

My comments will focus on the U.S. soybean sector, but also on 

our most important customer group, the domestic meat and poultry 

sectors. 

Agriculture today represents NAFTA’s biggest success story. We 

stand ready, however, to work with the Members of Congress and 

the Administration in identifying ways to renegotiate NAFTA to 

create new opportunities for agriculture. 

NAFTA benefits the U.S. soy sector in two ways. First, by increased exports of soybeans, soy meal, and soy oil, but as said earlier, also increased exports of meat and poultry products that use 

soy meal as a primary feed ingredient. NAFTA has created significant market opportunities for U.S. exports of soybeans and soy 

products. Mexico is our number one export market for soy meal, 

our number one market for soy oil. It is our number two market 


11511019.eps
37 

for soybeans, behind China. Canada ranks as our number three 

market for U.S. exports of soy meal, and our number nine or ten 

market for soybean oil. 

However, unlike the tremendous success stories for U.S. soy, we 

are aware that there are some major unresolved market access 

issues for exports of dairy, poultry, and eggs to Canada, and I 

would like to comment on several of the key negotiating objectives 

that are important to NOPA. 

We are still in our initial review process and may have more to 

say on some of the negotiating objectives later, such as the retention of investor state dispute settlement and dispute settlement 

chapters. Any renegotiating of the NAFTA must preserve current 

market access levels for U.S. agriculture commodities and products, 

including all tariff and duty preferences, and in simple terms, as 

you have heard already, do no harm to our current excellent export 

positions in Mexico and Canada. Resolving the longstanding Canadian policies designed to negatively impact exports of U.S. dairy, 

poultry, and eggs would be another top objective for NOPA. 

Also, implementing an expanded sanitary phytosanitary SPS 

plus and rapid response mechanism consistent with and improving 

on the TPP text to ensure that science-based SPS measures are developed and implemented in a transparent, predictable, and nondiscriminatory manner is another objective for NOPA. 

Moreover, adding a new NAFTA chapter on biotechnology, which 

again, was included in the final TPP text, is a major objective for 

my organization. Under a modernized NAFTA, NOPA requests that 

the U.S. Government enter into a mutual recognition agreement 

with Canada and Mexico on the safety determination of biotech 

crops intended for food, feed, and further processing, and also to 

develop a consistent approach to managing low level presence of 

products that have undergone a complete safety assessment and 

are approved for use in other countries, but not necessarily in all 

NAFTA member countries. 

In summary, NOPA welcomes this opportunity to provide the 

Committee with testimony to identify ways to renegotiate the 

NAFTA while preserving the core benefits of this important agreement. NAFTA has led to tremendous expansion of the U.S. oilseed 

processing sector with ripple effects that have benefitted the broader U.S. economy. Our business sectors have grown. People have 

been hired, and strong supply chains have been built based upon 

the current agreement. As I said, do no harm must be the guiding 

overarching objective of this renegotiation. Moreover, a renegotiation of NAFTA should first and foremost preserve the current 

market access, including the tariff and duty preferences, but additionally, we ask our negotiators to fiercely protect the gains 

achieved in NAFTA to date to ensure that these gains are not eroded and tradeoffs for gains to be achieved in other non-agricultural 

sectors of the American economy. 

Thank you again for this opportunity to testify, and NOPA, as 

I said, stands ready to work with the Members of Congress and the 

Administration as we commence this critically important renegotiation of NAFTA with our Canadian and Mexican trading partners. 

Thank you. 

[The prepared statement of Mr. Hammer follows:] 

38 

PREPARED STATEMENT OF THOMAS A. HAMMER, PRESIDENT, NATIONAL OILSEED

PROCESSORS ASSOCIATION, WASHINGTON, D.C. 

Good morning, Chairman Conaway, Ranking Member Peterson, and Members of 

the Committee. Thank you for calling this important hearing today to discuss renegotiating the North American Free Trade Agreement (NAFTA) and the opportunities to achieve the best deal possible for American Agriculture. 

My name is Tom Hammer, President of the National Oilseed Processors Association (NOPA). NOPA is a national trade association that represents 13 companies engaged in the production of food, feed, and renewable fuels from oilseeds. NOPA’s 

members process soybean, sunflower seed, canola, flaxseed and safflower seed. Our 

member companies process more than 1.8 billion bushels of oilseeds annually at 64 

plants located throughout the country, including 58 soybean processing facilities 

that ‘‘crush’’ over 95% of the U.S. soybean crop. 

My comments will focus on the U.S. soybean sector; and, on our most important 

customer group, the domestic meat and poultry sectors. 

Agriculture Represents One of NAFTA’s Biggest Success Stories 

Agriculture represents one of NAFTA’s biggest success stories. Since the agreement was enacted, U.S. food and agricultural exports to Canada and Mexico have 

more than quadrupled—growing from $8.9 billion in 1993 to over $38 billion in 

2016. We recognize that NAFTA is now over 23 years old and improvements to the 

agreement can be made. We stand ready to work with Members of Congress and 

the Administration to identify ways to renegotiate NAFTA. However, in so doing, 

it is critical that the core benefits of the Agreement that have greatly expanded U.S. 

food and agricultural trade within North America must be preserved. 

The U.S. food and agriculture sector is heavily dependent on our current level of 

access to Mexico and Canada. NAFTA has played a significant role in boosting incomes for millions of U.S. farmers, ranchers, and allied manufacturers—and continues to provide important and profitable markets for our nation’s rural agriculture-based communities. As the Administration and Congress work together to 

identify constructive opportunities to modernize NAFTA, it is critical to preserve 

what has worked well in the current agreement as a ‘‘base line’’ and then build upon 

this base by expanding the market access, tariff, and non-tariff provisions. 

NOPA looks forward to working with Members of Congress and the Administration to develop and implement a modernized trade policy that will promote and expand America’s food and agriculture producers’ and exporters’ interests in the important North American market. 

NAFTA Benefits the U.S. Soy Sector in Two Ways: 

1. Increased exports of soybeans, soy meal, and soybean oil. 

2. Increased exports of meat and poultry products that use soy meal as animal 

feed. 

NAFTA: U.S. Soy and Soy Product Exports 

Thanks to trade agreements with our North American partners, U.S. soy exports 

have grown significantly over the past 23 years. These agreements reduced tariffs 

and further integrated the North American market for soybeans and related products. This improved market access allowed the U.S. soy industry to meet Mexico’s 

growing demand for proteins. 

In 2016, the U.S. exported $415 million and $2.5 billion of soybeans and soy products to Canada and Mexico, respectively. Mexico saw the greatest growth, nearly tripling their imports of U.S. soybeans and soy products since the implementation of 

NAFTA. 

U.S. Soy & Soy Product Exports—2016 (CY) Value in Thousands * 

Products 

Mexico Canada 

Value ($) Metric Tons Value ($) Metric Tons 

Soybeans 1,462,600 3,639,647 115,869 304,089 

Soybean Meal 800,501 2,128,983 280,865 755,182 

Soybean Oil 226,820 257,374 18,341 16,369 

Total Soy Exports $2,498,921 6,026,004 $415,075 1,075,640 

* Source: USDA/FAS/GATS. 

39 

U.S. Soy & Soy Product Exports—1993 (CY) Value in Thousands * 

Products 

Mexico Canada 

Value ($) Metric Tons Value ($) Metric Tons 

Soybeans 415,723 1,758,386 58,227 231,709 

Soybean Meal 58,514 251,641 162,973 655,706 

Soybean Oil 14,854 33,130 11,345 20,650 

Total Soy Exports $489,091 2,043,157 $232,545 908,065 

* Source: USDA/FAS/GATS. 

NAFTA has led to Enormous U.S. Soy Export Gains: 

➢ Increase in Value of all U.S. Soy and Soy Products Exports to Canada 

and Mexico from 1993 to 2016: $2.19 Billion. 

➢ Increase in Volume of all U.S. Soy and Soy Products Exports to Canada 

and Mexico from 1993 to 2016: 4.15 Billion Metric Tons. 

NAFTA: U.S. Meat and Poultry Product Exports 

Because of trade agreements with our North American partners, U.S. meat and 

poultry exports have also grown significantly over the past 23 years. NAFTA has 

reduced tariffs and further integrated the North American market for meat and 

poultry products. This improved market access allowed the U.S. meat and poultry 

industries to meet the demands for quality food and feed products from Mexico, 

which are essential to meet Mexico’s growing demand for proteins. 

In 2016, the U.S. exported $3.25 billion of meat and poultry products to Mexico. 

Exports to Canada of meat products and poultry have also grown, totaling In 2016, 

total exports of meat and poultry products were $2.07 billion in 2016. Yet, exports 

of U.S. dairy and poultry products could be higher—this will be discussed later in 

my comments. 

U.S. Meat Product Exports—2016 (CY) Value in Thousands * 

Products 

Mexico Canada 

Value ($) Metric Tons Value ($) Metric Tons 

Pork & Pork Products 1,355,028 730,314 798,518 205,372 

Beef & Beef Products 974,903 242,374 758,117 116,265 

Poultry & Poultry Products 924,649 841,940 509,172 184,637 

Total Meat Exports $3,254,580 1,814,628 $2,065,807 506,274 

* Source: USDA/FAS/GATS. 

U.S. Meat Product Exports—1993 (CY) Value in Thousands * 

Products 

Mexico Canada 

Value ($) Metric Tons Value ($) Metric Tons 

Pork & Pork Products 112,103 95,345 36,717 15,250 

Beef & Beef Products 163,803 80,314 361,096 94,429 

Poultry & Poultry Products 204,965 171,091 164,439 65,521 

Total Meat Exports $480,871 346,750 $562,252 175,200 

* Source: USDA/FAS/GATS. 

NAFTA has led to Enormous U.S. Meat Product Export Gains: 

➢ Increase in Value of all U.S. Meat and Poultry Exports to Canada and 

Mexico from 1993 to 2016: $4.27 Billion. 

➢ Increase in Volume of all Meat and Poultry Exports to Canada and 

Mexico from 1993 to 2016: 1.79 Billion M/T. 

40 

Animal Agriculture is the Single Largest User of U.S. Soybean Meal 

Conversion Rates = Pounds of Soybean Meal used to Produce One (1) Metric Ton of 

Meat 

Turkey 1,618 

Pork 1,508 

Chicken 1,156 

Beef 568 

NAFTA Objectives: Trade in Soybean and Soybean Products 

Since NAFTA was signed over 23 years ago and during that time, virtually all 

tariff barriers for trade in oilseeds and oilseed products have been eliminated—creating a seamless North American market for such products as soybeans, soybean 

meal and soy oil. 

As I have stated, NAFTA has created significant market opportunities for U.S. exports of soybeans and soy products. For the past calendar year (Jan.–Dec. 2016), 

Mexico ranked number two (2) for our exports of soybeans, and number one (1) for 

both soybean meal and soy oil. This has been the case for several years running. 

For the past calendar year, Canada ranks number three (3) for U.S. exports of soybean meal and number ten (10) for our exports of soybean oil. This also has been 

the case for several years. 

In anticipation of the renegotiation of NAFTA, we recently polled NOPA’s members to determine if they have experienced any trade irritants or non-tariff trade 

barriers with either Mexico or Canada. At this point in time, our members have not 

identified any major issues or disputes that could not be handled between U.S. exporters and their importing customers. Thus, it appears that the North American 

supply chain for trade in soybeans and soybean products is operating in an efficient 

and seamless manner. 

Since Mexico and Canada have become our leading export markets for soybean 

meal and soy oil under NAFTA, NOPA’s top priority must be to ‘‘do no harm’’ to 

the positive trading terms we currently enjoy. Nevertheless, there are several major 

opportunities to modernize and improve the Agreement. 

NAFTA Objectives: Trade in Meat and Poultry Products 

NOPA’s members have benefited from the NAFTA in two major ways. First, from 

the greatly expanded trade in soybean meal and soy oil. But, also due to the significant growth in U.S. exports to both Mexico and Canada of meat and poultry product 

exports over the past 23 years. This is important to NOPA members because American poultry, pork, beef and dairy producers and exporters are our principal customers. When these customers sell more meat products to Mexico and Canada, by 

definition, they consume more U.S. soybean meal. 

However, unlike the tremendous ‘‘success stories’’ that we hear from NOPA members about unfettered exports of soymeal and soy oil to Mexico and Canada, we are 

aware that there are still some major unresolved market access issues for U.S. exports of dairy, poultry and eggs to Canada. These trade barriers stand in sharp contrast to nearly all other U.S. agricultural exports which enjoy duty-free and quotafree access to Mexican and Canadian consumers. 

• For U.S. dairy exports, Canada continues to use a variety of unfair trade policies, including the use of trade restricting tariffs and limited in-quota volumes, 

which impede access to their market and impair the value of the concessions 

Canada has granted to the U.S. dairy industry. 

• While U.S. poultry exports to Canada have been significant and Canada is the 

U.S. poultry industry’s second largest export market, the U.S. poultry industry 

has had more limited access to the Canadian market than most other sectors. 

Market access to Canada for highly competitive U.S. chicken, turkey and eggs 

is limited by restrictive quotas. 

The renegotiation, or modernization, of the NAFTA represents a most important 

opportunity for the further expansion of U.S. dairy, poultry and egg product exports, 

particularly to Canada. 

Therefore, fully liberalizing access to the Canadian market for these important agricultural products is a key negotiating objective for NOPA. 

41 

Specific Negotiating Objectives for the Initiation of NAFTA Negotiations 

On July 17, 2017, the Office of the United States Trade Representative (USTR) 

provided a summary of the Administration’s specific objectives with respect to the 

NAFTA negotiations. 

I would like to comment on several of the key negotiating objectives that are of 

importance to NOPA. As these specific negotiating objectives have just been made 

available to the Congress and to the public, NOPA is still in its internal review 

process and may have more to say on these negotiating objectives later. 

Trade in Agricultural Goods 

• Maintaining existing reciprocal duty-free market access for agricultural goods 

is our number one objective; any renegotiation of NAFTA must preserve current 

market access, including all tariff and duty preferences. In simple terms, ‘‘do 

no harm’’ to our current excellent export positions in Mexico and Canada is 

NOPA’s main objective. 

• Eliminating non-tariff barriers to U.S. agricultural exports including discriminatory barriers, restrictive administration of tariff rate quotas, other unjustified 

measures that unfairly limit access to markets for U.S. goods is another major 

objective for NOPA. Particularly, resolving the long-standing Canadian policies 

designed to negatively impact dairy, poultry and egg trade, and obtaining significantly greater market access for U.S. dairy and poultry exports to Canada, 

is a top objective. 

• Promoting greater regulatory cooperation to reduce burden associated with unnecessary differences should be an overarching goal of NAFTA renegotiation 

which embraces provisions to foster an open, fair and predictable regulatory environment. This objective will be achieved by promoting the use of widely-accepted good regulatory practices including core principles such as science-based 

risk assessment, transparency, impartiality and due process paired with coordination across governments to ensure a coherent regulatory approach. 

Sanitary and Phytosanitary Measures (SPS) 

• Implementing an expanded ‘‘Sanitary Phytosanitary (SPS)-Plus and Rapid Response Mechanism’’ consistent with, but improving on the Trans-Pacific Partnership (TPP) text, to ensure that science-based SPS measures are developed 

and implemented in a transparent, predictable, and non-discriminatory manner 

is a major objective for NOPA. At the same time, it is important to preserve 

the ability of NAFTA partner regulatory agencies to take necessary steps to ensure food safety and protect plant and animal health. 

• Adoption of expanded WTO SPS-Plus standards should include: 

» Creation of a Rapid Response Mechanism, including tighter standards and 

deadlines for adverse import checks. 

» Adoption of cooperative technical consultations and increased reporting, 

transparency and record keeping. 

» Creation of a more robust single inquiry point standard for SPS contacts (including increased transparency of SPS requirements, databases for SPS regulations etc.). 

» High standards for risk assessment and risk management, including language that elaborates on current WTO provisions. 

» Adopt trade facilitative residue levels and adventitious presence mechanisms. 

» Include low level tolerance principles. 

» Enhance enforcement mechanisms for unjustified SPS barriers, including potential compensation, three strikes policy or retroactive damages to help enforce and hold trading partners accountable to persistent and unscientific SPS 

measures. 

Biotechnology 

• Adding a new NAFTA Chapter on Biotechnology is also a major objective for 

NOPA. 

• Under a modernized NAFTA, NOPA requests that the U.S. Government: 

» Enter a mutual recognition agreement with Canada and Mexico on the safety 

determination of biotech crops intended for food, feed and for further processing. 

» Develop a consistent approach to managing low-level presence (LLP) of products that have undergone a complete safety assessment and are approved for 

use in another country/ies but not yet approved by a NAFTA member. 

42 

Other NAFTA Chapters 

Improved and modernized Chapters dealing with such important trade issues as: 

(1) Rules of Origin, (2) Technical Barriers to Trade (TBT), (3) Good Regulatory Practices, (4) Transparency, and (5) Dispute Settlement are also important objectives for NOPA. 

We will have more to say about these Chapters, and possibly others, once NOPA’s 

Committees and its Board of Directors have had adequate time to evaluate these 

important elements of a renegotiated NAFTA. 

Summary 

In summary, NOPA recognizes that NAFTA has become outdated and that improvements to the Agreement can be made. We welcome this opportunity to identify 

ways to renegotiate the NAFTA while preserving the core benefits of the Agreement. 

NAFTA has led to an expansion of the U.S. oilseed processing sector and our domestic meat and poultry customers during the past 2+ decades, with ripple effects that 

have benefitted the broader U.S. economy. Our business sectors have grown, people 

have been hired, and strong supply chains have been built based upon the current 

Agreement, so ‘‘do no harm’’ should be a guiding, overarching objective in the negotiations. A renegotiation of NAFTA should, first and foremost, preserve current market access, including all tariff and duty preferences. Additionally, we ask that our 

negotiators fiercely protect the gains achieved in NAFTA to date to ensure these 

gains are not eroded in tradeoffs for gains to be achieved in other sectors of the 

American economy. 

Thank you again for the opportunity to testify before this Committee. NOPA 

stands ready to work with the Members of Congress and the Administration as we 

commence this critically important renegotiation of NAFTA with our Canadian and 

Mexican trading partners. 

The CHAIRMAN. Thank you, sir. 

Mr. Brown, 5 minutes. 

STATEMENT OF REGINALD L. BROWN, EXECUTIVE VICE 

PRESIDENT, FLORIDA TOMATO EXCHANGE, MAITLAND, FL; 

ON BEHALF OF FLORIDA FRUIT AND VEGETABLE 

ASSOCIATION 

Mr. BROWN. Thank you, sir, and I appreciate the opportunity to 

testify before the Committee this morning. I am Reggie Brown. I 

work for the Florida tomato industry, and I am here also on behalf 

of the Florida Fruit and Vegetable Association, producers of fruits 

and vegetables in Florida. 

Florida and the U.S. specialty crops producers are high-quality, 

competitive producers, and we can, in fact, compete on a free and 

fair trade enterprise. We are not opposed to fair trade. But we are 

having a problem in the specialty crop industry in this country, 

and that problem is not limited to Florida. It is happening in states 

like Georgia, with crops like blueberries and broccoli. It is happening in Texas with crops like watermelons. It is happening in 

California with the desert grape industry. It is happening to the asparagus industry in California. All the specialty crop producers in 

this country are having a problem with the current NAFTA trade 

relationship. 

As you have heard this morning, there have been a number of 

folks testify about the positive side of NAFTA. We have a $5.3 billion trade deficit with NAFTA. That $5.3 billion is specialty crops, 

fruits and vegetables, coming into this country. While our friends 

in the grain and the meat industry have fared well with NAFTA, 

the fresh fruit and vegetable industry has been taking it on the 

cuff from the standpoint of unfair competition coming into the 

country. 

43 

For instance, when we started down the path of NAFTA, the tomato industry in the United States produced two out of every three 

tomatoes in this country. We now produce approximately one of 

every three tomatoes in this country. The tomato industry has 

shrunk by some 40 percent in volume. This is nationally, not just 

Florida’s problem. And we have had 25 percent reduction in the 

acreage of the tomato industry in this country, fresh tomatoes. We 

are the canary in the coal mine. We are an example of what is 

going to happen to many of the specialty crops that compete with 

Mexico, and part of that problem is being driven by the fact that 

the Mexican Government has been subsidizing and providing incentives for expansion of that industry in Mexico. They also have been 

trading in product prices into this country that would constitute 

dumping in competition with producers in the United States. And 

they also have a tremendous advantage in wage rate. The wage 

rate in Mexico is approximately 1⁄10 what the American producer 

is paying for wages in this country. 

The NAFTA renegotiation objectives of the Administration’s that 

were shared back on the 17th of this month on improving the trade 

balance and reducing trade deficit within the NAFTA countries is 

a very positive one for us. We are very concerned about the provisions for a perishable and seasonable application of dumping and 

countervailing duty cases that would allow some of these commodities that are being targeted to be competed against, to defend 

themselves against unfair trade practices. We would like to see the 

trade laws in the United States, as does the Administration, for 

anti-dumping and countervailing duty and safeguards being strongly enforced, because we are basically an industry under assault. We 

do appreciate the support of the Members of this Committee, as 

well as the Florida delegation in their support letters to Secretary 

Ross concerning these issues, but the reality is the expansion of the 

specialty crop industry in Mexico, for instance, in just the last 16 

years, strawberry production has gone from 16 million pounds to 

260 million pounds of strawberries. The bell pepper industry, when 

NAFTA was signed, two out of every three bell peppers was produced in the United States. Today, one to one, and it is progressively getting worse. We have family farmers being forced out of 

business by unfair trade practices coming from our competitors to 

the south with a $5.3 billion deficit in trade of agricultural products with this country, and those individuals, once they are gone, 

they will never come back. We are basically witnessing the disassembling of the fruit and vegetable industry that competes in the 

environment of the season that Mexico produces product from this 

country. And when those family farms are sold and when those 

businesses are broken up, there will be no capacity to grow those 

fruits and vegetables within the borders of the United States of 

America. 

I thank you for the opportunity to be here this morning. 

[The prepared statement of Mr. Brown follows:] 

44 

1May 17, 2017, testimony before the House Committee on Agriculture. 

2Data from Florida Department of Agriculture and Consumer Services. 

PREPARED STATEMENT OF REGINALD L. BROWN, EXECUTIVE VICE PRESIDENT, 

FLORIDA TOMATO EXCHANGE, MAITLAND, FL; ON BEHALF OF FLORIDA FRUIT AND

VEGETABLE ASSOCIATION

Thank you for the opportunity to testify before the House Committee on Agriculture concerning Renegotiating NAFTA: Opportunities for Agriculture. I am Reggie 

Brown, Executive Vice President of the Florida Tomato Exchange, representing tomato growers in Florida, one of the major fresh tomato producing regions in the 

United States, as well as other tomato-growing areas of the country. The Florida 

Fruit and Vegetable Association has also asked that I speak to the concerns of Florida’s other fruit and vegetable sectors, which are encountering issues similar to 

those confronting Florida’s tomato sector. As a member of the U.S. Government’s 

Agricultural Technical Advisory Committee for Fruits and Vegetables, I have been 

conveying many of these concerns to the U.S. Government since the North American 

Free Trade Agreement (NAFTA) first took effect. 

Mr. Chairman, while a number of our nation’s farmers and ranchers have benefitted from NAFTA, the same has not been true for Florida’s fruit and vegetable sector. U.S. Secretary of Agriculture Sonny Perdue summed it up well in stating to this 

Committee in May that— 

‘‘Certainly I think our vegetables and our produce sectors of agriculture have 

maybe been the ones that have not benefited as much under NAFTA. Regarding 

NAFTA negotiations, it is my hope . . . [that] one area we can improve our position vis a` vis Mexico is in regards to vegetables.’’ 1

Florida and U.S. specialty crop producers grow the highest quality agricultural 

commodities in the world, and can successfully compete in a fair market environment. We are not opposed to free trade—however it must be fair trade. Unfortunately, the current trade environment under NAFTA has not fared as well for many 

U.S. fruit and vegetable producers, as we have heard concerns from many regions 

around the country including growers of Georgia blueberries and broccoli, Texas watermelon, California grapes and asparagus and other specialty crop producers impacted under NAFTA throughout the nation. 

Even before NAFTA entered into force, the original negotiators forecasted that 

NAFTA could negatively affect Florida and other specialty crop regions. Florida and 

Mexico produce a number of the same specialty crops and share a similar growing 

season. Mexico’s known unfair advantages made NAFTA a concern. True to forecast, 

most of the growth in Mexico’s agricultural shipments to the United States since 

the turn of the millennium has been in the fresh fruit and vegetable sector. Mexico’s 

growth in these sectors has resulted in a loss of agricultural cash receipts of between $1–$3 billion a year to Florida alone. 

Tomatoes are a vivid example of Mexico’s explosive growth in specialty crops. U.S. 

imports of tomatoes from Mexico increased from 1.2 billion pounds in 2000 to 3.2 

billion pounds in 2016, a 166% increase. By comparison, U.S. tomato production 

shrank from 27 billion pounds in 2000 to 1.7 billion pounds in 2016, a nearly 40% 

decrease.2 Despite U.S. trade remedy measures and a long-standing Suspension 

Agreement, Mexican tomatoes continue to surge into the U.S. market at unfairly 

low prices. 

Other Florida specialty crops have encountered similar adverse trends under 

NAFTA. Since 2000, for example, U.S. imports of Mexican strawberries have almost 

tripled. Imports of Mexican bell peppers have grown by 163%. 

Although the United States is one of the world’s major agricultural producers, 

Mexico’s extraordinary expansion in fruit and vegetable shipments to the United 

States is creating a growing trade deficit in U.S.-Mexico agricultural trade. As of 

2016, that deficit exceeded $5.3 billion. 

45 

Agricultural Imports from Mexico—Fresh Fruits and Vegetables Growing 

Faster than other Agriculture and Livestock Products 

With Florida’s fruit and vegetable industry a growing casualty to this rising deficit, our industry is in dire need of government help. Florida’s specialty crop sectors 

were therefore encouraged by the Administration’s July 17, 2017, Summary of Objectives for the NAFTA Renegotiation, which expressed the Administration’s intention to[:] 

• ‘‘improve the U.S. trade balance and reduce the trade deficit with the NAFTA 

countries;’’ 

• ‘‘seek a separate domestic industry provision for perishable and seasonal products in AD/CVD proceedings;’’ 

• ‘‘preserve the ability of the United States to enforce vigorously its trade laws, including the antidumping, countervailing duty, and safeguard laws;’’ and 

• ‘‘require NAFTA countries to have laws governing acceptable conditions of work 

with respect to minimum wages, hours of work, and occupational safety and 

health.’’ 

Our industry is also grateful to the Florida Members of this Committee who 

joined with numerous other Colleagues in calling on the Secretary of Commerce to 

address Mexico’s unfair trading practices, which are displacing Florida’s production. 

Their letter to Commerce stated that[:] 

‘‘Florida produces the highest-quality agricultural commodities in the world 

and can successfully compete in a global market, if it’s operating on a level playing field, [but] the current trade environment created under NAFTA is anything 

but fair, particularly when it comes to policies impacting Florida’s specialty crop 

growers and producers.’’ (Letter attached for Record). 

As the many Members signing that letter correctly stated, Mexico’s specialty crops 

have only been able to achieve their extraordinary U.S. growth with the help of 

sales prices significantly below costs of production, unfair subsidies, and dramatically lower labor costs. The U.S. tomato sector again drives home the point. Despite 

years and years of U.S. trade remedy proceedings and a long-standing Suspension 

Agreement, tomato imports from Mexico are still bypassing the Suspension Agreement at unreasonably low prices and at volume levels that are stronger than ever. 


11511020.eps
46 

3See USDA National Statistics Service, Annual Survey Data, available at https:// 

quickstats.nass.usda.gov/. 4See Wageningen University and Research, ‘‘Mexican Protected Horticulture: Production and 

Market of Mexican Protected Horticulture Described and Analyzed,’’ (Report GTB–1126, 2011); 

USDA Foreign Agricultural Service, 2012 Tomato Annual, GAIN Report No. MX2036 (June 4, 

2012), at 6. 5Government of Mexico website, ‘‘SAGARPA has the Support You Need,’’ January 14, 2016. 

6Official Diary of the Government of Mexico, ‘‘Rules of Operation for the Program for the Promotion of Agriculture of the Secretariat of Agriculture, Livestock Rural Development, Fisheries 

and Food for the 2017 Fiscal Year,’’ December 31, 2016, Article 12. 7 Id. 

8 Id. 

9 Id., at Article 10. 

Tomatoes—Domestic Production and Imports from Mexico (USDA) 

Source: Florida Department of Agriculture and Consumer Service. 

As Mexican volumes have soared, and prices fallen, U.S. fresh tomato growers 

have been unable to keep up with rising farm costs. Florida farmers have been 

forced to leave tomato fields unharvested. Numerous producers, especially smaller 

farms, have filed for bankruptcy. As confirmed by USDA figures, U.S. fresh tomato 

production is in serious decline, having lost almost 25% of total acreage since the 

inception of NAFTA.3

Compounding Mexico’s unfair pricing practices is a web of unfair Mexican subsidy 

schemes for specialty crops. Those subsidies are aimed at increasing yields for ‘‘protected’’ specialty crops (greenhouses, shade-houses, and on tunnel farms), not only 

during the winter months (November–March), but throughout the year. In 2009 and 

2010, Mexico spent $189.2 million on 2,500 ha of protected agriculture: 65% for 

greenhouses, 25% for shade-houses, 7% for macro-tunnels, and 3% for micro-tunnels. 

Those Mexican Gove[r]nment programs supported 859 ha of tomatoes (41%), 428 ha 

of cucumbers (20%), 347 ha of bell peppers (16%), 274 ha of berries (13%), and additional plantings of zucchini, grapes, brussels sprouts, haban ̃ ero and green peppers, 

and ornamental plants, among other specialty products. Not surprisingly, Mexico’s 

productivity improved markedly during this period, even as overall planted areas 

decreased.4

For FY 2017, Mexico has established at least nine programs and 43 ‘‘components’’ 

to support agriculture.5 Its regulations specifically authorize greenhouse ‘‘incentives’’ 

of up to $48,000 per hectare.6 Other reports have found that subsidies for new 

greenhouse installations are as high as $162,000 per agricultural project.7 Those 

greenhouse funds can be used in Mexico for the purchase of materials, equipment, 

and infrastructure, and for the management, conservation, and processing of greenhouse products.8 They can cover up to 50% of the cost of investments.9 As noted, 

these benefits, which are aimed at promoting year-round production for Mexican 

fresh fruits and vegetables, have already put Florida producers at serious risk and 

in time will compromise all U.S. fruit and vegetable production if corrections are 

not made. 

The Mexican industry’s considerable labor wage disparities only add to its unfair 

advantages. The estimated annual Mexican wage advantage in the agricultural secVerDate Aug 31 2005 12:02 Aug 31, 2017 Jkt 041481 PO 00000 Frm 00050 Fmt 6633 Sfmt 6621 P:\DOCS\115-11\26495.TXT BRIAN

11511021.eps
47 

10Florida Department of Agriculture and Consumer Services, ‘‘An Examination of International Competitive Impacts on Florida Agriculture’’ (March 2017), at 11. 11Farmworkers in Mexico typically earn approximately the equivalent of $8 per day, while 

U.S. farmworkers earn approximately $10–$12 per hour. Thus, assuming an 8 hour day, a farmworker in the United States would earn at a minimum $80, while a Mexican farmworker would 

earn $8, i.e., 10%. 12Data from Florida Department of Agriculture and Consumer Services. 

tor is $1 billion.10 Mexico’s farm laborers are paid about 10% of what U.S. farm laborers are paid for similar work.11

In line with the staggering losses faced by Florida tomato growers under these 

unfair Mexican practices, numerous other Florida specialty crops are sustaining 

growing losses as well. U.S. imports of strawberries from Mexico have risen from 

76.1 million pounds in 2000 to 216 million pounds in 2016 (a 184% increase).12 That 

expansion has compromised absolute growth and market share for domestic producers. 

Strawberry Market Share—Volume 

November 2000–February 2001 

Strawberry Market Share—Volume 

November 2016–February 2017 

Source: Florida Department of Agriculture and Consumer Services. 

Note: ‘‘Others’’ (gray) is primarily California production that appears to be 

shifting to Mexico. 

Imports of bell peppers from Mexico have grown from 326.53 million pounds in 

2000 to 859.77 million pounds in 2016, a 163% increase. 

Bell Peppers—Domestic Production and Imports from Mexico (USDA) 

Source: Florida Department of Agriculture and Consumer Services. 

As the Committee knows, the Trade Priorities and Accountability Act of 2015 

(TPAA) took careful note of the market pressures being faced by Florida’s fruit and 

vegetable sectors and established several FTA objectives specific to specialty crops, 

the primary ones being the following: 


11511022.eps 11511023.eps
48 

13 Bipartisan Congressional Trade Priorities and Accountability Act of 2015, Pub. L. No. 114– 

26, § 102(b)(3), 129 Stat. 320, 322–23 (2015) (‘‘2015 TPAA’’). 1These comments are submitted in response to the request in 82 Fed. Reg. 18110–11 (April 

17, 2017). 2 If identifying a particular sector, commenters were requested to indicate the relevant HS category. 82 Fed. Reg. at 18111. Fresh tomatoes fall under category 0702, with various subcategories based on the season of importation and the growing environment and type of the tomato 

(greenhouse, cherry, roma, etc.). 

(J) eliminating practices that adversely affect trade in perishable or cyclical 

products, while improving import relief mechanisms to recognize the unique 

characteristics of perishable and cyclical agriculture; 

(K) ensuring that import relief mechanisms for perishable and cyclical agriculture are as accessible and timely to growers in the United States as those 

mechanisms that are used by other countries; . . . [and] 

(R) seeking to develop an international consensus on the treatment of seasonal or perishable agricultural products in investigations relating to dumping 

and safeguards and in any other relevant area.13

The Florida industry hopes these TPAA objectives, together with the objectives in 

the Administration’s Summary of Objectives for the NAFTA Renegotiation referenced 

above, will help deliver a substantially revised NAFTA that finally enables Florida’s 

fruit and vegetable sectors to endure and thrive. We will coordinate closely with the 

Committee, Congress, and the Administration to help achieve that result. 

In the meantime, given the extraordinary market pressures Mexican suppliers are 

now creating for our specialty corps, the Florida fruit and vegetable industry is also 

asking the Administration to pursue various other near-term remedial and political 

steps to help reverse Mexico’s unfair practices as quickly as possible. As these nearterm solutions take shape, the Florida fruit and vegetable industry looks forward 

to working with this Committee, Congress, and the Administration on aligning its 

near-term solutions with longer-term NAFTA specialty crop and trade enforcement 

reforms. Our aim is to achieve all measures necessary—both near- and long-term— 

that can provide the Florida industry with the timely, effective protections it critically needs. 

We greatly appreciate this Committee’s continuing support for a strong Florida 

fruit and vegetable sector and stand ready to coordinate with the Committee on 

NAFTA and bilateral strategies to achieve that result. 

ATTACHMENT [1] 

May 9, 2017 

via regulations.gov 

Hon. WILBUR L. ROSS, JR. 

Secretary of Commerce, 

U.S. Department of Commerce, 

Washington, D.C. 

Hon. STEPHEN VAUGHN, 

Acting U.S. Trade Representative, 

Office of the U.S. Trade Representative, 

Washington, D.C. 

Re: Docket No. DOC–2017–0003: Omnibus Report on Significant Trade Deficits, 

Comments Regarding Causes of Significant Trade Deficits for 2016 

Country of Interests: Mexico 

Harmonized System (HS) Categories of Interest: 0702—Tomatoes; fresh or 

chilled 

The Florida Tomato Exchange (‘‘FTE’’) and the Florida Tomato Growers Exchange 

(‘‘FTGE’’) appreciate this opportunity to submit comments to assist the Department 

of Commerce and the United States Trade Representative in preparing an Omnibus 

Report on Significant Trade Deficits for the President.1 The FTE and FTGE represent tomato growers in Florida, one of the major tomato producing regions in the 

United States. 

Florida tomato growers are particularly concerned with one area of trade that has 

contributed to the United States’ trade deficit with Mexico: fresh tomatoes.2 Florida 

tomato growers and other fresh tomato producers throughout the United States 

have been seriously challenged for decades with an ever-increasing trade deficit 

with Mexico. The Mexican Government provides significant financial support for the 

production of tomatoes with the foremost purpose of pushing them into the U.S. 

49 

3See USDA Foreign Agricultural Service, 2012 Tomato Annual, GAIN Report No. MX2036 

(June 4, 2012) at 6, included in Attachment 4. 4 Id. 

5 Id. 

6 Id. at 4. 

market, to the detriment of the U.S. fresh tomato industry. U.S. tomato growers’ 

struggle with unbalanced Mexican imports has been prolonged by weak enforcement 

of U.S. trade laws by prior Administrations; even though the Department of Commerce has previously determined that Mexican tomato exports to the United States 

are dumped at unfair prices. 

The Trade Deficit with Mexico in Fresh Tomatoes 

The United States runs a large and growing trade deficit with Mexico on this 

major crop. As shown in the trade statistics in Attachment 1 to these comments, in 

2016 the deficit on fresh tomatoes with Mexico surpassed $1.9 billion. This is virtually all one-way trade: with Mexican tomato production mainly focused on exporting to the United States while U.S. exports of tomatoes to Mexico have remained 

comparatively non-existent. Further, as shown in the graph below, apart from the 

substantial and growing deficit with Mexico, other trade in fresh tomatoes is relatively balanced. 

U.S. Trade Balance—Fresh [Tomatoes] 

Sources: trade data from the U.S. International Trade Commission. 

The Mexican Government’s Support of Production for Export in Mexico 

In Mexico, fresh tomato growers benefit from numerous support programs made 

available by the Mexican Government. Many of these programs are aimed at increasing the productivity of Mexican production, particularly through the establishment of protected agriculture (greenhouses and shade-houses), which dramatically 

increase per-acre production of tomatoes. A 2012 U.S. Department of Agriculture 

(‘‘USDA’’) report stated that Mexican Government support programs available to 

Mexican producers can provide as much as 45 to 60 percent of the cost of improvements.3

The push for tomato production in Mexico is aimed at exporting the product to 

the United States. The 2012 USDA report explains that in Mexico, ‘‘domestic consumption is a residual after exporting.’’ 4 Mexican growers do not grow tomatoes for 

Mexican consumers; they grow them to send to the U.S. market. The Mexican Government’s support programs have the same goal. The USDA report states the ‘‘increase {in protected-agriculture production capacity} is largely attributable to recent 

success in exporting to the United States.’’ 5

The Mexican Government’s programs have distorted trade. The government’ push 

for increased production and capacity has led to a glut of capacity in Mexico, with 

many green- and shade-houses sitting empty in some areas. One report found that 

30 percent of greenhouses in major producing areas in Mexico ‘‘were not operating.’’ 6 With significant overcapacity and an industry aimed at exporting to a single foreign market, the increasing flood of Mexican tomatoes in the U.S. market is 

unsurprising. 


11511024.eps
50 

7 Based on Real Effective Exchange Rate data from the IMF, http://data.imf.org. 

From a broader perspective, the devaluation of the Peso since the signing of the 

NAFTA agreement from 3.1 Pesos to the dollar to currently 18.5 to 22 has also significantly disadvantaged U.S. growers. In real terms (adjusted for inflation), the 

Peso has lost nearly 1⁄3 of its value in that time.7 This is a particular advantage 

to an export-oriented industry such as the Mexican tomato growers, who are able 

to receive dollars for their goods but in turn pay Peso-denominated costs. U.S. growers are competitive, but this absolute advantage by currency devaluation strongly 

advantages the Mexican industry in their effort to dominate the market. 

The Impact of the Deficit on the U.S. Fresh Tomato Industry 

Tomato growers in Florida are particularly impacted by Mexican tomato exports 

because the Florida and Mexico growing seasons align: perishable tomatoes from 

both regions enter the market at the same times of the year and compete directly. 

As shown in Attachment 2, since 1996 the volume of Mexican fresh tomato imports 

has more than doubled. Over this period, the U.S. fresh tomato industry has continually lost market share to Mexican product. As shown in the chart below, based on 

USDA production data, Mexican imports have overtaken U.S. production in recent 

years, and in 2016 accounted for over 1⁄2 of U.S. consumption. As shown in the second chart, for the January–April period, the months when Florida and Mexican tomatoes are both most heavily competing in the market, the impact of imports has 

been even more pronounced. 

U.S. Market Share 

Source: USDA Economic Research Service, Vegetables and Pulses Yearbook Data 2017, excerpt included in Attachment 3. 


11511025.eps
51 

U.S. Market Share: Jan.–April period 

Source: USDA Agricultural Marketing Service, Market News Report 

Data (Movement Report), https://www.marketnews.usda.gov/mnp/fvhome. 

The ever-increasing wave of tomatoes crossing the border has devastated the U.S. 

industry. U.S. fresh tomatoes growers have struggled as prices, depressed by escalating import competition, have failed to keep up with raising farming costs. In the 

bad years, many fields planted in tomatoes have been left unharvested, as market 

prices were too low to sustain even that final step. Many producers, especially 

smaller and family farms, have been forced into bankruptcy. 

Figures reported by the USDA show that U.S. production, shown in the number 

of acres in fresh tomatoes that are harvested, remains in serious decline, having lost 

almost a quarter of the total acreage since 1996. 

U.S. Fresh Tomatoes—Acres Harvested 

Source: USDA National Statistics Service, Annual Survey Data (data 

available at https://quickstats.nass.usda.gov/). 

The United States’ 20 Year Failure to Respond to Dumped Mexican Tomatoes 

Following the surge of low-priced Mexican tomatoes and the disastrous effect on 

U.S. producers in the years following the signature of NAFTA, FTE and FTGE were 

among the domestic parties that sought relief from the Department of Commerce 

and the International Trade Commission (‘‘ITC’’) by submitting an antidumping petition on fresh tomatoes from Mexico in 1996. The ITC preliminary found that there 


11511026.eps 11511027.eps
52 

8See Fresh Tomatoes from Mexico, Inv. No. 731–TA–747, USITC Pub. 2967 (May 1996) (making a positive preliminary injury determination). 9 Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of 

Final Determination: Fresh Tomatoes From Mexico, 61 FED. REG. 56608, 56615 (Dep’t Commerce 

Nov. 1, 1996). 10Suspension of Antidumping Investigation: Fresh Tomatoes From Mexico, 61 FED. REG. 56618 

(Dep’t Commerce Nov. 1, 1996). 11 19 U.S.C. § 1673c. 12 In the 1996 agreement, only on reference price was established. In later agreements, the 

different reference prices were set for the winter and summer seasons and then for tomatoes 

grown in different production environments. 13See Suspension of Antidumping Investigation: Fresh Tomatoes From Mexico, 67 FED. REG. 77044 (Dep’t Commerce Dec. 16, 2002). 14See Suspension of Antidumping Investigation: Fresh Tomatoes From Mexico, 73 FED. REG. 4831 (Dep’t Commerce Jan. 28, 2008). 15 Between the 1996 and 2008 suspension agreements, the reference prices had increased less 

than five percent. This failed to keep any kind of pace with raising costs of production, and allowed prices to fall to the unsustainable levels for the U.S. industry. 16See Fresh Tomatoes From Mexico: Notice of Initiation of Changed Circumstances Review and 

Consideration of Termination of Suspended Investigation, 77 FED. REG. 50553 (Dep’t Commerce 

Aug. 21, 2012). 

was a reasonable indication that Mexican tomatoes were a material cause of injury 

to the U.S. industry.8 The Department’s investigation confirmed that Mexican exporters were dumping their product on the U.S. market at unfair prices. The Department preliminarily found dumping margins ranging from 4.16 to 188.45 percent.9

However, rather than continuing the investigation and ordering final duties on 

Mexican tomatoes, the Department entered into a suspension agreement with Mexican tomato growers (concurrently with its preliminary determination).10 Suspension 

agreements are allowed under U.S. trade law 11 but only if foreign exporters agree 

to terms that will prevent injury to the U.S. industry and if most of the unfair 

dumping is eliminated. The type of suspension agreement the Department used in 

this case required that Mexican tomatoes could not be sold to the U.S. market at 

less than an established reference price.12

While the statute permits suspension agreements, Congress made clear that it 

was highly distrustful of such agreements, which it saw could be used for political 

purposes to the detriment of the U.S. industry the trade law was intended to protect 

from unfair trade. The statute therefore only allows these agreements in ‘‘extraordinary circumstances’’, where the Department of Commerce can determine that both 

all injury caused by the imports along and all underselling or price suppression in 

the U.S. market will be eliminated. Additionally, in the type of agreement here, 85 

percent of the dumping found in the investigation must be eliminated for every 

entry of the product. The continued ability of every suspension agreement to meet 

these stringent requirements was intended to be reviewed by the Department at 

least every 5 years in a sunset review. 

In 1996, domestic growers did not oppose the suspension. The Department set the 

1996 reference price based on market prices from earlier years where Mexican tomatoes were not having a detrimental effect on the market. The Department did not 

address how the reference price eliminated 85 percent of the dumping, however. But 

when the time came for the sunset review however, the Department did not complete its review of whether the agreement continued to meet statutory requirements. 

Instead, in order to avoid these questions, the Mexican growers withdrew from the 

1996 agreement, terminating it. Those growers and the Department then entered 

into a substantially identical ‘‘new’’ 2002 agreement. To accommodate this, the Department resumed the investigation temporarily, terminated the sunset review, and 

then resumed suspension upon concluding the new agreement.13 The same process 

occurred again when the next sunset review was due, resulting in a 2008 agreement.14

In 2012, following a disastrous season in which a flood of Mexican tomatoes forced 

many U.S. producers, including the largest U.S. greenhouse producer, into bankruptcy, domestic producers sought to end this cycle.15 The domestic petitioners filed 

notice with the Department that they were withdrawing their petition, seeking to 

terminate the investigation and hence the suspension of the investigation. However, 

the Department declined to recognize the withdrawal and instead initiated a 

‘‘changed circumstances’’ review to consider the termination of the suspended investigation.16 The Department can terminate an investigation or antidumping duty 

order through a changed circumstances review if substantially all of the domestic 

53 

17See Fresh Tomatoes From Mexico: Notice of Preliminary Results of Changed Circumstances 

Review and Intent To Terminate the Suspended Antidumping Investigation, 77 FED. REG. 60103, 

60104 (Dep’t Commerce Oct. 2, 2012). 18See Fresh Tomatoes From Mexico: Intent To Terminate Suspension Agreement and Resume 

Antidumping Investigation and Intent To Terminate Sunset Review, 78 FED. REG. 9366 (Dep’t 

Commerce Feb. 8, 2013). 19See Fresh Tomatoes From Mexico: Suspension of Antidumping Investigation, 78 FED. REG. 14967–79 (Dep’t Commerce March 8, 2013). 20 CIT Case. No. 13–00148, FTE v. United States. 21The CIT remanded to the Department of Commerce because Commerce had failed to disclose certain information regarding its views of the suspension agreement to domestic producers 

before it entered the agreement, as required by law. The Court remanded with instructions for 

the Department to properly allow domestic producers to comment on the late-disclosed information, but did not address FTE’s substantive challenges to the agreement at that time. Because 

the Department made no changes to the agreement during the remand, FTE maintained those 

substantive challenges. 22 Additionally, despite continued efforts by the Department of Commerce to enforce those reference prices it did put in place in 2013, Florida tomato growers remain concerned that importers and sellers of Mexican tomatoes have implemented various schemes to circumvent even the 

limited terms of that agreement. 

industry (defined as those producers accounting for over 85 percent of domestic production) declare they have no interests in its continuation. 

In the changed circumstances review, U.S. growers who accounted for over 90 percent of U.S. fresh tomato production submitted letters to the Department seeking 

to have the investigation terminated.17 Domestic producers also submitted information, including cost studies from the Mexican Government, that showed costs to 

produce in Mexico had risen significantly from 1996 and were well above the suspension agreement reference prices, so that the suspension agreement would allow 

significant dumping by Mexican exporters even at those reference prices. During 

this period, the Department also initiated a sunset review of the 2008 agreement. 

But once again, the Department allowed the foreign exporters to determine how 

they would be treated under U.S. antidumping law. The Mexican producers again 

withdrew from the suspension agreement, terminating that sunset review.18 At the 

Mexican producers’ request, in February of 2013, the Department entered into yet 

another suspension agreement with the Mexican growers.19 The Department never 

completed the changed circumstance review or honored the domestic industry’s repeated request to end the repetitive suspension. Also, despite 2 decades having 

passed since it collected dumping data in its preliminary investigation, the Department again did not collect any updated information that would allow it to determine 

what the fair market value of Mexican tomatoes would be in 2013, including even 

basic Mexican growing costs. Instead, the Department argued that the Mexican exporters would self-monitor their level of dumping. The Department then set the new 

reference prices at the price levels that were on the market in the 2012 winter season, a period where the price levels devastated to the U.S. industry and lead directly 

to the U.S. producers’ attempts to have the suspended investigation terminated. 

Because the Department made no effort with the 2013 agreement to determine 

if the reference prices would in fact eliminate dumping and set those prices at levels 

that would not prevent injury to the U.S. industry, FTE has appealed the suspension to the Court of International Trade (‘‘CIT’’).20 Four years later, there has still 

been no final court decision on FTE’s claims. The CIT remanded the issue to the 

Department in 2015,21 but the Department maintained the suspension agreement 

with no changes and returned the agreement to the CIT. Following an additional 

hearing before the CIT in February of 2017, the domestic growers await the Court’s 

further decision.22

Conclusion 

The U.S. fresh tomato industry has repeatedly sought the protections intended for 

U.S. industries under U.S. trade laws against dumped products such as Mexican tomatoes. Due to a continued lack of strong enforcement of those laws and the Mexican growers’ repeated gaming of the system to avoid a review of the suspension 

agreements that they have found favorable, nothing has stemmed the mounting flow 

of under-priced tomatoes coming from Mexico. 

The Mexican Government has continued to encourage over-production of fresh tomatoes through subsidization of Mexican growers and simply pushed the resulting 

over-production north to land on the U.S. market. The result has been a ballooning 

deficit in trade between the U.S. and Mexico and the continuing evaporation of the 

U.S. industry. On behalf of the U.S. tomato growers who have been forced to carry 

the costs of the Mexico’s production choices, FTE and FTGE urge the Department 

54 

and the USTR to strongly enforce the U.S. trade laws that were intended to prevent 

exactly this outcome. 

Sincerely, 

REGGIE BROWN, 

Executive Vice President for the Florida Tomato Exchange and the Florida Tomato 

Growers Exchange. 

ATTACHMENT 1 

U.S. Balance of Trade in Tomatoes (HS 0702) 

Total Exports FAS—General Imports Customs Value 1996–February 2017 

Country 1996 1997 1998 1999 2000 2001 2002 

Value (U.S.$) 

Mexico ¥578,161,189 ¥503,349,419 ¥563,174,937 ¥484,786,940 ¥388,672,545 ¥463,492,186 ¥540,157,872 

Dominican Rep. ¥28,395 ¥48,000 ¥10,690 ¥2,265 ¥8,100 0 49,032 

Guatemala 0 5,078 0 0 0 26,842 99,082 

Netherlands ¥42,646,325 ¥51,345,257 ¥63,684,041 ¥56,007,713 ¥45,867,130 ¥51,054,513 ¥44,265,398 

New Zealand ¥21,660 ¥5,743 8,800 ¥10,039 0 2,560 0 

Spain ¥3,835,513 ¥7,698,056 ¥10,714,837 ¥10,531,358 ¥10,418,268 ¥9,655,822 ¥13,735,286 

Canada 83,097,358 74,304,047 32,547,532 723,205 ¥20,607,971 ¥27,861,326 ¥27,045,957 

All Other ¥3,788,700 ¥4,534,148 ¥6,132,364 657,809 7,724,336 1,949,885 ¥779,045 

Total ¥545,384,424 ¥492,671,498 ¥611,160,537 ¥549,957,301 ¥457,849,678 ¥550,084,560 ¥625,835,444 

Country 2003 2004 2005 2006 2007 2008 2009 

Value (U.S.$) 

Mexico ¥752,246,578 ¥729,707,733 ¥773,028,530 ¥897,698,105 ¥925,321,200 ¥1,093,463,636 ¥1,056,665,676 

Dominican Rep. ¥10,025 ¥530,640 ¥1,216,238 ¥3,273,789 ¥3,122,752 ¥2,886,542 ¥2,867,832 

Guatemala 34,189 0 0 ¥4,570 ¥283,020 ¥1,502,360 ¥3,981,051 

Netherlands ¥29,692,792 ¥25,089,736 ¥15,524,085 ¥17,792,192 ¥15,025,096 ¥10,987,861 ¥12,499,872 

New Zealand 3,365 ¥13,474 0 0 ¥31,844 ¥26,220 ¥92,688 

Spain ¥7,011,515 ¥6,023,194 ¥819,927 ¥4,809,619 ¥1,474,126 ¥2,423,385 ¥195,536 

Canada ¥58,812,731 ¥58,458,685 ¥63,285,795 ¥51,379,448 30,597,018 9,788,702 ¥12,247,916 

All Other ¥7,263,934 ¥2,180,122 5,160,951 5,066,339 5,230,597 2,853,962 1,710,503 

Total ¥855,000,021 ¥822,003,584 ¥848,713,624 ¥969,891,384 ¥909,430,423 ¥1,098,647,340 ¥1,086,840,068 

Country 2010 2011 2012 2013 2014 2015 2016 

Value (U.S.$) 

Mexico ¥1,415,272,353 ¥1,758,712,475 ¥1,546,445,911 ¥1,610,479,030 ¥1,625,325,452 ¥1,655,362,740 ¥1,962,094,088 

Dominican Rep. ¥2,936,463 ¥5,490,474 ¥4,493,983 ¥3,470,008 ¥5,122,876 ¥5,250,938 ¥10,670,845 

Guatemala ¥6,929,854 ¥21,962,207 ¥12,135,404 ¥15,832,207 ¥14,221,450 ¥9,144,492 ¥8,609,038 

Netherlands ¥3,399,560 ¥2,044,236 ¥2,232,569 ¥2,412,992 ¥1,755,136 ¥1,514,062 ¥1,479,547 

New Zealand ¥317,069 ¥256,955 ¥307,375 ¥261,021 ¥98,030 ¥245,321 ¥207,843 

Spain 0 0 408,629 0 ¥21,390 3,514 ¥97,243 

Canada ¥891,991 ¥918,645 ¥5,814,019 ¥20,532,883 35,423,559 56,713,827 62,543,340 

All Other 4,655,366 4,801,896 11,701,449 13,466,623 11,184,528 10,524,758 9,282,429 

Total ¥1,425,091,924 ¥1,784,583,096 ¥1,559,319,183 ¥1,639,521,518 ¥1,599,936,247 ¥1,604,275,454 ¥1,911,332,835 

Country 2016 YTD 2017 YTD Percent Change 

2012–2016 

Percent Change 

2008–2016 

Percent Change 

2002–2016 

Percent Change 

1996–2016 

Value (U.S.$) 

Mexico ¥541,427,735 ¥354,942,157 26.88% 79.44% 263.24% 239.37% 

Dominican Rep. ¥2,988,118 ¥2,609,263 137.45% 269.68% ¥21,863.02% 37,480.01% 

Guatemala ¥2,237,165 ¥2,453,333 ¥29.06% 473.03% ¥8,788.80% 

Netherlands ¥373,376 0 ¥33.73% ¥86.53% ¥96.66% ¥96.53% 

New Zealand ¥150,829 ¥135,717 ¥32.38% 692.69% 859.57% 

Spain ¥73,040 ¥65,736 ¥123.80% ¥95.99% ¥99.29% ¥97.46% 

Canada 97,295,135 66,363,572 ¥1,175.73% 538.93% ¥331.25% ¥24.73% 

All Other 1,613,264 744,532 ¥20.67% 225.25% ¥1,291.51% ¥345.00% 

Total ¥448,341,864 ¥293,098,102 22.57% 73.97% 205.41% 250.46% 

ATTACHMENT 2 

U.S. Imports of Fresh Tomatoes (HS 0702), 1996–YTD 2017 

Tomatoes: for All Countries 

U.S. Imports for Consumption 

(HTS Number 0702: Tomatoes, Fresh or Chilled) 

Country 1996 1997 1998 1999 2000 2001 

In Actual Dollars 


11511028.eps
55 

U.S. Imports of Fresh Tomatoes (HS 0702), 1996–YTD 2017—Continued 

Tomatoes: for All Countries 

U.S. Imports for Consumption 

(HTS Number 0702: Tomatoes, Fresh or Chilled) 

Mexico 580,348,521 517,048,769 567,442,691 489,587,610 411,795,805 484,922,820 

Canada 37,408,123 58,965,727 100,507,593 119,690,432 160,939,005 166,836,053 

Dominican Rep. 48,395 48,000 35,490 2,265 8,100 0 

Guatemala 0 0 0 0 0 0 

Netherlands 42,646,325 52,908,527 64,487,481 57,170,545 46,364,566 51,054,513 

New Zealand 21,660 5,743 0 10,039 0 0 

Spain 3,879,073 7,828,736 10,893,917 10,686,008 10,723,548 9,684,622 

Colombia 0 3,875 5,893 0 13,200 5,007 

Ecuador 0 0 8,908 7,799 0 10,210 

Italy 0 22,800 3,143 0 0 9,011 

France 0 0 160,498 230,732 0 0 

Gaza Strip 124,740 5,376 20,010 52,970 0 0 

Germany 0 17,625 0 0 0 0 

Honduras 0 0 0 0 0 0 

Israel 3,804,252 6,683,585 8,604,560 8,071,429 7,811,594 7,715,814 

All Other 4,187,325 5,128,954 5,725,270 3,811,711 2,624,738 1,377,505 

Total 672,468,414 648,667,717 757,895,454 689,321,540 640,280,556 721,615,555 

Country 2002 2003 2004 2005 2006 2007 

In Actual Dollars 

Mexico 552,241,241 760,756,391 749,963,474 781,234,276 918,754,938 960,046,726 

Canada 172,587,391 231,350,010 257,191,469 271,976,608 284,206,268 238,147,767 

Dominican Rep. 2,028 10,025 534,990 1,216,238 3,283,785 3,216,947 

Guatemala 0 4,260 0 0 4,570 283,020 

Netherlands 45,619,918 33,837,082 27,638,236 16,228,725 17,795,731 15,027,895 

New Zealand 0 0 13,474 0 0 35,572 

Spain 13,735,286 7,011,515 6,023,194 819,927 4,809,619 1,474,126 

Colombia 0 0 0 0 0 18,995 

Ecuador 0 0 0 0 0 0 

Italy 12,655 0 0 3,830 171,586 0 

France 0 0 0 0 0 0 

Gaza Strip 0 0 0 0 0 0 

Germany 0 0 0 0 0 0 

Honduras 0 0 0 0 0 0 

Israel 9,236,599 12,212,406 7,915,670 1,251,249 1,652,699 872,755 

All Other 1,807,131 2,179,440 4,306,459 2,387,962 2,729,214 1,374,007 

Total 795,242,249 1,047,361,129 1,053,586,966 1,075,118,815 1,233,408,410 1,220,497,810 

Country 2008 2009 2010 2011 2012 2013 

In Actual Dollars 

Mexico 1,142,867,790 1,125,527,212 1,487,411,425 1,807,703,157 1,578,590,513 1,637,534,863 

Canada 269,235,986 255,521,195 293,775,123 299,935,801 268,633,873 320,075,231 

Dominican Rep. 2,941,707 2,879,170 2,942,296 5,549,565 4,597,125 3,518,491 

Guatemala 1,502,360 3,981,051 7,384,702 21,962,207 12,135,404 15,839,690 

Netherlands 10,991,229 12,499,872 3,399,560 2,044,236 2,336,249 2,415,792 

New Zealand 26,220 92,688 317,069 256,955 418,723 261,021 

Spain 2,423,385 195,536 0 0 0 0 

Colombia 22,253 7,906 0 22,136 26,732 31,331 

Ecuador 0 0 0 0 0 0 

Italy 0 0 0 3,580 0 0 

France 0 0 2,645 0 0 0 

Gaza Strip 0 0 0 0 0 0 

Germany 0 0 0 0 0 0 

Honduras 0 0 0 0 0 13,770 

Israel 836,234 569,947 956,724 275,438 775,678 0 

All Other 742,320 2,308,132 2,048,560 116,816 90,316 79,418 

Total 1,431,589,484 1,403,582,709 1,798,238,104 2,137,869,891 1,867,604,613 1,979,769,607 

Country 2014 2015 2016 2016 YTD 2017 YTD 

In Actual Dollars 

Mexico 1,660,270,425 1,675,107,907 1,964,305,605 541,599,025 355,990,720 

Canada 283,079,581 247,682,869 277,930,732 3,432,904 4,016,876 

Dominican Rep. 5,146,069 5,317,858 10,675,438 2,988,118 2,621,177 

Guatemala 14,221,450 9,144,492 8,612,145 2,237,165 2,453,333 

Netherlands 1,762,230 1,516,662 1,490,009 383,838 0 

New Zealand 98,030 245,321 207,843 150,829 135,717 

Spain 21,390 26,520 102,256 73,040 65,736 

Colombia 46,571 3,089 12,142 0 0 

Ecuador 43,925 15,000 11,385 0 7,771 

Italy 7,653 4,207 10,261 0 0 

France 0 0 0 0 0 

Gaza Strip 0 0 0 0 0 

Germany 0 2,205 0 0 0 

Honduras 6,615 28,755 0 0 0 

Israel 148,351 0 0 0 0 

All Other 0 0 0 0 0 

Total 1,964,852,290 1,939,094,885 2,263,357,816 550,864,919 365,291,330 

Country Percent Change 

1996–2016 

Percent Change 

2008–2016 

Percent Change 

2008–2016 

Mexico 238.47% 71.88% 24.43% 

Canada 642.97% 3.23% 3.46% 

Dominican Rep. 21,958.97% 262.90% 132.22% 

Guatemala N/A 473.24% ¥29.03% 

Netherlands ¥96.51% ¥86.44% ¥36.22% 

56 

U.S. Imports of Fresh Tomatoes (HS 0702), 1996–YTD 2017—Continued 

Tomatoes: for All Countries 

U.S. Imports for Consumption 

(HTS Number 0702: Tomatoes, Fresh or Chilled) 

New Zealand 859.57% 692.69% ¥50.36% 

Spain ¥97.36% ¥95.78% N/A 

Colombia N/A ¥45.44% ¥54.58% 

Ecuador N/A N/A N/A 

Italy N/A N/A N/A 

France N/A N/A N/A 

Gaza Strip ¥100.00% N/A N/A 

Germany N/A N/A N/A 

Honduras N/A N/A N/A 

Israel ¥100.00% ¥100.00% ¥100.00% 

All Other ¥100.00% ¥100.00% ¥100.00% 

Total 236.57% 58.10% 21.19% 

ATTACHMENT 3 

Excerpt 

USDA Economic Research Service, Vegetables and Pulses Yearbook Data 

(April 6, 2017) 

Table 42—U.S. fresh tomatoes: Supply, utilization, & price, farm weight, 

1970–2016 

Year 

Supply Utilization Season-average price 

Production 1 Imports 2 Total Exports 2 Domestic 3 Per capita use Current 

dollars 1

Constant 2009 

dollars 4

Million pounds Pounds $/cwt 

1970 1,933.4 646.7 2,580.1 89.2 2,490.9 12.1 11.20 49.11 

1971 1,887.7 575.4 2,463.1 107.6 2,355.5 11.3 13.90 58.00 

1972 2,088.5 586.8 2,675.3 136.8 2,538.5 12.1 14.80 59.19 

1973 2,043.1 753.1 2,796.2 150.7 2,645.5 12.5 16.00 60.68 

1974 2,098.1 595.8 2,693.9 161.2 2,532.7 11.8 17.30 60.21 

1975 2,226.4 567.1 2,793.5 202.6 2,590.9 12.0 18.70 59.56 

1976 2,296.7 653.3 2,950.0 212.4 2,737.6 12.6 19.10 57.67 

1977 2,098.7 791.9 2,890.6 169.1 2,721.5 12.4 20.60 58.57 

1978 2,302.3 817.8 3,120.1 215.6 2,904.5 12.9 19.70 52.33 

1979 2,361.2 713.3 3,074.5 248.6 2,825.9 12.4 22.50 55.21 

1980 2,556.7 651.7 3,208.4 275.3 2,933.1 12.8 20.70 46.60 

1981 2,607.0 525.9 3,132.9 269.5 2,863.4 12.3 21.40 44.06 

1982 2,676.9 592.6 3,269.5 249.7 3,019.8 12.9 22.50 43.62 

1983 2,726.2 738.2 3,464.4 286.0 3,178.4 13.5 24.20 45.13 

1984 2,816.3 824.3 3,640.6 263.2 3,377.4 14.2 25.60 46.11 

1985 2,974.0 851.0 3,825.0 271.5 3,553.5 14.9 24.20 42.23 

1986 3,136.1 981.1 4,117.2 288.1 3,829.1 15.8 25.10 42.94 

1987 3,241.4 919.5 4,160.9 284.9 3,876.0 15.8 25.90 43.20 

1988 3,588.9 816.8 4,405.7 254.2 4,151.5 16.8 27.10 43.68 

1989 3,596.2 867.9 4,464.1 298.0 4,166.1 16.8 33.20 51.50 

1990 3,380.0 795.9 4,175.9 293.1 3,882.8 15.5 27.40 40.99 

1991 3,398.8 795.5 4,194.3 300.3 3,894.0 15.4 31.70 45.90 

1992 3,903.3 432.2 4,335.5 367.5 3,968.0 15.4 35.80 50.68 

1993 3,666.3 922.4 4,588.7 345.8 4,242.9 16.3 31.70 43.83 

1994 3,738.7 873.0 4,611.7 340.7 4,270.9 16.2 27.40 37.09 

1995 3,409.8 1,368.9 4,778.7 289.2 4,489.5 16.8 25.50 33.82 

1996 3,363.4 1,625.1 4,988.5 295.4 4,693.1 17.4 28.10 36.60 

1997 3,424.8 1,636.8 5,061.7 341.7 4,720.0 17.3 31.70 40.59 

1998 3,525.6 1,868.0 5,393.6 286.3 5,107.3 18.5 35.20 44.59 

1999 4,026.9 1,633.1 5,660.0 334.3 5,325.6 19.1 25.80 32.22 

2000 4,162.0 1,609.4 5,771.4 410.4 5,361.0 19.0 30.70 37.49 

2001 4,061.1 1,815.6 5,876.7 397.9 5,478.8 19.2 30.00 35.81 

2002 4,289.3 1,894.9 6,184.2 332.3 5,851.8 20.3 31.60 37.15 

2003 3,888.4 2,071.1 5,959.5 314.2 5,645.3 19.4 37.50 43.23 

2004 4,169.6 2,054.2 6,223.8 369.3 5,854.5 19.9 37.40 41.96 

2005 4,196.9 2,098.1 6,295.0 326.5 5,968.5 20.2 41.60 45.22 

2006 4,041.1 2,187.9 6,229.0 317.7 5,911.2 19.8 43.70 46.09 

2007 3,795.6 2,361.1 6,156.7 355.7 5,801.0 19.2 34.80 35.75 

2008 3,554.6 2,460.6 6,015.2 372.3 5,642.9 18.5 45.30 45.65 

2009 3,775.5 2,622.6 6,398.1 375.6 6,022.5 19.6 40.40 40.40 

2010 3,253.8 3,378.6 6,632.4 266.2 6,366.1 20.6 48.20 47.62 

2011 3,508.1 3,287.1 6,795.3 252.6 6,542.7 21.0 36.10 34.98 

2012 3,412.8 3,377.8 6,790.7 258.7 6,532.0 20.8 30.50 29.00 

2013 3,253.8 3,389.5 6,643.4 241.3 6,402.0 20.2 44.60 41.71 

2014 3,386.4 3,418.2 6,804.6 248.7 6,555.8 20.5 41.50 38.18 

2015 3,342.6 3,457.0 6,799.7 214.3 6,585.3 20.5 46.30 42.18 

2016p 3,129.4 3,938.5 7,067.8 186.9 6,880.9 21.3 40.70 36.52 

— = Not available. p = preliminary. 

1Source: USDA, National Agricultural Statistics Service. Production was adjusted by ERS for 1970–81 to account 

for states not included in NASS estimates. Includes ERS estimates of domestically-grown hothouse tomatoes after 

1996. 2Source: U.S. Department of Commerce, U.S. Census Bureau. From 1978–89, U.S. exports were adjusted using 

Canadian import data. Imports include hothouse tomatoes. 3Editor’s note: the submitted table did not include information for table note 3. 4Deflated by the GDP implicit price deflator, 2009=100. 

Cwt = hundredweight. 

Source: USDA Economic Research Service. 

57 

ATTACHMENT 4 

GAIN Report Number MX 2036, Mexico Tomato Annual 

USDA Foreign Agricultural Service 

This report contains assessments of commodity and trade issues 

made by USDA staff and not necessarily statements of official U.S. 

Government policy. 

Required Report—public distribution. 

Date: 6/14/2012 

GAIN Report Number: MX 2036 

Mexico 

Tomato Annual 

Early 2012 Supply Spike Leads to Low Prices, Exports Expected Higher in MY 

2012/13 

Approved By: Erik Hansen 

Prepared By: Dulce Flores 

Report Highlights: Tomato production for Marketing Year (MY) 2012/13 is 

forecast at 2.1 million metric tons (MMT). Production for MY 2011/12 is estimated 

at an unusually high 2.3 MMT. Tomato exports for MY 2011/12 are expected to 

reach 1.5 MMT, lower than expected as international prices were very low. Exports for MY 2012/13 will depend on weather conditions and international prices 

but are expected to be higher than the year before. Production under protected 

agriculture technology is expanding throughout the country for several horticultural products, particularly tomatoes. 

Commodities: Tomato Paste, 28–30% TSS, Basis Fresh Tomatoes. 

Production 

The tomato production forecast for the MY 2012/13 (Oct/Sept) is 2.1 MMT assuming favorable weather conditions and attractive international prices. Although there 

is no official Government of Mexico (GOM) forecast for overall tomato production for 

MY2012/13, Post estimates that tomato production will be lower than the previous 

marketing year as producers from the state of Sinaloa seem discouraged by MY 

2011/12 production and marketing results. The overall tomato production estimate 

for MY 2011/12 is high at about 2.3 MMT as weather was favorable and more acreage under protected agriculture entered production. However, according to producers, not all tomatoes reached the market, as lower international prices resulting 

from higher supplies caused Sinaloa producers to bring tomatoes back from the border for resorting, discarding the ones that did not meet supreme quality. The spring 

tomato crop from Baja California and other states is expected to be normal. The 

overall tomato production estimate for MY 2010/11 was expected to be around 2.0 

MMT but, due to weather problems and a freeze in Sinaloa that caused a loss of 

about 30 percent, total production was lowered to 1.6 MMT based on official information. 

Total planted area for tomatoes has been declining but yields have been increasing due to the establishment of protected agriculture (greenhouse, shade-house, tunnel) areas. In 1990, planted area devoted to tomatoes was about 85,500 hectares 

(ha). In 2000, tomato planted area was roughly 75,800 ha. In 2011, tomato planted 

area is expected at approximately 57,000 ha. Tomato-producing states like Sinaloa 

and Baja California switched more area from open field production to greenhouse 

production and used less area while increasing yields. Other states began to build 

greenhouse/shade-house infrastructure to grow tomatoes, cucumbers, bell peppers, 

zucchini, strawberries, and flowers (See policy section). 

Tomato planted area for fresh consumption for MY 2012/13 is forecast to be lower 

than MY 2011/12 area, at 52,000 ha, due to a general tendency to decrease open 

field tomato plantings in favor of using different types of protected agriculture. Also, 

area planted could be affected depending on water availability. The drought that 

Mexico has suffered over the last 2 years has exhausted local dams, mainly in the 

northern states. Private sources indicate that dams are currently (May 2012) closed 

in Sinaloa for agricultural production with resources dedicated to human consumption only. Also, overproduction and the resulting low market prices (domestic and 

international) in MY 2011/12 could encourage some producers to switch to other 

products (peppers, cucumbers) or reduce area planted for MY 2012/13. 

The planting area estimate for fresh consumption for MY 2011/12 is 54,000 ha 

and harvested area is 48,900 ha. Low temperatures slowed fruit ripening in Sinaloa 

and Nayarit during December 2011. By January 2012, the harvest volume spiked 

creating a large supply overhang. Low prices even forced producers to stop sending 

58 

product to the domestic market in late February. Oversupply also lowered the international market price, a situation that forced Sinaloa to recall product from the border for resorting and reselection with only the supreme quality exported to the U.S. 

market. Tomatoes that did not make grade were discarded. Based on official data, 

the MY 2010/11 planting area estimate for fresh consumption is 53,025 ha. However, harvested area was lower than expected at 38,003 ha due to bad weather and 

a freeze in Sinaloa where about 13,457 ha were damaged. The Roma variety now 

represents more than 58 percent of total Mexican tomato production as demand for 

this type of tomato has surpassed the round tomato. 

Yields vary depending on production conditions and inputs. Average yields have 

grown from 23 MT/ha in 1990 to 28 MT/ha in 2000 and are expected to reach 43 

MT/ha or more in 2011. Baja California and Sinaloa growers generally achieve the 

highest fresh tomato yields, 45 MT/ha or more, due in part to their pest and disease 

control programs. In other areas of Mexico, growers have significantly lower yields 

averaging from 20 to 30 MT/ha. This is primarily attributable to less intensive use 

of inputs. Greenhouse/shade-house yields tend to vary significantly among producers, variety, and state. These yields generally range from 150 MT/ha to 200 MT/ 

ha depending on the technology used. 

Table 1. Mexico: Tomato Production, Area (ha) and Volume (MT) 

Estimate MY 

2010/11 

Estimate MY 

2011/12 

Forecast MY 

2012/13 

Total Planted Area (ha) 56,025 57,000 55,000 

• For fresh consumption 53,025 54,000 52,000 

• For processing 3,000 3,000 3,000 

Total Harvested Area (ha) 40,003 49,000 48,000 

• For fresh consumption 38,003 46,000 45,000 

• For processing 2,000 3,000 3,000 

Total production (MT) 1,670,454 2,300,000 2,100,000 

• For fresh market 1,630,454 2,210,000 2,010,000 

• For processing 40,000 90,000 90,000 

Open-field tomato production area has shown a tendency to decrease due to pest 

problems, high costs of production, swings in both international prices and exchange 

rates, and limited water availability. The decrease in open field area is more evident 

in states like Sinaloa, Baja California, and Jalisco. In addition, small open field producers are switching to other products like corn and beans in search of better financial returns. There has also been a gradual switch from open field tomato production 

to protected production. Greenhouse/shade-house operations are concentrated in the 

states of Sinaloa, Baja California and Jalisco, but there are also greenhouse operations in the states of Colima, Mexico, Hidalgo, Michoaca ́n, Quere ́taro, San Luis 

Potosı ́, Sonora, and Zacatecas. According to industry sources, there are currently 

more than 13,000 ha of protected agriculture throughout Mexico devoted to tomato 

production. 

According to sources, protected agriculture is growing in Mexico at about 13 percent a year as producers increasingly become aware of the benefits in production, 

quality, pest control, and reduced risk exposure to climate change. Moreover, there 

is growth in protected agriculture as the GOM, at various levels, sees the benefits 

of introducing this production method to rural and poorer areas as a form of social 

development. According to the Secretariat of Agriculture (SAGARPA) there are 

about 20,000 hectares under protected agriculture, with 12,000 ha of greenhouse 

type and 8,000 ha of shade-house and macro-tunnel type. The state of Sinaloa accounts for 22%, Baja California 14%, Baja California Sur 12%, and Jalisco 10% of 

protected agriculture. The main horticultural products produced under this technology are tomato (70%), bell pepper (16%), cucumber (10%), and the rest are products like flowers, chili peppers, strawberries and papaya. 

In Sinaloa (a winter-cycle tomato producing state) there are about 15,000 ha devoted to tomatoes of which approximately 2,000 ha are under protected production. 

About 80% of these hectares are under shade-house operations as the climate is generally too hot for greenhouse technology. Due to strong returns, production has 

trended towards increased use of shade-houses, mainly for products destined for the 

export market. Growers, however, indicate that combining open field and shadehouse production has been useful for marketing their product. Sources point out 

that less than ideal levels of agricultural sophistication (i.e., lack of established marketing channels, insufficient capital, and ability to manage weather events), means 

that sometimes growers abandon protected facilities. Through a recent study in 

2010/11, the Mexican Association of Protected Horticulture (AMHPAC) found that 

59 

of the approximately 9,000 ha of greenhouses existing in the northern states of 

Sinaloa, Sonora, Baja California Norte, and Baja California Sur, 30 percent were not 

operating. 

During the October to May winter season, Sinaloa growers are the main producers and exporters of fresh tomatoes. Other significant producers include 

Michoaca ́n, Jalisco, and Baja California Sur. Growers in Sinaloa are anticipating 

that the use of improved and extended shelf varieties, drip irrigation, and plastic 

mulch will help maintain their high yield levels. During the summer season (May 

to October), Baja California growers are the main producers and exporters of fresh 

tomatoes. The states of Michoaca ́n, Jalisco, and Morelos follow Baja California’s production. Producers in Sinaloa and Baja California are widely considered more technologically advanced than other producing states. As a result, U.S. California tomatoes face direct competition from Baja California tomatoes. Tomato growers in 

Jalisco bridge the summer-winter cycle and usually export in October, November, 

and December after Baja California. The states of Jalisco and Quere ́taro have been 

increasing shade-house planted area. This increase is largely attributable to recent 

success in exporting to the United States. 

Planting and harvesting of tomatoes for processing is largely a function of fresh 

domestic market prices and international tomato paste prices. Areas that were previously devoted to planting tomatoes for the processing industry have shifted to 

fresh market, as demand for processing tomatoes has declined in the face of high 

international fresh market prices. Area planted in both MY 2011/12 and MY 2012/ 

13 to processed tomatoes is estimated at 3,000 ha. Yields for this type of tomato 

range from 30 MT/ha to 40 MT/ha given normal weather conditions. If the industry 

needs to process additional tomatoes, it purchases supplies from the open market. 

Due to the February 2011 freeze in Sinaloa, a large portion of the area devoted to 

industrial tomato use was damaged. 

Tomato production costs remain high across the country. Credit availability remains a constraining factor for growers since Mexican banks do not provide loans 

for tomato production. In a few instances, producers with export contracts can receive some operating capital from contracting companies in the United States. According to growers, imported agrochemicals, seeds, and fertilizers are the most costly inputs. Current depreciation of the Mexican peso vs. the U.S. dollar will increase 

costs of production as the exchange rate reached 13.75 pesos per U.S. $1.00 in December 2011 but has fallen to 14.20 pesos per U.S. $1.00 in June 2012. 

Consumption 

The MY 2012/13 final consumption figure will depend on tomato exports to the 

United States, as domestic consumption is a residual after exporting. Consumption 

for MY 2011/12 is estimated to be higher compared to the previous marketing year 

as prices were low due to large supplies. Consumption for MY 2010/11 was lower 

than expected due to lower supplies during the winter season, high export volumes, 

and high domestic prices. 

Tomato consumption is price sensitive in Mexico. Thus, marginal changes in 

prices tend to lead to significant changes in demand. Although protected production 

is still limited and tends to be higher priced, the market now has the option of meeting more of the domestic demand with greenhouse/shade-house tomatoes. 

Local tomato prices tend to rise from March to May because of increased exports 

from the state of Sinaloa, which in turn reduces supply in the domestic market. 

However, during the supply spike of the winter season of 2011/12, prices were down 

more than 50 percent compared to 2010/11. Tomato exports also tend to increase 

from June to August, as this is the international market window for tomatoes from 

Baja California. By the end of November and December, tomato prices usually rise 

again, due to the increased export volume from the states of Jalisco and Sinaloa. 

The tomato paste industry always buys tomatoes from the fresh market in addition to buying contracted tomatoes for processing. However, price competition in the 

fresh market has become a problem for the processing industry. Over the past several years, relatively high fresh tomato prices have diverted product away from the 

processing market. Thus, there has been very little industry demand for tomatoes 

destined to paste production as it is economically more feasible to import tomato 

paste rather than produce it domestically. 

Trade 

Exports for MY 2012/13 are expected to rebound from MY 2011/12 levels if weather conditions are good and international prices increase from last year’s levels. Tomato exports for MY 2011/12 are estimated at to reach 1.5 MMT. According to industry sources, tomato exports during the 2011/12 winter season were lower from 

Sinaloa as higher supplies resulted in very low prices for the international market. 

60 

In fact, according to traders, prices in January 2012 were selling almost at the lowest price allowed under the suspension agreement—about U.S.$0.21/lb. To prevent 

prices from declining further and to stabilize the market, producers in Sinaloa 

agreed to be more selective in the tomato quality for export resulting in a large 

quantity of tomatoes being kept off the market and discarded. However, it is important to note that other states like Jalisco, Quere ́taro, and San Luis Potosi are increasing export volumes during this window, crossing the border through Texas. Tomato exports for MY 2010/11were lower compared to MY 2009/10 exports or 1.43 

MMT, as Sinaloa reduced exports by roughly 30 percent due to the freeze. According 

to the U.S. Census Bureau, 40 percent of all tomatoes imported into the United 

States from Mexico during MY 2010/11 were shade/greenhouse tomatoes. 

Fresh tomato imports from the United States represent a small portion of Mexico’s fresh consumption and fluctuate depending on international prices and domestic 

availability. Due to weather problems in Mexico, there was an opportunity for higher imports for MY 2010/11, where an estimated of 31,058 MT of tomatoes were imported into Mexico from the United States. Import estimates for MY 2011/12 are expected to be lower as domestic supplies are higher and prices are lower. Most imported tomatoes are sold in the northern states of Nuevo Leo ́n, Sonora, Baja California, and Chihuahua. 

Policy 

Since 2009, the GOM has operated strategic projects for protected agriculture 

where the Federal and state governments participate with funds through FIRCO, 

a Mexican trust fund for shared risk (www.firco.gob.mx/). According to SAGARPA, 

more than $92.7 million USD were designated to promote protected agriculture 

through a Program of Investment Support for Infrastructure, which encourages production improvements and climate change mitigation. In 2009 and 2010, $189.2 million USD were destined for the establishment of 2,500 ha of protected agriculture— 

65% for greenhouses, 25% shade-houses, 7% macro-tunnel, 3% micro-tunnel and 

three Regional Training Centers (production, post-production, and marketing). Supported production includes 859 ha of tomatoes (41%), 428 ha of cucumbers (20%), 

347 ha of bell peppers (16%), 274 ha of berries (13%), and the rest are planted with 

zucchini, grapes, brussels sprouts, haban ̃ ero and green peppers, and ornamental 

plants. These types of projects have helped to consolidate development areas for 

small producers in the states of Oaxaca, Nuevo Leo ́n, Morelos and Puebla. Some of 

the projects in marginal areas are geared first for self consumption within the communities. Read more about this program at: http://www.sagarpa.gob.mx/ 

agricultura/Paginas/Agricultura-Protegida2012.aspx. 

According to SAGARPA, the program for protected agriculture in 2012 will be 

very similar, in general, to the 2011 program: support funds are $18,018 USD/ha 

for macro-tunnel, $36,036 USD/ha for shade-house and $108,108 USD/ha for greenhouse technology. Only investments for new infrastructure and new equipment are 

supported and funds cannot be used to buy land or housing. Support could reach 

up to 60 percent for highly marginalized areas and up to 45 percent for other producers. For additional information see the following page: http:// 

www.sagarpa.gob.mx/agricultura/Documents/Agricultura%20Protegida%202012/ 

TRIPTICO%202012%20agricultura%20protegida.pdf. 

Both producers and SAGARPA officials are extremely cognizant of the importance 

of meeting quality standards for fruits and vegetables and have implemented programs to comply with U.S. food safety requirements. 

The Tomato Suspension Agreement between Mexico and the United States, signed 

on December 4, 2002, binds participants in the agreement to an agreed upon reference price. The reference price for exporting fresh tomatoes for the summer season 

(July 1 to October 22) is 17.2¢ per pound and the reference price for the winter season (October 23 to June 30) is 21.69¢ per pound. According to growers, tomato prices 

for MY 2011/12 have been close to the reference price. The U.S. Department of Commerce will soon begin the third sunset review of the agreement (ending January 

2013) to evaluate how well it worked. Low prices over the last 6 months have lead 

to complaints by both Mexican and U.S. growers about the functioning of the agreement, with sellers and brokers accused of under-cutting the agreement floor price. 

Producer associations have exerted considerable effort combating these bad actors. 

Tariffs 

Mexico, in general, does not import tomatoes from countries other than the United 

States. Mexico’s most favored nation (MFN) applied tariff rate for tomato (HTS 

0702) imports is ten percent. Countries with tariff-free access to Mexico include: the 

United States, Canada, Chile, Costa Rica, Nicaragua, Uruguay, Bolivia, the European Union, and Japan. There is an applied tariff rate of 28% for tomatoes from 

61 

Colombia. Fresh tomato exports to the United States as well as imports have zero 

duty under NAFTA. The tomato tariff classification numbers are 0702.0001 and 

0702.0099. Mexico does notassess an export tariff. 

Marketing 

Fresh tomatoes destined for domestic consumption, including imported tomatoes, 

pass through wholesale markets and proceed to large supermarkets and retail 

stores. A few stores import directly without going through wholesale marketing 

channels. This remains somewhat rare, however, since most retail operations do not 

have expertise importing or the labor resources to repack tomatoes based on maturity, size, etc. before products are showcased to consumers. In the past, promotional 

campaigns for U.S. tomatoes focused on proper tomato handling techniques, point 

of sale materials, and in-store promotions. Most of the imported product is destined 

to border cities and states. Tomatoes for the export market are shipped directly from 

the producing area to the United States border. 

Prices and Trade 

Table 2. Mexico: Wholesale Round Tomato Prices 

Mexico City—Pesos/Kg 

Month 2010 2011 2012 % Change 2012/ 

2011 

January 11.05 8.60 8.85 0.11 

February 12.29 15.73 5.12 (67.45) 

March 26.03 24.53 9.88 (59.72) 

April 17.40 30.63 7.76 (74.66) 

May 11.96 14.99 9.64 (35.69) 

June 6.09 13.25 N/A N/A 

July 7.88 11.80 N/A N/A 

August 12.00 12.35 N/A N/A 

September 12.69 11.32 N/A N/A 

October 14.44 10.92 N/A N/A 

November 11.84 10.87 N/A N/A 

December 11.59 11.22 N/A N/A 

Table 3. Mexico: Wholesale Roma Tomato Prices 

Mexico City—Pesos/Kg 

Month 2010 2011 2012 % Change 2012/ 

2011 

January 5.72 8.20 7.26 (11.46) 

February 6.60 9.83 4.96 (49.54) 

March 9.42 10.42 6.38 (38.77) 

April 5.54 16.06 5.63 (64.94) 

May 4.95 7.09 7.72 8.88 

June 4.15 5.51 N/A N/A 

July 5.76 6.12 N/A N/A 

August 6.44 5.39 N/A N/A 

September 8.45 6.23 N/A N/A 

October 12.19 5.68 N/A N/A 

November 11.78 5.12 N/A N/A 

December 10.66 8.15 N/A N/A 

Source: Servicio Nacional de Informacio ́n de Mercados. 

Note: 2011 Exchange Rate Avg.: U.S. $1.00 = 12.42 pesos. 

June 1, 2012 Exchange Rate: U.S. $1.00 = 14.30 pesos 

62 

* Editor’s note: the graphic entitled, Round & Roma Tomato Prices Mexico City Wholesale, 

was cutoff in the submitted document. It has been reproduced herein as is. 

Round Tomato Prices Mexico City Wholesale 

Round & Roma Tomato Prices Mexico City Wholesale * 

Table 4. Mexico: MY2010/11 Tomato Exports and Imports by Volume (MT) 

and Value ($) 

Exports for MY 2010/11 (Oct.–Sept.): Imports for MY 2010/11 (Oct.–Sept.): 

Destination Volume Value 000 Origin Volume Value 000 

U.S. 1,302,668 $1,732,831.7 U.S. 31,058 $58,714.0 

Canada 127,669 179,154.2 

Others not 

listed 

3,621 4,922.9 Others not 

listed 

0 

Grand Total 1,433,958 $1,916,908.8 Grand Total 31,058 $58,714.0 

Source: Global Trade Information Services, Inc. Global Trade Atlas, Mexico Edition, March 

2012. 

Table 5 Mexico: MY2011/12 * Tomato Exports and Imports by Volume (MT) 

and Value ($) 

Exports for MY 2011/12 * (Oct.–Sept.): Imports for MY 2011/12 * (Oct.–Sept.): 

Destination Volume Value 000 Origin Volume Value 000 

U.S. 794,827 $1,059,067.8 U.S. 9,166 $13,470.0 

Canada 31,710 40,583.6 Chile 0 

Others not listed 2,685 3,426.7 Others not listed 0 

Grand Total 829,222 $1,059,068, Grand Total 9,166 $13,470.0 

* Through March 2012. 

Source: Global Trade Information Services, Inc. Global Trade Atlas, Mexico Edition, March 

2012 


11511029.eps 11511030.eps
63 

Table 6. Mexico: Monthly Exchange Rate Averages 2008–2012 

MX Pesos per U.S. $1.00 

2008 2009 2010 2011 2012 

January 10.91 13.15 12.80 12.13 13.46 

February 10.77 14.55 12.95 12.06 12.79 

March 10.74 14.71 12.59 12.00 12.75 

April 10.52 13.41 12.23 11.73 13.05 

May 10.44 13.19 12.71 11.64 13.60 

June 10.33 13.47 12.72 11.80 †14.30 

July 10.24 13.36 12.82 11.67 

August 10.10 13.00 12.74 12.22 

September 10.61 13.41 12.82 12.97 

October 12.56 13.24 12.44 13.46 

November 12.31 13.12 12.33 13.67 

December 13.40 12.85 12.39 13.75 

Annual Avg. 11.14 12.33 12.62 12.42 

† As of 1er week of June 2012 

Source: Mexican Federal Register. 

Note: Monthly rates are averages of daily exchange rates from the Banco de Mexico. 

FAS/Mexico Web Site: We are available at www.mexico-usda.com or visit the 

FAS headquarters’ home page at www.fas.usda.gov for a complete selection of FAS 

worldwide agricultural reporting. 

FAS/Mexico YouTube Channel: Catch the latest videos of FAS Mexico at work 

http://www.youtube.com/user/ATOMexicoCity. Other Relevant Reports Submitted by FAS/Mexico: 

Report 

Number Subject Date Submitted 

MX1012 Hard Freeze Damages Sinaloa Corn and Produce 2/14/2011 

Useful Mexican Web Sites: Mexico’s equivalent of the U.S. Department of Agriculture (SAGARPA) can be found at www.sagarpa.gob.mx, the equivalent of the U.S. 

Department of Commerce (SE) can be found at www.economia.gob.mx, and the 

equivalent of the U.S. Food and Drug Administration (SALUD) can be found at 

www.salud.gob.mx. These web sites are mentioned for the reader’s convenience but 

USDA does not in any way endorse, guarantee the accuracy of, or necessarily concur with, the information contained on the mentioned sites. 

ATTACHMENT [2] 

May 4, 2017 

Hon. WILBUR L. ROSS JR., Secretary, 

Department of Commerce, 

Washington, D.C. 

Dear Secretary Ross, 

We are writing today to raise concerns regarding unfair trade practices with respect to Mexico’s exports of produce to the United States, which are undercutting 

Florida’s specialty crop industry. Mexican growers in particular have a long history 

of flooding the U.S. market with tomatoes at below-market prices, a practice referred to as dumping. However, it is no longer just tomatoes that are being dumped 

into U.S. markets, Mexico’s exports of bell peppers, strawberries and watermelon 

have soared over the past couple of years—which is disproportionately impacting 

the economic vitality of Florida’s unique agriculture industry. 

Florida’s farmers and ranchers provide an economic impact of over $120 billion 

and serve as the foundation for over 2 million jobs. Furthermore, Florida is the second largest producer of specialty crops in the United States. Our state’s special climate and fertile growing regions mean Florida is the sole U.S. producer of many 

fruits and vegetables during the winter months before most domestic producers 

begin their harvests. 

Unfortunately, after the implementation of the North American Free Trade Agreement (NAFTA) in 1994, imports of many agricultural products from Mexico increased substantially and Mexico began dumping tomatoes and other specialty crops 

into the U.S. at below-market prices. Coupled with Mexico’s inexpensive labor force, 

64 

its favorable growing conditions and expanding greenhouse production systems, the 

resulting impact has been a Mexican growing season that directly competes with 

Florida’s specialty crop industry. 

In 1996, Florida growers filed a complaint with the International Trade Commission charging that the lower tariff on Mexican tomatoes—a result of NAFTA—had 

caused significant harm to domestic producers. In October of 1996, the Department 

of Commerce reached an agreement with Mexican producers and exporters of tomatoes under which Mexican tomato growers agreed to revise their prices and set a 

minimum reference price in order to eliminate the injurious effects of fresh tomato 

exports to the U.S. The so-called ‘‘suspension agreement’’ remained in place for 

years and was renewed in 2002 and 2008. Another agreement established in 2013 

raised the reference prices at which tomatoes can be sold in the U.S. to better reflect 

the changes in the marketplace and to account for winter and summer growing seasons. However, the lack of enforcement of these agreements has intensified conditions allowing Mexican produce to once again flood the U.S. market. 

Tomatoes are just one example of how high volumes of these commodities are 

pouring into the U.S. market at prices significantly below the cost of production. 

When the trade framework allows unfairly subsidized commodities to be dumped 

into U.S. markets, it results in negative repercussions on U.S. producers and causes 

disproportionate economic injury to Florida’s specialty crop industry. 

As Members of Congress representing Florida, we know how instrumental trade 

is to Florida’s economy. Our state exports over $4 billion worth of products to over 

170 countries and territories around the world each year. Florida is uniquely and 

strategically located in the Western Hemisphere, boasting state-of-the-art economic 

infrastructure, a multilingual workforce and a concentration of corporate and financial resources. Specifically, Florida has 15 seaports, with Miami recognized as the 

‘‘trade and logistics hub of the Americas.’’ Florida produces the highest-quality agricultural commodities in the world and can successfully compete in a global market, 

if it’s operating on a level playing field. Unfortunately, the current trade environment created under NAFTA is anything but fair, particularly when it comes to policies impacting Florida’s specialty crop growers and producers. 

Our country’s trade laws provide a variety of avenues to address unfair and injurious trade practices resulting from foreign government subsidies, dumping, and 

surging imports. We need to implement a trade agenda that will strictly enforce 

U.S. trade laws and to ensure that a fair and level playing field exists for America’s 

farmers, ranchers, and businesses. 

We respectfully request that you initiate an investigation into Mexico’s unfair 

trade practices and its dumping of specialty crops into U.S. markets. Furthermore, 

as the U.S.-Mexico trade relationship is reexamined, we urge the U.S. Commerce 

Department, the U.S. Trade Representative, and the U.S. International Trade Commission to develop a new agreement that will protect Florida’s domestic agriculture 

industry, a critical pillar of our state’s economy, and compel our Mexican counterparts to compete on a level playing field. 

Sincerely, 

Hon. THOMAS J. ROONEY, Hon. TED S. YOHO, 

Member of Congress; Member of Congress; 

Hon. MARIO DIAZ-BALART, Hon. JOHN H. RUTHERFORD, 

Member of Congress; Member of Congress; 


11511031.eps 11511032.eps
65 

Hon. BRIAN J. MAST, Hon. DANIEL WEBSTER

Member of Congress; Member of Congress; 

Hon. DENNIS A. ROSS, Hon. GUS M. BILIRAKIS, 

Member of Congress; Member of Congress; 

Hon. DARREN SOTO, Hon. AL LAWSON, JR., 

Member of Congress; Member of Congress; 

Hon. ALCEE L. HASTINGS, Hon. CHARLIE CRIST, 

Member of Congress; Member of Congress; 

Hon. KATHY CASTOR, Hon. STEPHANIE N. MURPHY, 

Member of Congress; Member of Congress; 

Hon. NEAL P. DUNN, Hon. LOIS FRANKEL, 

Member of Congress; Member of Congress; 

Hon. ILEANA ROS-LEHTINEN, 

Member of Congress; 

The CHAIRMAN. Well thank you, gentlemen. 

The chair would remind Members they will be recognized for 

questioning in the order of seniority of Members who were here at 

the start of the hearing. After that, Members will be recognized in 

order of arrival. I appreciate Members’ understanding. 

I recognize myself for 5 minutes. 


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66 

Mr. Frazier, NAFTA has appeared to have created a supply 

chain between north to south that allows the movement of cattle 

across both borders. There is a chart in your testimony that is U.S. 

beef trade with Mexico, and it basically shows almost a break even. 

Imports and exports to and from Mexico have reached a common 

level. Can you walk us through how that has happened and what 

did NAFTA do to facilitate that? 

Mr. FRAZIER. Well, first of all, we have a lot of feeder cattle that 

come from Mexico that are fed in feedlots in the United States and 

then processed in our packing plants. And yes, that is kind of an 

equilibrium, but we need to remember that a lot of that beef that 

is produced from those Mexican cattle gets exported around the 

world and goes into the Asian markets and all over the world. And 

it is part of the $6 billion export market that we have around the 

world, Mr. Chairman. 

The CHAIRMAN. Is that balance of trade between the two a sharp 

increase in imports from Mexico during the last 5 or 6 years, is 

that part of the drought that we had? 

Mr. FRAZIER. It is. 

The CHAIRMAN. But is that necessarily a bad thing? 

Mr. FRAZIER. Well it is, and what they are doing is they are 

building infrastructure in northern parts of Mexico. In parts of 

Mexico, there are feedlots that are being built in Mexico, and some 

packing infrastructure that is going into Mexico, and that is resolving, and some of that beef coming into the United States. But we 

still import a significant amount of feeder cattle into the United 

States that are fattened and then processed and exported around 

the world. 

The CHAIRMAN. Secretary Vilsack, geographical indicators continue to haunt us. Obviously, with the bilateral agreements where 

countries decide that they will recognize each other’s geographical 

indicators, when they try to do a deal with somebody else it has 

an impact. Parmesan cheese is a big issue with dairy. Can you talk 

to us about the impact that bilateral deals with other countries 

may have on NAFTA’s negotiations on GIs? 

Mr. VILSACK. Mr. Chairman, the Canadians have entered into an 

agreement with the European Union, which essentially grandfathers in existing utilization of common names for existing facilities, but prohibits and prevents future facilities from being able to 

use certain cheese names. 

This obviously is of deep concern to our cheese industry. If we 

are going to increase exports and our goal is to try to get from 15 

percent of our volume to 20 percent of our volume, cheese is going 

to be incredibly important. If we simply allow the Europeans to monopolize certain terms of cheeses, that will create no market competition. That will make it difficult for us to market much of what 

we can produce in this country. 

Mexico right now is negotiating with the EU for a free trade 

agreement, and what we are concerned about is which negotiation 

gets completed first, the modernization of NAFTA that could potentially reinsert the GI protections that were in the TPP agreement, 

or will Europe do what they recently did with Japan, enter into a 

free trade agreement that basically restricts Mexican use of GIs? 

It is a very critically important issue, and one that prompts us to 

67 

encourage bilateral discussions and the modernization discussions 

to proceed expeditiously without delay. We can’t afford to lose this 

race with the EU. 

The CHAIRMAN. Thank you. 

Mr. Brown, on your issue, I am aware that there are certain U.S. 

growers who have built facilities in Mexico and that they are importing those products. Can you get any sense as to what distortions are actually caused by U.S. producers choosing to grow in 

Mexico and bringing those products into the U.S. versus folks who 

don’t have that kind of opportunity to compete? Can you break that 

market down for us? 

Mr. BROWN. I can’t give you absolutely specific details, but it will 

actually vary with the particular commodity. In the case of the tomato industry, there are some U.S. producers that are participating in production enterprises in Mexico, but to a large part, the 

tomato industry in Mexico is driven by Mexican interest. In the 

case of strawberries and blueberries and some of the fruit crops 

that are exploding in Mexico as we speak, there is a lot of American interest, relocating from California into Mexico, in that process. It will vary depending on the commodity. 

The CHAIRMAN. Thank you. I yield back. 

Mr. Peterson for 5 minutes. 

Mr. PETERSON. Thank you, Mr. Chairman. 

Secretary Vilsack, welcome back to the Committee. It is good to 

see you here again. 

As I understand, you went down to Mexico and met with some 

of the folks down there and I guess you had a good result from 

that. 

Mr. VILSACK. We went down and Jim Mulhern from National 

Milk, Michael Dykes from the IDFA, and I went down to Mexico, 

primarily to reinforce the belief that our relationship with Mexico 

is not a transactional buy/sell relationship in dairy. It is a much 

more of a partnership. We are trying to grow consumption of dairy 

products generally in Mexico, which will create opportunities for 

Mexican producers but also create opportunities for us on the export side. 

Following our visit, we saw increased sales. Last month we were 

at or near record in terms of our exports to Mexico. 

Mr. PETERSON. Thank you, and my question is have you done a 

similar trip to Canada, or do you intend to go up and talk to those 

folks? 

Mr. VILSACK. We have conversed with Canadian officials. I 

haven’t gone up to Canada. We have been very clear about our concerns about Class VI and Class VII, the impact that it is having, 

not just on our ability to export into Canada, but also the impact 

it is having on powder prices generally. That is why ten of the leading trade organizations in the dairy industry globally have expressed deep concern about the Canadian process. 

Our goal here is to make sure that our Administration and the 

Canadian Administration understand how serious this problem is. 

Mr. PETERSON. As I said in my opening statement, the Canadians’ interest up there continue to buy up our processing, which 

I don’t know if it is good or bad, but it does seem curious what happened with this situation with Grassland where Agropur was inVerDate Aug 31 2005 12:02 Aug 31, 2017 Jkt 041481 PO 00000 Frm 00071 Fmt 6633 Sfmt 6601 P:\DOCS\115-11\26495.TXT BRIAN
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volved in buying the surplus milk and as I understand it, they paid 

$7 per hundredweight less than the pool price. Just so you know, 

this whole situation that is going on, I told the Canadian Ag Committee, they want to know if there is anything they can do for me. 

I said yes. I said get me a quota to milk 100 cows in Canada, because that is one of the most profitable things you could ever do, 

if you could ever get that quota. 

I don’t know how we resolve this. They are going to defend this 

no matter what, and they make so much money up there, they 

can’t invest it in their own industry. They are coming down and 

buying us up. It can’t be good. I don’t know what you guys think 

about it. 

Mr. VILSACK. Well it is not good, and it certainly is detrimental 

not only to American producers, but also Canadian consumers who 

end up paying a significant amount more for their dairy products 

than they would otherwise have to pay if there was a freer flow of 

product across the border. 

Congressman, I don’t know that we have all the answers, but I 

would suggest to you that this renegotiation needs to focus on significant tariff reduction. It needs to focus on greater transparency 

in the process. The Canadian Government clearly manipulates 

through policy and regulation this market. Whenever we make an 

in-road, then the rules change. You can’t ask American companies 

to invest hundreds of millions of dollars in a processing facility if 

there is no expectation that the market that they are counting on 

for the payment of that expansion is going to be present 6 months 

from now because the Canadian Government changes the rules. It 

is clear that this process has to be more transparent and more predictable. 

Mr. PETERSON. Thank you. 

Mr. Brosch, I was reading your testimony that in spite of the fact 

that they have this export supply management and poultry, and 

the fact that you are somewhat limited in what you can export, I 

guess, but it says in here that Canada is the number two export 

market for the United States. 

Mr. BROSCH. That is correct. 

Mr. PETERSON. How can that be? 

Mr. BROSCH. We have a limited quota for certain products, and 

we have no quota for other products that the poultry industry produces. For example, fowl meat, we have a lot of spent hens in the 

United States. Canada is a deficit producer for their own market 

of poultry, and so certain products they are going to need no matter 

what, and those products make it into Canada; and turkey, we export turkey to Canada. But they are about 16 percent of our exports right now total, if you look at all products. 

I understand the Secretary’s concern. We have those concerns 

and have had those concerns for years. We would like more access 

to the market. We were hopeful that the Administration would pursue the TPP because we thought we had some gains locked up in 

the TPP in Canada. Of course, TPP also offered us what we really 

wanted, which was access to lots of other markets. Canada is not 

going to solve the problems of the U.S. poultry industry, frankly. 

We need all the markets around the world to have access, all marVerDate Aug 31 2005 12:02 Aug 31, 2017 Jkt 041481 PO 00000 Frm 00072 Fmt 6633 Sfmt 6601 P:\DOCS\115-11\26495.TXT BRIAN
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kets. We would like improvements in Canada, but the truth is, 

right now Canada is our number two market. 

Mr. PETERSON. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Lucas, 5 minutes. 

Mr. LUCAS. Thank you, Mr. Chairman. 

Mr. Frazier, I think we would all agree that whatever is done on 

NAFTA will likely set the tone for future trade deals, particularly 

as it affects agriculture. Could you expand for a moment in this renegotiation process of what would be important to the beef industry 

and other sectors that could happen in the future, say, as it might 

then apply to other countries, Japan or China, for instance, as 

trade deals come together? 

Mr. FRAZIER. Well, first would be that we have no duties on products going into those countries, no tariffs, no duties. That would be 

first. We feel that NAFTA is working for our industry. It is providing a lot of value-added products that we are able to sell around 

the world. It utilizes a lot of grain products, and we would like to 

see more of the focus now on bilateral negotiations with Japan in 

the absence of TPP, and bilateral negotiations with other countries 

around the world, and replicate some of the things that we think 

are beneficial in NAFTA. 

Mr. LUCAS. Is there anything that potentially would come up in 

such renegotiation that you think could be damaging or harmful to 

future trade deals, things we should be concerned about? 

Mr. FRAZIER. I mentioned one, Country-of-Origin Labeling, if that 

gets back on the table. We don’t need that back on the table again. 

I guess that would be our biggest concern, and anything that would 

have to do with tradeoffs around duties or tariffs put on American 

beef going into Canada and Mexico. 

Mr. LUCAS. Mr. Gaibler, it is my understanding and it has been 

reflected in comments here that as we approach potential NAFTA 

renegotiations, Mexican buyers are shifting to short-term contracts 

and looking at sources perhaps for grain outside of North America. 

That is the way I will word that. And this is just based on the potential for change in NAFTA. Could you discuss for a moment what 

the impact would be if this renegotiation turns out to be an extended process, what the effect could be on your folks, and for that 

matter, agriculture in general? I am looking for justification to 

move quickly, whatever we do. 

Mr. GAIBLER. Thank you, Congressman Lucas. 

Well as I said and as is written in my testimony, we haven’t even 

gotten to the negotiation, and we have a seven percent decline in 

our sales since the beginning of the year. And we did try and come 

up with some analyses to try and measure the potential impacts. 

I didn’t cite them in my oral testimony; but, we are talking about 

some real numbers here. Our total grain production could fall by 

1.2 billion. We would have a loss of about $6 per acre. There would 

also be increased costs because the model imputed that there were 

probably $1.2 billion in farm program payments. So that is just a 

shot or a guesstimate of what the potential impacts could be. And 

if we are not getting this negotiation done by the end of the year, 

we anticipate that this erosion will continue and all of us who are 

in the international export business know that once you lose marVerDate Aug 31 2005 12:02 Aug 31, 2017 Jkt 041481 PO 00000 Frm 00073 Fmt 6633 Sfmt 6601 P:\DOCS\115-11\26495.TXT BRIAN
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ket share, even with your best customers, it is very difficult to recover it. 

Mr. LUCAS. Secretary Vilsack, the last time we went through the 

farm bill process, you sat in a different role and you were responsible for the entirety of agriculture. I know you have concerns for 

the entirety, as always. Is it fair to say that as we approach 2018 

and the next farm bill process, that perhaps just as important as 

comprehensive farm bill policy is, as what happens on NAFTA and 

these trade agreements will make or break us as an industry? Your 

observations? 

Mr. VILSACK. Well Congressman, Canada and Mexico, Mexico is 

our number one market, Canada is our number two market for 

dairy products, so clearly what happens here will make a difference 

to the nearly 42,000 operations that are producing product. 

Look: We have to fix what is broken in Canada. This is a market 

that is far too closed. It is not transparent. The rules are constantly 

changing, and there are some serious issues that have to be dealt 

with in these negotiations. And to your point, they need to be dealt 

with immediately. This is not a situation where we can have an extended conversation about changes, because we are facing competition with the EU and their efforts to get free trade agreements 

with Mexico, and the one that was recently done with Japan. It is 

incredibly important that we get this done quickly and we get it 

done right. And to get it done right, we have to preserve what is 

working. We have to strengthen what can be strengthened, and we 

have to fix what is broken. 

Mr. LUCAS. Thank you, Mr. Secretary. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Scott, 5 minutes. 

Mr. DAVID SCOTT of Georgia. Thank you, Mr. Chairman. 

This is a big issue. It is very important to my State of Georgia. 

Under NAFTA, Georgia has a lot to lose if these export markets 

shrink due to uncertainty, and that is the big word here. This uncertainty that is floating. And as we are considering this issue, I 

put myself in Mexico and Canada’s shoes, and I ask myself what 

I would do if my largest trading partners were thinking of backing 

out of a deal? I would start looking at other countries to trade with 

in case our deal is broken. And this is why I wasn’t surprised, 

panel, when Mexico bought five times more corn from Brazil than 

it imported from Brazil last year. And in your testimony, Mr. 

Gaibler, you showed that it may very well be even worse than I 

had thought. And when I hear the Administration saying that they 

will follow a first do no harm strategy, I really can’t help but wonder if we have already began to see some harm on America’s agriculture industry? And I also worry about repeating battles. 

And especially, Mr. Frazier, last week the Office of the U.S. 

Trade Representative announced in its negotiating objectives in updating and strengthening the rules of origin. Now we all have 

fought this fight over and over again, and can tell great stories on 

it. To repeat this mandatory Country-of-Origin Labeling on U.S. 

beef products as we are all aware of, Mr. Frazier, can you comment 

and tell me if you have any concerns about this objective that U.S. 

71 

Trade Representative is offering? Are we in any way having to 

fight this COOL label all over again? 

Mr. FRAZIER. Well I hope not. I am not going to speak for the 

U.S. Trade Representative, but we feel strongly that Country-of-Origin Labeling did not work. WTO ruled in favor of Canada and 

Mexico, and our conversations with them, it is very clear that if 

that is brought back on the table, they will put in retaliatory tariffs 

on U.S. beef going into Mexico and Canada. 

Mr. DAVID SCOTT of Georgia. So your answer to that is that you 

are somewhat worried, but you feel we won’t have to repeat it. Is 

that right? 

Mr. FRAZIER. Yes, we would be concerned if there is any discussion about it coming back on the table. 

Mr. DAVID SCOTT of Georgia. Okay. 

Mr. FRAZIER. We are against that. 

Mr. DAVID SCOTT of Georgia. All right. Let me go to Mr. Brosch 

for a second. 

One place where I see a possibility of hope is increasing the 

quota access in poultry to Canada. The poultry industry has a very 

similar supply management situation in Canada as the dairy industry does. If a U.S. company decides it wants to do business in 

Canada, they first have to build a facility. They have to build growing barns. They have to get office space, packing, shipping, and 

processing. And then they have to have a purchase quota; however, 

after all that, they can only purchase 250 kilos or 550 pounds of 

import quota. This small amount of production assures that no 

competition can come into Canada. 

Mr. Brosch, can you tell us how was this allowed when NAFTA 

was first negotiated? 

Mr. BROSCH. Well NAFTA was first negotiated as the U.S.-Canada Free Trade under President Reagan in 1984, and I was, frankly, a lot younger man than I am today. It actually is before my 

time, but the Canadians essentially retained their reservation 

under the WTO, which they have had for many, many years for 

supply management. And the WTO rules allowed that at the time. 

We thought when NAFTA was negotiated that they couldn’t 

maintain that, and there was actually a challenge case brought by 

the USTR on behalf of the U.S. dairy industry, and we lost that 

case. As a legal matter, and frankly, I never quite understood how 

we lost that case, but as a legal matter, the Canadians were upheld 

in that dispute settlement case. 

It all goes back to that original negotiation where they essentially claimed the right to reservation. 

Mr. DAVID SCOTT of Georgia. Thank you. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Gibbs, 5 minutes. 

Mr. GIBBS. Thank you, Mr. Chairman. Thanks to the panel for 

being here. 

Secretary Vilsack, you mentioned about the dairy supply management in Canada, and some of their policies. Ranking Member 

Peterson talked about the quota is quite profitable in the dairy industry up there on your quota, and they are using a lot of those 

profits to buy processing here in the United States. I’m not that familiar with how their quota system works up there, supply manVerDate Aug 31 2005 12:02 Aug 31, 2017 Jkt 041481 PO 00000 Frm 00075 Fmt 6633 Sfmt 6601 P:\DOCS\115-11\26495.TXT BRIAN
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agement system works, but is it possible for dairy producers in 

Canada to exceed their quota and then move that milk to the 

United States to the processing plants that they own in the United 

States? 

Mr. VILSACK. Let me give you an example of the Canadian system so that you have a better understanding. 

This Class VII, which we have raised concerns about, essentially 

what they have done is they have essentially allowed processors to 

pay about 15 percent less than what they would normally pay for 

a U.S. product to go into their processing, and that has created, as 

a result of a significant increase in butter consumption, has created 

a lot of powder. They put the powder basically on the world market 

at a below world market price, which drives the price down for everyone. That also would impact Canadian farmers, but they have 

allowed for adjustments on the other classifications of milk products and dairy products, so Canadian farmers basically break even 

in this system. Processors benefit from cheaper supply, and powder 

is dumped on the market. And essentially what that has done is 

it has created havoc for our producers, and for that matter, for producers in New Zealand and in the EU. 

It is the ability of the Canadian Government to essentially manipulate the system whenever there appears to be the need or the 

U.S. is making in-roads, they manipulate the system, and that is 

the problem. And it guarantees a price for Canadian producers that 

is significantly greater than what they would get in a market and 

the consumers end up paying for it in Canada. 

Mr. GIBBS. They just created a whole new class, this Class VII, 

that wasn’t part of the agreement? 

Mr. VILSACK. Exactly. We were having ultra-filtered milk going 

into the Canadian market, creating the opportunity for processors 

to use our ultra-filtered milk. When we began to gain market 

share, they created a Class VII, allowed the processors to basically 

purchase Canadian product for 15 percent less than what they 

would pay for U.S. product. That ended the import opportunity for 

us, the export opportunity for us. It created opportunities for processors to profit in Canada, and it didn’t hurt the Canadian producers because they increased in the other classifications so that 

they could make up the difference in other classifications. And the 

losers are U.S. producers and Canadian consumers. 

Mr. GIBBS. Back to the Ranking Member’s comments about the 

co-ops that producers in Canada are buying the processing here in 

the United States. Is that happening and where do you see it is 

happening, what is the phenomenon there? 

Mr. VILSACK. Well it is happening, and of course, it happens in 

a number of other industries. But the bottom line here is what we 

really need, and the conversation needs to focus on creating a system where the Canadian Government can’t manipulate the system 

to impact and affect. We need predictability. We need transparency. As I said earlier, you can’t expect American processing facilities to be expanded or built if they are counting on a Canadian 

market to change every 2 or 3 months. And this is not the first circumstance. Class VII or Class VI are not the first circumstance of 

changes. They change product standards. They change the way in 

which they calculate whether quotas are being met. It makes it inVerDate Aug 31 2005 12:02 Aug 31, 2017 Jkt 041481 PO 00000 Frm 00076 Fmt 6633 Sfmt 6601 P:\DOCS\115-11\26495.TXT BRIAN
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credibly difficult and unpredictable for our industry, and so our 

hope is that this modernization conversation allows us to fix these 

problems, because they have been serious—— 

Mr. GIBBS. Maybe Mr. Brosch might want to comment. I know 

it is experience mostly about NAFTA, but with TPP gone, bilateral 

agreements that the Administration talks about, it seemed to me 

that the two countries that we ought to be having serious discussions with would be Japan and Great Britain. Am I correct in that? 

Mr. BROSCH. For us, Japan was the big win in TPP. The problem, of course, as you realize, Congressman, I did trade negotiations for a number of years, is that it is never a one-way street. 

Mr. GIBBS. Yes. 

Mr. BROSCH. And the problem was in the TPP, which is a plurallateral agreement, Japan was getting benefits from open markets 

in other countries, and so there was a tradeoff for them. Whether 

or not Japan is willing to give us access without those tradeoffs is 

going to be the big challenge. And in my discussions, I think that 

is going to be a huge challenge. The Japanese Government is going 

to have a difficult time having a benefit in a bilateral agreement. 

Mr. GIBBS. Even though that the United States is by far the largest economy in the world, there are benefits in non-ag that they 

would benefit? 

Mr. BROSCH. You are asking for my speculation. I think that is 

going to be a difficult sell. 

Mr. GIBBS. Yes, go ahead. 

Mr. GAIBLER. Well, I have actually had some discussions with 

Ministry of Agriculture, Forestry and Fisheries in Japan. They, 

clearly, want to keep the TPP alive. They are managing the TPP 

11 process. They would like to actually leave an opening for the 

U.S. to come in at some later point, but the message that we are 

going to hear from them is that they do not feel like they can get 

into a bilateral negotiation, and particularly from their agricultural 

standpoint, if they have to come in and make more severe concessions than they did under TPP, they would view that as a net loss 

and politically would not be able to support that sort of process. 

Mr. BROSCH. I just would add this, Congressman. I did the bilateral negotiations with Japan during the Uruguay Round for 4 

years, and I can tell you, this is not easy. Their agricultural sector 

is pretty sacrosanct. They import about 55 percent of their food 

needs in Japan, or at least they were at the time. This is a real 

critical matter of food security, so unless there is some big benefit 

for them, it is a very hard push to open agricultural markets. 

Mr. GIBBS. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Costa. 

Mr. COSTA. Thank you very much, Mr. Chairman. I welcome this 

discussion, and I think that the last comments that were made 

about trade being a two-way street where you have to have win/ 

wins is right on point. 

NAFTA, I hope, will be modernized and renegotiated, but I was 

very frustrated to see the narrative change over the last 18 months 

or so during the campaign year, because it didn’t accurately reflect 

the successes of NAFTA, notwithstanding the fact that we need to 

modernize it. California leads the country in agricultural revenue, 

74 

and our producers are twice as reliant on foreign trade as the rest 

of the United States. 

Let me give you some numbers. Our NAFTA partners Mexico 

and Canada account for 22 percent, 22 percent of California’s agricultural export. In 2015, for that year, Mexico accounted for $31⁄2

billion in agricultural trade, Canada, $1.1 billion. And I just think 

it is inaccurate to say that when you look over the last 20 years 

and any objective criteria that you measure it by, that it has been 

a disaster. It hasn’t. Or the single worst trade deal that has ever 

been negotiated. It hasn’t. Yes, it needs to be upgraded and modernized, but we did that in TPP as was pointed out, and it was a 

mistake to walk away from it on the first day without having read 

it or examined for what is primarily political purposes. 

Notwithstanding the rhetoric, I think that any objective analysis 

shows that when you look at job loss—and I am very sensitive to 

the job losses and to the situation with our friends in organized 

labor on manufacturing. When you contrast it to where we are in 

terms of the totality and where we want to go, the fact is, is that 

we need to renegotiate this successfully. I have serious concerns, as 

do you, whether or not we can do this in the light of a bilateral. 

Let me ask the panel members, is there any chance that a renegotiated agreement could lead to improved conditions for migrant 

agricultural workers, which we have in short supply in the United 

States, or is it more likely that the labor force will relocate in Mexico if the agreement boosts economic productivity there? Who wants 

to take a whack at that? 

Mr. VILSACK. Congressman, I will just simply say in the dairy industry, there is a level of concern and anxiety based on the failure 

for us to actually solve our immigration issue in the U.S. We have 

a broken system, and it is impacting and affecting dairy production. 

Mr. COSTA. It is affecting all of agriculture. 

Mr. VILSACK. Well, I cannot speak for all agriculture today, but 

I can with confidence—— 

Mr. COSTA. I understand that. 

Let me go beyond. I mean, we remember clearly in 2010 with the 

Mexican truck driver issue, and then last year with the Countryof-Origin Labeling. Each side has leverage. I remember it very 

clearly when tariffs went on table grapes in 2010 and cheese production in Mexico, and it took us 18 months to get those tariffs removed. And last year, both Canada and Mexico were putting the 

lists together on retaliatory activity if, in fact, we didn’t take action 

on the Country-of-Origin Labeling. 

Is it not true that there is leverage on both sides? I see headnodding. Yes? 

Mr. BROSCH. I will tell you one of our concerns in the poultry industry. 

A number of years ago, one of the companies in Mexico brought 

a dumping case in Mexico against our industry. I actually had gone 

down and testified in that proceeding. We were able, through the 

cooperation of the larger Mexican poultry industry and the Mexican 

Government to get that duty suspended. Essentially, they never applied it, but it is sitting there. It is sitting there on the books in 

Mexico, and it could be applied at any time. And our concern is 

75 

that something is going to happen in these negotiations in another 

sector—— 

Mr. COSTA. Well, it has to be a win/win. I mean, if it is we win 

and you lose no company is going to agree to that. 

Mr. BROSCH. Right. And we have had experience, Congressman—— 

Mr. COSTA. I mean, that makes good politics, but that doesn’t 

make a trade deal, maybe. 

Mr. BROSCH. Well, I am just telling you our concern right now 

is that—— 

Mr. COSTA. I share your concern. 

Let me just quickly go because my time is running out. 

Who was the big winner, in your opinion, when we walked away 

from TPP, and these countries are still trying to go ahead? 

Mr. FRAZIER. China. 

Mr. COSTA. China? Do you agree? China? Yes. I think there is 

a consensus there. China was the big winner on this. 

Mr. VILSACK. The EU also won in the dairy, because they just 

recently negotiated an agreement with Japan which gives them 

more market access and some protection in terms of GIs. 

Mr. COSTA. Well my time has expired. Thank you, Mr. Chairman. 

Hopefully we will figure out a consistent agricultural trade policy 

in the near future. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Scott? 

Mr. AUSTIN SCOTT of Georgia. Thank you, Mr. Chairman. 

Mr. Brown, as you were talking about Florida tomatoes, I 

couldn’t help but remember some of my Georgia tomato growers 

back in 2008 when they had warehouses full of a crop that had just 

been picked, and they couldn’t sell them because of a Salmonella 

outbreak that ended up being Mexican peppers. There is no telling 

how many millions upon millions of dollars farmers lost through 

my area before I was in Congress, but I remember quite well some 

of the long-term families that had been extremely good farmers 

and—— 

Mr. BROWN. We estimated $100 million was lost at that point 

and there has been no way to recover that in several court cases 

where the industry has tried to retrieve that money, but we failed. 

Mr. AUSTIN SCOTT of Georgia. It probably killed some people just 

from the stress, and through no fault of their own, no fault of their 

own. People lost, in some cases, things that it took generations to 

build, because it was literally just harvested. 

As we talk about renegotiations of NAFTA, it would be more adjustments to an existing framework, but from the standpoint of the 

fruit and vegetable growers, what do the renegotiations need to 

contain to address your concerns on trade? 

Mr. BROWN. One of the big concerns that we have, the U.S. tomato industries had a dumping case in place for 20 years. Many 

of these other commodities, especially where there is seasonal and 

perishable producers, are producing, for instance, our Florida 

strawberry industry produces about 15 percent of the fresh strawberries in the country, but they produce them from the period of 

December until about the 1st of March. They cannot avail themselves of U.S. trade law to defend themselves against the unfair 

76 

trade practices such as dumping or countervailing duty subsidization on the Mexican side of the border. And Mexico has pumped 

tens of millions of dollars into protected culture agriculture, which 

is exploding the productivity of the Mexican specialty crop industry, and it is coming back into the U.S. We need to have some way 

of allowing those industries to use the tools to defend themselves 

and create some kind of a carve-out onto the trade law and onto 

the treaty for perishable and seasonable producers to be able to 

join together to defend themselves. 

Mr. AUSTIN SCOTT of Georgia. Thank you for that, and as we go 

forward, I know we are not here to talk about the farm bill, but 

I know specialty crops is going back to that 2008 scenario where 

the government made a decision that hurt those people, basically 

bankrupted them, and I hope we take a serious look at what we 

can for specialty crops that they participate in. 

There has been a lot of discussion on the chicken issues already 

with regard to Canada, but just one more time. How do we achieve 

greater access into Canada while making sure that we don’t disrupt the market access that we currently have in Mexico, Mr. 

Brosch? 

Mr. BROSCH. That is a good question, Congressman. We thought 

that the key to this was essentially a plural-lateral agreement 

under TPP. We thought that this was our best chance to make 

progress in Canada, because Canada wasn’t interested in TPP initially until it saw all the countries that were in there, and then 

they realized they had to be at the table or they were going to be 

left out. And this really put the pressure on Canada to do something about poultry access, and it is unfortunate that we are not 

in there. We are having a hard time seeing exactly what the leverage is at the current time, and as I said, we do have a fairly significant market in Canada, even though we would like to do better. 

Mr. AUSTIN SCOTT of Georgia. Gentlemen, thank you for your 

time. Mr. Chairman, I am going to yield the remainder of my time. 

The CHAIRMAN. The gentleman yields back. 

Ms. Fudge, 5 minutes. 

Ms. FUDGE. Thank you very much, Mr. Chairman, and thank you 

all for being here today. 

We all know that there is no perfect piece of legislation, so we 

know that everything should be reviewed. It is time that we start 

to talk about reviewing NAFTA. Although, Mr. Chairman, I am 

somewhat dismayed that there is no one representing labor at this 

table, and I would just say that for the record. 

The Administration has decided that it would like to come to 

some closure on a new NAFTA agreement by sometime in the beginning of next year. Now, I mean, that might be good for a rose 

garden photo-op, but it is a much more complicated issue than just 

a few months, as is healthcare, by the way. Complicated. It is important that we make sure that the interests of U.S. producers are 

protected in whatever agreement we come up with, and so I am 

hopeful that you are taking some time to educate the White House 

on what you believe should happen with a new NAFTA. 

I think that when we sit and talk about trade, we have to be 

sure once again that we protect American interests and not other 

country’s interests. We could, indeed, come up with a new plan and 

77 

have serious damage to U.S. producers. I think all of you are saying that, and I certainly want to ask you now, what, if anything, 

are you prepared to do to make sure that this deal that your position is heard? Mr. Brown? 

Mr. BROWN. We are doing everything we can to communicate 

throughout the Administration the concerns of the specialty crop 

industries out of Florida and other parts of the country. We have 

talked with the U.S. Trade Representative’s office. We have talked 

with the White House. We have worked with our delegation here 

from Florida, and we have had the opportunity to certainly make 

people aware that all is not well when there is a $5.3 billion deficit, 

and it is on the backs of the specialty crop fruit and vegetable industry in this country. And it is American farms and American 

communities that are going to be destroyed if we don’t take steps 

to ensure that we have a free and fair trade environment where 

those enterprises can continue to feed America here with American 

products. 

Ms. FUDGE. Thank you. We are just going to go down the line. 

Mr. HAMMER. Thank you. We have been trying to carry the message to the new Administration from my member companies 

through our association and through combined efforts of many coalitions that we work with. 

A message that you heard throughout here today is while there 

is opportunity for improvements, the message of do no harm has 

been said loudly and clearly from American agriculture that is benefitting. My industry, the soy processing industry, our increase in 

value since the beginning of the NAFTA to Canada and Mexico, 

has been over $2 billion in trade this year versus trade in 1993. Because of free trade agreements that we have in the Caribbean and 

Canada and Mexico, we own those markets. We have them 100 percent of the year. We often are in a cyclical market share situation 

in other markets where South America produces at different times 

than we do, but by serving their markets year-round, we are able 

to keep our processing plants open year-round. If we were to lose 

those markets, we would be closing U.S. processing plants. We already know our members have gone down there and there is great 

angst, and we have seen our sales of soybean meal in the first 6 

months of this year in value drop 21 percent from the same period 

a year ago, and in volume drop 13 percent from this period to last 

year. They are making adjustments now. They are telling our member companies that they want their contracts to be on much shorter 

contract terms. That is not a good sign for our business. We need 

to send this signal to them that we want to continue this supply 

chain relationship that we have with both Canada and Mexico. 

Ms. FUDGE. Thank you. 

Mr. GAIBLER. Well the U.S. Grains Council that participates in 

this U.S. food and ag trade dialogue, they provided extensive comments to USTR. We provided our own extensive comments. As I 

mentioned in my testimony, we have engaged our customers, particularly the Mexican livestock and feed industry. We have gone 

down there numerous times. Per their concerns, we thought it 

made sense to have people in Congress and the U.S. Department 

of Agriculture hear those concerns, so we brought them up to do 

78 

that. In addition, we continue to have ongoing dialogue with the 

Administration. 

The CHAIRMAN. The gentlelady’s time has expired. I will ask the 

other three witnesses to submit their answers for the record. 

Ms. FUDGE. Which is fine, Mr. Chairman, but everybody else 

went over a whole minute, but I thank you very much. I appreciate 

it. 

The CHAIRMAN. Mr. Crawford for 5 minutes. 

Mr. CRAWFORD. Thank you, Mr. Chairman. I will try to make up 

for some of that and just focus on one question. 

Mr. Gaibler, prior to NAFTA, Mexico was a minor importer of 

U.S. rice, typically sourced from Asia. Since the implementation of 

NAFTA, they have become the largest market for U.S. rice, particularly important to the mid-South region medium and long grain 

production. 

In the last few years, there has been a little bit of a threat that 

they might revert back to Asian sourcing, and one of the deals, for 

example, is a side deal related to TPP where Vietnam could access 

the Mexican market duty free. 

I guess my question is does the NAFTA renegotiation process 

create any problems for that competitive edge that we have in Mexico with regard to rice that might accelerate their decision to now 

start to source from Asia? 

Mr. GAIBLER. Well I guess my response would be is that we have 

seen the growth of the Mexican livestock industry and we have 

seen their ability to gain efficiencies, economies, the size, and scale. 

A lot of it has to do because of our arrangement with us by giving 

them reliable supplies. And part of what you saw, in the TPP negotiations, was is that Mexico, like every other country, is looking to 

be a net exporter of products, including agricultural products, and 

they view the opportunity that they are efficient enough to compete 

and actually export some of those products, the value-added products, outside of their markets, and part of it was that some of the 

concessions they gained as part of TPP. But it is all under-driven 

and enlightened by the fact that our system with no tariffs and the 

ability to create the efficiencies have made that possible. And I 

would remind you that Mexico already is very aggressive. They 

have 46 FTAs already, so they know how to negotiate trade agreements and get access. 

Mr. CRAWFORD. Thank you. Mr. Chairman, I will yield my time. 

The CHAIRMAN. The gentleman yields back. 

Mr. Tom O’Halleran, 5 minutes. 

Mr. O’HALLERAN. Thank you, Mr. Chairman. 

The CHAIRMAN. Is that getting close, Tom? 

Mr. O’HALLERAN. You got it. 

Anyway, back in the Depression, my grandmother and grandfather lost their farm, and it is probably still in existence, but 

times have changed. And Mr. Brown, you had mentioned about the 

loss of family farms, and that concerns me a lot. But what concerns 

me also is the entire process that we are going through right now. 

One of you mentioned that you hope that we have this done by the 

end of the year. Well as you know, the timeline for this from the 

Administration goes way into next year, and that is without the 

complexities that have been mentioned today and the other ones 

79 

for other industries. That concerns me probably as much as the 

loss of family farms, because it is an ongoing process, and it is 

going to hurt agriculture in America. 

But I guess what I would like to know from Secretary Vilsack is 

you have been down to Mexico, so the political environment, I 

would like to hear a little bit about that, and your ideas about the 

bilateral needing to be done in a timely fashion, and if you feel that 

is going to be accomplished to make sure agriculture in America 

stays competitive. And then if you have time, some discussion on 

what you have identified clearly as the EU problem. 

Mr. VILSACK. Where there is an election in Mexico next year, 

which is prompting the Mexicans to want to conclude discussions 

as quickly as possible, but it is correct to say that this is a very 

complex set of negotiations. And the Mexicans are skilled at this, 

and they understand that they are on dual tracks. On the one 

hand, they are negotiating with us on renegotiation of NAFTA. On 

the other hand, they are negotiating with the EU on a free trade 

agreement, and they are essentially, in my view, sort of working 

off each other. In other words, they are suggesting to us well 

maybe the EU will have a better deal for us. Maybe we need to 

conclude those negotiations before we conclude NAFTA. They are 

probably telling the Europeans the opposite. And they are looking 

for the best deal for Mexico. 

So it is important and relevant for us to be able to conclude this 

agreement, particularly as it relates to things like the GIs, the geographic indications, that we talked about earlier. We don’t want to 

give the EU yet another notch, if you will, in that effort to try to 

preserve and protect common names and create a due process system. 

We face some serious competition in the dairy industry, and we 

also face an incredibly productive industry. We anticipate and expect by the year 2022 that we will have 14 million more pounds 

of dairy product that will need to be exported, or we will need to 

find a market above and beyond what we have that will increase 

domestic consumption. These export markets, these trade agreements are incredibly important in order for us to sustain the family 

farming operations that are represented in the dairy industry. 

One of the benefits of dairy is that we still have very small operations, and we have very large operations, and they are mutually 

coexisting, if you will, because of exports and because of increased 

domestic consumption. 

Mr. O’HALLERAN. I take it the need for expedited activity on the 

bilaterals is an important part? 

Mr. VILSACK. It absolutely is. I mean, when we took ourselves 

out of TPP, it essentially created an urgency in beginning and concluding bilateral discussions, not just in the context of NAFTA, but 

also in the context of some of our Asian partners. 

Mr. O’HALLERAN. Mr. Chairman, I will yield back. 

The CHAIRMAN. The gentleman yields back. 

Mr. Davis for 5 minutes. 

Mr. DAVIS. Thank you, Mr. Chairman. 

Question first, Mr. Gaibler. As in your testimony, you mentioned 

the commercialization of biotechnology that occurred after the U.S. 

ratified NAFTA. And as the Chairman of the Subcommittee that 

80 

has jurisdiction over biotechnology issues, I am really interested in 

hearing your opinion on what can be biotechnology’s future role in 

a possible renegotiation? If you could expand upon your comments. 

Mr. GAIBLER. Well yes, as Tom had noted in his testimony, TPP 

provided some foundational language on biotechnology, which was 

really kind of the first time that I am aware of that biotechnology 

was even addressed in any trade agreement, bilateral or otherwise. 

And it put—— 

Mr. DAVIS. Do you think that is a necessity in future trade agreements? 

Mr. GAIBLER. Sure. 

Mr. DAVIS. Lay it out? 

Mr. GAIBLER. Absolutely, because the markets, particularly 

China and the European Union, continue to have asynchronous biotechnology policies. The other part of what we have proposed is 

that we have tried to explain that there have been over 660 products assessed over that 20 years. Each government uses fairly similar risk assessment processes to do that, and there has been an effort to try and come up with ways to share that information in a 

way that, if a country has already adopted the proposal and the 

other country looking to approve it could say, ‘‘Yes, we will review 

that documentation. If it meets our scientific rigor, we will do that 

rather than repeating the whole process.’’ We are trying to get that 

kind of foundational language as well into this North American 

Free Trade Agreement, because, in my view, this will probably be 

our foundational document moving forward on other FTAs, and so 

we want to build on that, what we achieved in TPP. 

Mr. DAVIS. Mr. Hammer, did you have any comments you would 

like to make? 

Mr. HAMMER. As we are both in agreement, NOPA works 

through a coalition called the U.S. Biotech Crops Alliance, which 

represents from the tech company all the way through to the exporter, the greens and oilseeds. And we are very, very unified on 

this point that we need to put biotech agreements in our trade 

agreements. This is an excellent example, we wouldn’t have even 

contemplated this in 1993, of one of the areas where modernization 

is so necessary, and it does have so much to do with the marketability and fungibility of our grain trade globally. This is high priority for NOPA, and virtually everyone in our value chain. 

Mr. DAVIS. Well thank you very much for your comments. I 

agree, and I hope that we open up more opportunities for biotechnology and its growth as we move forward and have to continue to grow more food on less land with a very much growing 

population. 

Mr. Secretary, welcome back. I am glad to see you here. I am 

used to you not being surrounded by anybody and in the middle of 

the table. I just wanted to say welcome back. It was great to work 

with you, a pleasure to work with you over the last few years when 

we sat in different places in this room, and I look forward to working with you in your new capacity. 

Mr. VILSACK. Thank you. It is good to be back. 

Mr. DAVIS. So with that, thank you. I yield back, Mr. Chairman. 

The CHAIRMAN. The gentleman yields back. 

Mr. Panetta, 5 minutes. 

81 

Mr. PANETTA. Thank you, Mr. Chairman, and thanks to all of the 

witnesses for being here. I thank you for your preparation, thank 

you for your testimony. 

I represent the central coast of California, 20th Congressional 

District. As Mr. Davis knows well, it is called the salad bowl of the 

world, based on its number of specialty crops. I can tell you, when 

you are driving through Salinas from pretty much April to October, 

you want to avoid it because there is so much production, there is 

so much traffic going on there. However, in the other 5 months, it 

slows down a little bit and there is not that much production during the winter months, at least there in Salinas. But let me tell 

you, there are family farms that continue to produce and continue 

to be successful during those winter months. That is because they 

have farms in Mexico, a number of farms in Mexico. And what it 

turns out to be is sort of a complimentary relationship, their farms 

here and then the other winter months they are able to produce in 

Mexico, and so it allows them to continue to be successful, continue 

to make money which they can then invest in their farms here in 

the United States. In fact, especially there in the Salinas Valley, 

which is close to Silicon Valley, allows them to invest in mechanization, obviously, to deal with the labor issue or lack of labor 

issue that we are all facing here in the United States. 

Most of you except one person said that renegotiating NAFTA, 

you don’t want to do harm. You don’t want to do any harm to the 

production. And Mr. Brown, you are the only one I didn’t hear say 

that, and instead, Mr. Brown, I heard you say specialty crops are 

an industry under assault. And I can tell you that in the Salinas 

Valley, in the salad bowl, they are not under assault. They are actually taking advantage and benefitting from farm production in 

Mexico. 

And so I guess my first question to you, Mr. Brown, would be 

have you been to the central coast? 

Mr. BROWN. Yes, sir. 

Mr. PANETTA. Okay. Have you spoke with family farmers such as 

Bruce Taylor? 

Mr. BROWN. I am fully aware of the expansion that is taking 

place, and those expansions, Mr. Panetta, are basically managed 

ventures and investment opportunities in Mexico. What we are concerned about is the wholesale subsidization of Mexican expansion 

into other specialty crops that are basically creating excess capacity 

that is being basically grown for the U.S. market, pushed into the 

U.S. market, and it is price depressing. Your farmers are managing 

their supply and making their enterprises work as good businesses 

should, but when you release the capacity that is being built in 

Mexico in the last decade and dump it into the U.S. market at 

whatever price, as you well know, produce is sold on whatever the 

price is today is the price, because we can’t store it, and if we all 

operate under the premise you either sell it or you smell it, and 

it basically depresses prices for many of these other commodities, 

but it is a different kind of business than you are referring to out 

of the Central Valley. 

Mr. PANETTA. That is right. And so once again, have you spoken 

with the specialty crop farmers there on the central coast? 

82 

Mr. BROWN. I have not personally had that conversation with 

central coast farmers. 

Mr. PANETTA. Okay. All right, because they will tell you. I spoke 

with Kevin Murphy of Driscoll’s Farm, Bruce Taylor at Taylor 

Farms, Rick Antle, T&A Farms, Dicky Peixoto, Lakeside Organics. 

They will tell you that their production in Mexico is benefitting 

them and benefitting your family and my family by allowing us to 

eat fresh fruits and vegetables year round. 

The question was asked by Mr. Costa, the Mexican production 

that is U.S. owned in Mexico, are you familiar with that percentage? 

Mr. BROWN. I don’t have a percentage and I don’t know there is 

a percentage anywhere in existence that I have ever been aware 

of. 

Mr. PANETTA. Okay. Does Florida have farmers that have farms 

in Mexico as well? 

Mr. BROWN. Generally speaking, no. We have a very limited 

number of farmers that have some tomato operations in Mexico, 

but they are basically Florida-based operations. 

Mr. PANETTA. Understood, understood. Thank you. Thank you, 

gentlemen. I yield back. 

The CHAIRMAN. The gentleman yields back. Mr. Allen, 5 minutes. 

Mr. ALLEN. Thank you, Mr. Chairman, and again, I want to 

thank everyone for being here and talking about the importance of 

trade, particularly as it relates to agriculture and obviously, agriculture is the largest industry in my State of Georgia, and the largest industry in my district. Of course, we grow a variety of things 

in my district, the famous Vidalia onions, and some, obviously, 

fruits and vegetables, blueberries and of course cotton, peanuts, 

and Georgia is the top exporter of peanuts and poultry, and it is 

the top five exporter of cotton, pecans, vegetables, and melons. And 

according to the U.S. Census Bureau, since 2004, Georgia’s agriculture exports to Canada and Mexico have more than doubled 

from just less than 300 million to almost 720 million in 2016. 

One of the things that I hear from my constituents, and one objective that I am happy to see in this package is the elimination 

of Chapter 19. While we continue the process of renegotiating and 

modernizing the NAFTA, it is essential that we highlight the benefits to the agriculture sector. We need to look at the areas which 

some of our commodities have faced challenges. 

Mr. Brown, you have talked about the dumping issue, and of 

course, I was interested in the conversation that we had there as 

far as what California is doing versus say, Georgia, we are becoming a big blueberry grower. And what is your suggestion on how, 

as far as if we are talking about NAFTA and we are talking about 

how do we fix this issue where we don’t affect, say, California, but 

obviously, it is good for Georgia and Florida. Do you have a solution? 

Mr. BROWN. Right now in the U.S. trade law, in order for a 

dumping case to be filed, to have standing, you must have 51 percent of all like product in the country as a petitioner in that process. This basically handicaps any regional, seasonal, perishable 

producing entity. For instance, as an example, Florida’s strawberry 

industry, which is 15 percent of the domestic supply. Most of the 

83 

rest of the domestic supply comes from California, but in the period 

of the winter months from December to March when California is 

a minor producer, if a producer at all, to any great extent, we are 

competing with Mexican product coming into the country at very 

low prices, and it basically is depressing the domestic strawberry 

market during that period of time. A redefinition or a modification 

that would allow for these very specific seasonal, perishable products, things that can’t be stored, they are going to have to be sold 

in a marketplace and compete in a given time period in that marketplace, for those industries to have what every other industry in 

this country has the privilege of having, which is the right to defend themselves from unfair trade practices. And we are not saying 

close the border, we are just saying if you are dumping stuff in this 

market at less than your cost of growing it, that is an unfair trade 

practice. 

Mr. ALLEN. Right. 

Mr. BROWN. And without that modification, those pieces of American agriculture are going to be ground up. 

Mr. ALLEN. Yes, okay. Good. 

As far as Mr. Brosch, you mentioned the U.S. poultry industry 

has been among America’s most important and successful production and export sectors. Of course, in Georgia we are top exporter 

of poultry out of the port of Savannah. 

You mentioned in your testimony the past decade two of our five 

most important poultry export markets have been Mexico and Canada; however, Canada has a supply management for poultry. Can 

you give us more of an explanation of that, and how to fix U.S. exports for poultry? 

Mr. BROSCH. Canada manages the border through limited 

quotas. We don’t have tariff-free trade into Canada like we do on 

all other products, except dairy and poultry. They have been exempted under their WTO reservation and they have been able to 

maintain that, so we only get a small quota. Our quota is something in the order of 7,000 or 10,000 tons into Canada, very small. 

However, we do sell other products into Canada. We have managed 

to sell products that aren’t limited by that quota. The big one I was 

talking about, to give you an example, is fowl, spent fowl, which 

goes in the processed product category into Canada. 

Despite that limitation, we still have Canada as our number two 

market. It is surprising to most people, but that is the way it is. 

We would like more access into Canada. We certainly would like 

that, and we thought that we were on that track in TPP, but unfortunately, we are not there anymore. 

Mr. ALLEN. Okay. Thank you. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Lawson, 5 minutes. 

Mr. LAWSON. Thank you very much, Mr. Chairman. Welcome to 

the Committee. 

Gentlemen, and especially Mr. Brown, I reside in north Florida, 

same as Congressman Dunn, and it gets cold up in north Florida, 

unlike when we talk about some areas in south Florida where Mr. 

Yoho is, central Florida. But we are still able to get out about two 

crops a year, our tomato growers. And when I talk to the tomato 

growers up there, they are really concerned about the NAFTA 

84 

agreement. And so like when Mr. Allen talked about in Georgia, we 

are right there on the border. I have some tomato growers who are 

growing tomatoes in Florida, and then they are also growing them 

on the other side of the line in Georgia. How would this NAFTA 

negotiation help or hurt those tomato growers that we have in 

north Florida? 

Mr. BROWN. If we have the ability to improve the capacity to enforce trade law aggressively in that treaty renegotiating process, 

there is a dumping case that has been in place for 20 years for the 

U.S. tomato industry that was filed a couple of years after NAFTA 

was enacted. If that suspension agreement, which is currently in 

a suspension agreement from that dumping case, if there was aggressive enforcement to where we didn’t have a lot of circumvention and price suppression due to that circumvention, it would improve the well-being of those tomato growers, and Mr. Williams 

would enjoy a better marketplace in his operation there in Quincy. 

Mr. LAWSON. Okay. You know who I am talking about. 

The other thing asked a great deal about is how the immigration 

issue is going to affect them, because they won’t be able to get the 

tomatoes out of the field because we can’t get a lot of the people 

there to want to go and get these crops out of the field, and it directly affects them. Immigration: I know the President talks about 

it a great deal, but it is very critical up there in Gadsden County. 

Mr. BROWN. It is extremely important that we resolve our issue 

of an agricultural workforce in this country, because most all of the 

fruits and vegetables in this country are hand-harvested. And without that workforce, which basically puts food on the table for America, we are going to have problems, going forward, with those agricultural entities surviving. 

Mr. LAWSON. Okay, and one other question to the panel, and I 

support the NAFTA, but I am concerned about the focus on education and how education with our 1890 institutions can be utilized 

in research to help us attract more individuals into the agriculture 

industry, and what kind of research that can be provided to promote the industry where some of the other people don’t want to go 

into it, but we need the research in order to maybe help these institutions attract more people to it. Can anyone elaborate on that 

with the time that I have left? 

Mr. BROSCH. I can tell you one thing that we have done in the 

poultry industry, Congressman. 

We recently renegotiated our access to South Africa under the 

African Growth Opportunity Act. We had trouble getting into 

South Africa, and we recently renegotiated. And part of that renegotiation, we agreed to support students from South Africa who, 

especially the historically disadvantaged students in South Africa, 

and we are bringing some of them to agriculture colleges in the 

United States to train. I think that is a good model. We could use 

that model in the future in our NAFTA negotiations to look for opportunities that are similar. 

Mr. LAWSON. Okay, thank you very much. One thing I am going 

to say, when you are talking about Mr. Williams in Gadsden County, he told me this a couple weeks ago that we can’t do anything 

with the dumping that is coming in from Mexico. We don’t have the 

85 

authority to do anything. I am just going to cut to Mr. Brown 

where you can just say something one more time. 

Mr. BROWN. We have had a dumping case in place for 20 years 

and I will give credit to the Mexican Government and the Mexican 

industry. They are a fierce, aggressive negotiators and competitors, 

and we continue to try to ensure that the domestic tomato industry 

survives going into the future. 

Mr. LAWSON. Okay. Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Faso, 5 minutes. 

Mr. FASO. Mr. Chairman, thank you, and I appreciate the panel 

being here. It really has been a very timely and instructive set of 

presentations, and I appreciate that. 

Governor Vilsack, I wanted to ask you about a topic that you and 

I also appreciate having an Albany Law graduate here as well. 

There are a lot of people in my marketplace that are Albany Law 

folks. 

Your testimony, you go into great detail about the Canadian 

trade practice on ultra-filtered milk and the barriers, Canadians 

don’t call them that, but the barriers, in essence, that the Canadians are putting to the import of ultra-filtered product from the 

United States and its impact now on the export market to countries that we would typically be exporting to as well. What is incomprehensible to me is how Canada can, with a straight face, get 

away with this, and how this doesn’t run afoul of existing trade 

agreements that they have adopted. Could you expound on this a 

bit and give us some advice as to what you think the Committee 

should do and what the U.S. Trade Representative should do about 

this topic? And I have 3 minutes and 36 seconds left, and if you 

could give us that answer in that time, I would appreciate it. 

Mr. VILSACK. Congressman, I would start by saying that if the 

Canadians were here, they would say ‘‘Well gee, what is the problem here? Exports from the U.S. have gone up.’’ It is a little bit 

misleading for them to use that talking point, because in essence, 

what happens is product is exported into Canada and then re-exported outside of Canada back into the United States in a valueadded proposition. It is not what we traditionally think of exports 

where you export a product and it is consumed in the product that 

you are exporting to. 

This is an issue where the Canadians have essentially evaluated 

their market and when they see the U.S. making in-roads, the 

rules change. They create a new class, they change a product specification, they redefine a product so that it will now qualify for tariffs as opposed to being duty free. It is a constant battle that we 

have been engaged in, in trying to open this market up, and trying 

to educate the Canadian consumer that they are really paying a lot 

more for their products than they would have to if there was a 

freer trade arrangement. 

It also has an impact because of the incredible increase in butter 

consumption, this has created a glut of powder, milk powder, and 

normally that milk powder in Canada would have been fed to livestock, but there is so much of it that what they should be doing, 

obviously, is providing an opportunity for the U.S. to export into 

their country, import into their country. Instead, what they have 

86 

done is they have basically put it on the open market at a price 

lower than the world market, which is depressing overall powder. 

And that is why the ten leading dairy global associations have 

come out and said look, this is a problem in New Zealand, it is a 

problem in the EU, it is a problem in the United States because 

it is depressing unfairly the market. 

There can be a lot of conversation about the letter of the law, but 

clearly the spirit of a number of agreements that Canada has entered into we think are severely tested by this approach, agreements that they have made in the past. And that is why this renegotiation is so critically important. Let us get a much more predictable, transparent process. Let us get more stability in the process, and let’s open up the markets. Let’s take a look at ridiculous 

tariffs that are currently in place in Canada. The over quota tariff 

for food and milk is 241 percent. For butter, it is 298 percent. For 

cheese, it is 245 percent. I mean, there are multiple opportunities 

here for us to have a much better relationship with Canada as it 

relates to dairy. And if we had that, then there would be greater 

predictability, there would be greater stability for our producers, 

and consumers in Canada would benefit. 

Mr. FASO. And what are consumers in Canada paying for fluid 

milk as compared to the U.S.? 

Mr. VILSACK. Well it is significantly higher, and that is why you 

will see in border communities people traveling across the border 

to essentially purchase in the U.S. Now what is interesting about 

this is there is a quota system, and the Canadians are basically 

saying for fluid milk look, our consumers are coming across the 

border and purchasing milk in the U.S., and that satisfies our 

quota. Well wait. They are not even tracking that. They are not 

even keeping track of that, so how can they say it satisfies the 

quota? 

Mr. FASO. Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Soto, 5 minutes. 

Mr. SOTO. Thank you, Mr. Chairman. 

We all know the history of NAFTA, filed and passed by a Republican Congress, signed by a Democratic President in 1991, and setting aside the manufacturing decline that happened, agriculture 

has really been kind of a mixed bag. We have seen the big guys 

get bigger, the small guys get smaller, even go out of business, and 

a lot of that has to do with the scale they are operating on or the 

ability to really withstand unfair trade practices that have occurred 

over the years through some other members of the coalition. 

I want to start out with you, Mr. Brown. First of all, welcome. 

I am no stranger to Maitland. It is just a few miles north of our 

district, and part of that wonderful place we call central Florida. 

I want to go through some specifics based upon your report about 

things that you think there is already existing language in NAFTA 

you could work with, or things that need to be changed in your 

mind. 

First, with regard to subsidies and incentives provided by the 

Mexican Government to their producers, are there sufficient provisions in NAFTA, or do we need to look at changing areas with regard to helping out our growers in Florida? 

87 

Mr. BROWN. One of the important things that needs to be addressed, as we talked about earlier, is this seasonable perishable 

issue to where the Florida industry could defend itself against 

those unfair trade subsidies with the countervailing duty case. If 

you had to go to a national countervailing duty case, not only do 

you have to round up all the producers, or 51 percent of all the producers of the product that is defending itself, but you also have to 

prove injury to that entire body of producers. And many of these 

problems are very specific to time periods of market dumping or 

market subsidization of product going into a specific market. So 

that would be a major adjustment in that process would be having 

the ability to do that, to use those tools that most everybody else 

is entitled to in the country. 

Mr. SOTO. Regional standing, especially with the fact that we 

have that window in wintertime that a lot of our fruits and vegetables really try to hit that mark. What about with labor costs being 

at ten percent of what we are paying here in the United States 

down in Mexico, and in addition to whether that is going to be 

helpful, do we have to make a change, or are there sufficient laws 

in the books for NAFTA already? 

Mr. BROWN. The labor standards that are currently in place don’t 

really address the real labor issue for fair working conditions and 

standards of living and this sort of stuff, and minimum wages in 

Mexico like we have here in the U.S., and they would make some 

significant adjustment to that. And in addition, there is also the 

issue of the evaluation of the peso over the course of the 20 years 

to where there is a very strong pull of product coming into the U.S. 

simply because it is trading in dollars and working that workforce 

for pesos and buying materials and inputs would devaluate pesos, 

which is a very significant advantage as well. 

Mr. SOTO. We are talking about dumping, labor costs, currency 

manipulation, subsidies, these are sort of the nuts and bolts of 

what we are facing right now? 

Mr. BROWN. It makes our business a very challenging business 

in Florida. 

Mr. SOTO. Absolutely. 

Secretary Vilsack, I know you have a real global perspective on 

all this. Is there a balance we can strike with a lot of folks who 

are succeeding under NAFTA and those who are facing some obstacles? 

Mr. VILSACK. There is an instructive example for dairy at least 

in Mexico where we see this as a partnership. The Mexican producers have, at times, felt threatened by the U.S., and oftentimes 

there is this belief that somehow U.S. agriculture is going to come 

in and essentially overwhelm the domestic agriculture. 

What we have done in dairy is we have said look, we are here 

to try to build demand for product in Mexico, which we know will 

help your producers, but will also create an export market for us. 

And that is precisely what has happened. Production in the last 

decade in Mexico has increased by 58 percent in dairy, their own 

producers, but that has been more than enough overcome by increases in consumption. 

88 

There is a way in which we can continue to find ways to mutually benefit from trade. It has to be a two-way street; otherwise, 

at the end of the day, it is not going to be particularly effective. 

Mr. SOTO. Thank you, and just finishing up, Mr. Frazier, do you 

think we could strike a balance with cattle as well and other big 

product from our district? 

Mr. FRAZIER. Excuse me, someone was whispering. Can you repeat what you asked? 

Mr. SOTO. Well, I guess my time has expired, but thank you 

though. 

Mr. THOMPSON [presiding.] The gentleman’s time has expired, 

but I certainly encourage you to maybe submit that for the record 

so that you would be able to get a response in writing. 

I will take the liberty of my 5 minutes here. Every pun intended, 

I am going to continue to milk the dairy issue with you, Mr. Secretary. 

There has been some heated rhetoric on all sides of the trade debate in the last few years, and it is important for our trade-dependent sectors of the economy to communicate the benefits that we 

have from trade. How do you see the importance of trade for the 

next 10 years for the dairy industry, and what do we need to do 

as a country to help you achieve your goal? 

Mr. VILSACK. In the dairy industry, the U.S. dairy industry, the 

image of the industry around the world historically has been one 

that has been an industry focused primarily on the domestic market. Over the last decade or so that has begun to change, and in 

many markets, there is now a recognition that U.S. dairy is in the 

export game to stay. We have to continue to increase our presence, 

both physical presence, more people, more capacity in some of these 

export market opportunities, to send the message that we want to 

compete effectively with New Zealand, effectively with the EU. 

It is important and necessary that we obviously have trade 

agreements that are fair, that are transparent. There is a classic 

example here with what is happening in Mexico where we see 

nearly a nine to ten times increase in export opportunities for dairy 

in Mexico versus what is happening in Canada where the rules consistently change. If we could get the same kind of opportunity in 

Canada that we have in Mexico, obviously that would be beneficial. 

Here is the issue, Congressman, and you know this better than 

anybody because of who you represent in central Pennsylvania. 

Great dairy producers. They are going to continue to produce more 

milk, somewhere between a percent to a percent and a half more 

each year. Domestic consumption can increase, but we want the opportunity also to stabilize markets through exports. And so if we 

can increase presence, increase capacity, and change the image of 

American dairy globally and get fair trade agreements, we will do 

very, very well in the next 10 years. 

Mr. THOMPSON. Keeping with that theme, and you had mentioned about Mexico, Canada, in terms of the whole, you have articulated clearly the importance of NAFTA modernization. We had 

that conversation when you first came in. Quite frankly, most of 

my staff were not alive when NAFTA was negotiated, so having 

something that has an element of staying current and modernization is important, no matter what the trade agreement is, because 

89 

the world is changing around us. Certainly the industry of agriculture changes around us. And you have talked about the importance of NAFTA modernization for the dairy industry, as well as 

the value of seizing the moment, negotiating additional trade 

agreements with our potential partners around the world. 

I think the two go hand in hand. Would you agree that NAFTA 

modernization process will directly impact our ability to make good 

progress in equally critical areas of the world, such as with Japan, 

Vietnam, and others? 

Mr. VILSACK. Well the hope would be that we would contain in 

NAFTA renegotiation and modernization specific provisions relating to SPS, sanitary and phytosanitary rulemaking, the ability of 

making sure that we protect the use of common names for cheeses, 

for example. All of that can have an impact on future bilateral discussions. The more market access we get, the better off we are to 

make that case in other, more closed market opportunities. 

Clearly, there is a benefit here, and that is why it is incredibly 

important, especially in the absence of the Trans-Pacific Partnership Agreement. It is incredibly important now that we engage 

very aggressively in bilateral discussions and get this renegotiation 

completed, because our competitors are not waiting around for us 

to act. They are moving forward very aggressively. 

Mr. THOMPSON. Thank you, Mr. Secretary. 

Mr. Hammer, you stated that U.S. soybean exports have grown 

significantly over the past 23 years. Where do you see opportunities 

for growth and trade with Mexico and/or Canada? 

Mr. HAMMER. It will be primarily a demand growth, a population 

growth. It is basically unfettered now. In Canada we have indicated some opportunity for some poultry, egg, turkey, dairy growth. 

We are growing in the United States’ consumption, and it will continue to grow. For example, as incomes rise in Mexico, you will see 

them go from maybe an egg diet to a poultry diet or on up the line, 

and you will continue to see these opportunities grow with the 

growth and as the economy grows and as the opportunities for the 

individuals within our three countries grow. 

Mr. THOMPSON. Thank you very much. My time has expired. 

I am pleased to recognize the gentlelady from North Carolina for 

5 minutes. 

Ms. ADAMS. Thank you, Mr. Chairman, and thank you, Ranking 

Member Peterson, for hosting this hearing and thank you all, gentlemen, for your testimony. 

First of all, free trade agreements inevitably create winners and 

losers in our economy. Some industries like agriculture, for example, are able to reap the benefits of trade through access to new 

markets and lower prices, and other sectors, like the textile industry in North Carolina comes to mind, trade leads to displaced jobs 

for increased competition and offshoring. And North Carolina’s textile industry lost 82 percent of its workforce since the mid-1980s. 

In Charlotte alone, 34,200 jobs were lost in the textile industry 

since NAFTA, and NAFTA had a massive negative repercussion on 

my state’s economy. According to the Economic Policy Institute, 

North Carolina was one of the hardest hit states in our country, 

sustaining some of the biggest net job losses. 

90 

Secretary Vilsack, how can we balance these competing needs to 

maximize the benefits for our agriculture sector while minimizing 

harm to manufacturers, to small businesses, and to middle class 

Americans? 

Mr. VILSACK. Well, Congresswoman, one of the hallmarks, at 

least from the dairy perspective, and why we have been able to be 

competitive and maintain a favorable balance is because of innovation, the ability of our industry to adapt to the needs and specifications of customers around the world. Ninety-five percent of the 

world’s consumers are outside the U.S. There will be growing populations and growing middle class in many parts of the world where 

it plays to the strength of American agriculture. I would say one 

strategy for dealing with trade generally is to make sure that 

America remains a place of great innovation, and certainly in agriculture, that has been true. 

Ms. ADAMS. Thank you. I know that agriculture is one of the few 

economic bright spots in implementing NAFTA, but I really cannot 

ignore the devastating impact that it has had on my state and my 

state’s middle class. 

Of course, this question is to anybody who wants to answer it, 

how you think that Congress can ensure that a renegotiation of 

NAFTA benefits the majority of middle class Americans? Anyone 

can answer this, or all of you. 

Mr. GAIBLER. Well, we have already identified some areas where 

we don’t want to do any harm, but where modernization and improvements are possible. I also think that one of the important aspects of the NAFTA will be that we develop very transparent dispute settlement mechanisms. In our part of agriculture, we worry 

that Article 19 may be removed because it is an insurance policy 

that we don’t have to have unfair anti-dumping or countervailing 

duty trade cases brought against us, but we have also heard some 

areas from testimony today where our partners on the other side 

of the border may be using unfair trade practices. 

A really robust dispute settlement mechanism to make sure that 

fair competition is taking place is a part of this agreement, and to 

that end, we would certainly not want to see Chapter 11 or Chapter 19 removed. Thank you. 

Ms. ADAMS. Anybody else like to comment? 

Okay. Let me ask then, Mr. Brosch, according to the Wall Street 

Journal, friction between the U.S. and Mexico over trade is starting to cut into the sales for U.S. farmers and agricultural companies. In the past 4 months, Mexican imports, chicken, meat, fell 11 

percent, the biggest decline for the period since 2003. Do you have 

faith that the Trump Administration will be able to renegotiate 

NAFTA without causing irreparable harm to our agriculture trading relationships? 

Mr. BROSCH. Congresswoman, we had somewhat the same experience that these gentlemen have talked about when the President 

announced he wanted to renegotiate NAFTA. We suddenly had a 

number of buyers who were looking to differentiate their supply. 

Traditionally, I have been told by the folks I have dealt with in 

Mexico that they sort of looked at us as their big brother. Their 

sort of pushy big brother, but their big brother, and I have also 

been told that since that announcement, they are not going to look 

91 

at us the same way ever again. But they are looking at Brazil. 

They are looking at other sources of supply, and unless we move 

quickly, as Secretary Vilsack suggested, to get this negotiation 

closed and get this improved and get it back on the books, we are 

going to have uncertainty in Mexico and we are going to have people looking at other possible suppliers, even for the things we are 

most competitive for. 

Ms. ADAMS. Thank you, sir. I am out of time. I yield back, Mr. 

Chairman. 

The CHAIRMAN [presiding.] The gentlelady’s time has expired. 

Mr. Marshall, 5 minutes. 

Mr. MARSHALL. Thank you, Chairman. 

My first question is for Mr. Frazier. Mr. Frazier, I have done 

about 40 town halls, 20 round tables, been to 30 or 40 ag-centric 

operations. And when I went back, I was expecting to talk about 

a farm bill. I think we are going to try to get that sometime this 

year. But the number one issue has been trade. Trade, trade, and 

trade. Nothing more important to my district than NAFTA. It is 

our number one revenue generator in an economy that is 60 percent agriculture-related. What is the number one concern for the 

beef industry? 

Mr. FRAZIER. It would be do no harm in these negotiations. Don’t 

do anything that would disrupt, from our perspective, trading in 

beef with Mexico and Canada. Both those markets are worth $2 

billion a year to our U.S. industry, so that would be my number 

one concern with NAFTA is do no harm. 

Mr. MARSHALL. But trade in perspective to farm bill—2 years 

ago, all the farmers and the ag producers talked about was overregulation. Do you get a feeling that maybe that NAFTA is a bigger 

concern now than even over regulations, your industry? 

Mr. FRAZIER. I would say there is both, concern about both of 

those. Things like WOTUS, some of those types of issues, there is 

a lot of concern about land owners, and obviously, our industry 

owns a lot of land. But trade is also a big issue, so I am not going 

to pick one of those and say one is more important than the other. 

They are both important. 

Mr. MARSHALL. Mr. Gaibler testified, I believe, earlier about that 

we are actually seeing decreased corn sales already because of 

some of the just concern that our markets were dependent on. Are 

we seeing any of that yet in the beef industry with Mexico and 

Canada? 

Mr. FRAZIER. Not yet, although in conversations with Canadians 

and Mexicans, they are concerned about some of the rhetoric that 

they hear in the United States about NAFTA. 

Mr. MARSHALL. Okay. My last question, we have had the pleasure to sit down with three different groups from Mexico, grain purchasers, meat purchasers. Describe to me again a little bit the type 

of cuts of beef that we are sending their way and coming back and 

forth. 

Mr. FRAZIER. To Mexico we send a lot of products like rounds, 

skirts, tongues, intestines, products that we traditionally have not 

consumed a lot in the U.S. To Canada, we send more of a high 

quality, ribs, loins, into the Canadian market. 

92 

Mr. MARSHALL. Okay. Mr. Gaibler, you, at least I saw in some 

of your testimony, you talked about the value of the peso versus the 

dollar. Was that your testimony, or was in one of your drafts? 

Mr. GAIBLER. No, I didn’t reference that, though obviously, it is 

an important issue. The fact is, it is part of the reason why it is 

feasible, or at least potentially feasible for Brazil to actually potentially export into the Mexican market, because they don’t have duty 

free access. Their transportation costs are higher. In fact, they 

have some internal programs that subsidize the movement of corn, 

so I didn’t mention it, but it is clearly an issue for every one of our 

industries represented here. 

Mr. MARSHALL. Does anybody want to expand on that a little bit? 

Mr. BROSCH. Well after the Administration announced that there 

was going to be a renegotiation of NAFTA, the Mexican peso fell 

against the dollar about 25 percent, and that had nothing to do 

with currency manipulation. That had to do with the perception of 

the markets and of what the effect on the economy is going to be. 

Well that makes it much more difficult for Mexicans to buy American chicken or American beef when their currency falls against the 

dollar. So yes, that has had a big impact. 

Mr. MARSHALL. Mr. Gaibler, I will follow up with you. I am sure 

you are looking in the future further than I can look into it. You 

have experienced a six or eight percent drop in corn sales, you 

mentioned. Secretary Purdue has been a proponent, a strong advocate for trade. Looking into the future, do you feel like we are stabilizing that situation or does there continue to be a drop in the 

future with Mexico and corn purchasing? 

Mr. GAIBLER. Well, we have done some long-term economic forecasting with our economists, and looking 10 years down the road, 

and Mexico shows up as the one or two, depending on which assumptions you use of the market, long-term. And so if you look at 

the other countries that show up, some of them we have free trade 

agreements with, but some of them we don’t. In either instance, for 

us, our ability to tap into those markets, whether we have FTAs 

or we don’t, that is going to be the lynchpin here of our success in 

continued exports of corn but also the value-added to products that 

come from that. Frankly, Japan, the EU, and others are going to 

look at these negotiations very closely and make a determination 

based on whether they are successful, or if they go off the rails. 

Mr. MARSHALL. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Dunn, 5 minutes. 

Mr. DUNN. Thank you very much, Mr. Chairman. 

Mr. Brown, I frequently hear from stakeholders around the country about the high stakes of losing ground, losing what we have 

gained in NAFTA in the course of a renegotiation. I understand 

their point; however, the fruit, vegetable and sugar sectors, sectors 

that compete directly with Mexico and affect us in Florida, have 

competed on an unlevel playing field for a number of years. And 

as a matter of fact, some of these are sort of under an all out assault from Mexico. We share the same latitude with Mexico, so 

Florida is at greater risk with seasonal variation than other states 

in other parts of the country would be. Would you share with us 

93 

some of the special vulnerabilities that Florida has and how you 

see that affecting us? 

Mr. BROWN. Well that seasonal overlap, Mr. Dunn, is very, very 

critical to the fact that Florida was identified 24, 25 years ago 

when the treaty was originally negotiated as the state that was 

going to lose the most in the fruit and vegetable industry, and I 

can attest to you that we have. 

But the reality is with the investment that has been driven by 

the Mexican Government in the last 10 years in protected culture, 

greenhouses, tunnels, various kinds of saran shades, they have 

simply expanded their season on both edges to where historically 

we competed with them from December to March. Now the competition from Mexican tomatoes, in particular, which I am very familiar with, is now a year-round competition with all the tomato 

producers in the United States. And that is why the domestic industry has lost 40 percent of its volume that it had in production 

when NAFTA was signed, and why we have lost 25 percent of the 

acreage of fresh tomato production in this country to that competition. It has basically been supported, and it is fundamentally targeting the U.S. market with that product, trying to build up that 

rural economy in Mexico, and we are suffering from it. 

Mr. DUNN. Thank you very much. 

I understand there are portions, and I want all of you to be 

thinking about this, portions of the TPP may be a template for the 

NAFTA renegotiations, so I want to know in your various sectors; 

and we will start with you, Mr. Brown, that what language in the 

TPP that might guide the Administration as they work to address 

the concerns of first fruits and vegetables and cattlemen and poultry and whatnot. So take it away, 21⁄2 minutes. 

Mr. BROWN. Well basically the directive was basically in the 

Trade Parties Accountability Act of 2015 or addressing the issues 

and eliminating practices that adversely affected trade in perishable and cyclical products while improving import relief mechanisms to recognize the unique characteristics of perishable and cyclical agriculture. Ensuring that the import relief mechanisms for 

perishable and cyclical agriculture are as accessible and timely to 

growers in the U.S. as those mechanisms that are used by other 

countries, and seeking to develop an international consensus of the 

treatment of seasonal or perishable agricultural products in investigations relating to dumping and safeguards—— 

Mr. DUNN. He was prepared for that question, wasn’t he? Let’s 

ask the cattlemen if they have some specific wording in the TPP 

over the renegotiation of NAFTA. 

Mr. FRAZIER. From our perspective, TPP, the greatest benefit to 

the beef industry in the United States was taking down tariffs in 

Japan and letting us be more competitive with the Australians and 

New Zealand. We already have zero duties and tariffs on products 

going into Mexico and Canada, so I really can’t think of anything. 

Mr. DUNN. Very good. Mr. Brosch? 

Mr. BROSCH. Well, like the beef industry, we were interested in 

Japan. Japan was the big win for us. We were also interested in 

improvements of the SPS text. We don’t think that the TPP SPS 

text is perfect. There are a couple of things that we don’t like about 

it, but overall, we think it has some real promise for improvements 

94 

in the NAFTA, and then we thought that we would have some additional access into Canada as well as a result of that negotiation, 

as I have mentioned before, but that seems to not be an opportunity anymore. 

Mr. DUNN. Anybody have, yes, Mr. Secretary? 

Mr. VILSACK. Yes, geographic indications was basically dealt with 

in the TPP agreement that provided a due process and a protection 

for common names. That would be something that we would like 

to see placed in this modernized NAFTA agreement. 

Mr. DUNN. Thank you very much. Mr. Chairman, I yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. LaMalfa. 

Mr. LAMALFA. Well thank you, Mr. Chairman. Thank you, panelists, for being here today. I wanted to come from another hearing, 

as is fairly typical. 

So modernizing NAFTA would be very helpful. The ag economy 

has prospered pretty well under it, so I hope we can be optimistic 

about the discussions underway. So let me go to Mr. Frazier. 

In terms of the benefits, what gains in NAFTA negotiations 

would you be looking for, notably important for beef specifically, 

that may come from future deals, future negotiations for open access? 

Mr. FRAZIER. Well as I said in my testimony, Congressman, I 

really think that we are in a good place in the beef industry and 

NAFTA right now, because we don’t have tariffs on products going 

into Mexico and Canada. They are two of our top five markets for 

beef in the world. We have good relations with both those countries. We have good relations with importers in those countries, so 

in any renegotiation, I just think we are in a really good place right 

now. 

Mr. LAMALFA. Do you think anything in future negotiations 

could be harmful? Do you see much threat of that? 

Mr. FRAZIER. I mentioned one, if there was an effort to bring 

Country-of-Origin Labeling back on the table that could be, because 

that would result in the Canadians and Mexicans putting tariffs on 

our products. 

Mr. LAMALFA. Yes, believe me, we have heard all about that. 

That was a difficult deal. 

Well, I think that pretty much does it. The magnitude of additional trade and export for the industry, it seems as if it is just taking off more and more on international trade. Can you touch on 

that just a little bit? 

Mr. FRAZIER. Sure. We feel really good about it. Right now, we 

are exporting about 13 percent of our production overseas. 

Mr. LAMALFA. Fourteen? 

Mr. FRAZIER. Thirteen to fourteen percent. It varies month to 

month. We think over the next 5 to 10 years we could move that 

over 20 percent, maybe even to 25 percent. China just opened to 

U.S. beef. Now there are some restrictions on the kind of product 

that we can send to China, which limits some of that, but we think 

long-term that is a great market. It has a lot of potential for us. 

Mr. LAMALFA. They have opened up to rice too, so I am seeing 

this as a pretty good partnership. We can move those potato guys 

aside a little bit. 

95 

Mr. FRAZIER. We just think that there is a growing middle class 

around the world that desires U.S. beef. We have a unique product. 

It, as we all know, it tastes great. Consumers around the world, 

when they get to experience it, they love it. We just think it is a 

great opportunity for U.S. cattlemen in the future. 

Mr. LAMALFA. Okay, thank you. Well I hear a lot of talk about 

stakeholders, but you are the kinds that I like, so thank you very 

much. 

I am going to yield back, Mr. Chairman. 

Mr. FRAZIER. Okay, thank you. 

The CHAIRMAN. The gentleman yields back. 

Mr. Yoho, 5 minutes. 

Mr. YOHO. Thank you, Mr. Chairman. I appreciate the panel 

being here, and your endurance of being able to stay this long. 

NAFTA: there have been some wins with that and there have 

been some losses with that. And I come from Florida, and we went 

down to Homestead, Florida, and we visited the tomato region. And 

we used to get two to three crops. We produced about 60 percent 

of the tomatoes in the nation, and NAFTA really hurt the specialty 

crops. Florida is a specialty crop state with over 300 different specialty crops. And as we negotiate NAFTA, and Mr. Brosch, it 

sounds like you have done a lot of the negotiations. 

I had the opportunity to go down to Mexico and we met with the 

finance minister currently that had negotiated NAFTA, and we 

were talking about some of the wins and some of the losses. And 

what we saw were the losses in the tomato industry where the 

farmer’s grandson up in America wanted to take over the business, 

but there wasn’t a business to take over. And we got in a little bit 

of a heated debate down there. And the other thing was the sugar 

policies where Mexico dumped sugar on it, and the minister admitted that they did dump and he apologized for it. 

As we go forward and as you negotiate, and Mr. Hammer, you 

brought up to have robust reforms in there so that we can negotiate and settle these disputes, these trade inefficiencies better. 

What is your recommendation to put into the new NAFTA to where 

we can call people out when we know they are cheating or doing 

unfair practices? What would you recommend that we put in there 

to make it a lot more efficient so it doesn’t drag on for years? 

Mr. HAMMER. Well I just think that has to be a focus, because 

I think that is going to be the hallmark. I know at one time there 

was a group of us that had lunch on a monthly basis, and we were 

commodities that had all faced what we thought was frivolous antidumping or countervailing duty cases from Mexico. They were unsubstantiated, but they were brought basically because they were 

trying, it was apples. It was corn—— 

Mr. YOHO. Corn syrup. 

Mr. HAMMER. Corn syrup, right. It was meat. We were being 

looked at as soybean meal. And we were kind of a group that commiserated with one another. We met for lunch monthly and said 

what are you doing to stop this? We can look at some of the history 

of that and learn from that. 

Mr. YOHO. Well, and I have heard over and over again that Mexico is very astute and very sharp at trade. I hope that we have 

those things in place. 

96 

I want to go to you, Mr. Brown. We have talked extensively on 

the tomato issue. What does it cost you to produce a box of tomatoes here domestically? 

Mr. BROWN. Domestically in the Florida production cycle, we are 

looking at a cost of about $10 for a 25 pound box. 

Mr. YOHO. That is the cost of the box, the labor, the tomato 

itself? 

Mr. BROWN. That is put the box on the back of the truck. 

Mr. YOHO. What is Mexico selling a box of tomatoes here for? 

Mr. BROWN. Right now under the suspension agreement, they 

are not supposed to be selling a 25 pound box for less than $8.30 

at the border. 

Mr. YOHO. What are they selling it for? 

Mr. BROWN. The problem we have is because of circumvention 

and erosion of the enforcement process, you will see Mexican tomatoes in our terminal markets for $5 or $6 at various periods of 

times a year. 

Mr. YOHO. That is almost under the cost of production, isn’t it? 

Mr. BROWN. It is significantly less than the cost of production; 

however, in addressing the issue of enforcement and how dumping 

agreements work, the Commerce Department in the 20 years of the 

case have never actually collected the cost of production from the 

Mexican industry, and the industry has refused to provide it to the 

Commerce Department. 

Mr. YOHO. And that is a safeguard that needs to be in the next 

NAFTA negotiation. 

Mr. Brosch, I want to come back to you because as labor, yes, go 

ahead. 

Mr. BROSCH. What he is talking about isn’t changes to NAFTA. 

He is talking about changes to domestic law. We don’t have a 

dumping mechanism in NAFTA. What we have is we have a recognition of the ability of countries to use their domestic law. What 

Mr. Brown is really talking about is changing the domestic dumping law and dumping procedures, not about—— 

Mr. YOHO. Here domestically? 

Mr. BROSCH. Yes, I mean, that is the only way you can do it. 

Mr. YOHO. Okay. 

Mr. BROSCH. I mean, legally that is the only way you can do it. 

Mr. YOHO. And then when we negotiate these, they are supposed 

to have fair labor practices and the L.A. Times did a great expose ́

in 2015 about the slave labor in Mexico, and we know that is going 

on. And if we are buying from them and it is negotiated in NAFTA 

they are not supposed to use child labor. Under the age of 14, there 

are roughly 100,000 in the field documented. How do we get out 

of those kind of trade deals? 

Mr. BROSCH. Well, no one wants to see anything like that Congressman. 

Mr. YOHO. I know. 

Mr. BROSCH. I agree with you, and I am going to confess right 

here, I am no expert in the labor area at all. 

Mr. YOHO. Okay. I appreciate your time. I yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Arrington, 5 minutes. 

97 

Mr. ARRINGTON. Thank you, Mr. Chairman. The Chairman tells 

me he saves the best for last, and I am going to take him at his 

word. 

This is a big deal to ag producers all over the country. It is especially a big deal in terms of our trade partners with Mexico if you 

are from Texas. By the way, thank you all for coming, and Mr. Secretary, thank you for your service to our country. Also on a side 

note, Mr. Secretary, thank you for your support for cotton with the 

ginning assistance in 2015. We needed it, and we desperately need 

more of it to bridge us to the farm bill and get cotton back in as 

a title I commodity. But anyway, I really appreciate that. And any 

help you can give us with the current Secretary in this Administration for ginning assistance to follow, we would appreciate it. 

Do you all agree that we can improve on NAFTA, understanding 

that the sort of do no harm principle applies from the outset? But 

do you agree that for your industry, your sector of the industry 

that we could improve on NAFTA, we could enhance it in some 

way, some form or fashion? Yes, sir. 

Mr. HAMMER. Well, as I said earlier, for soybeans, soy meal, and 

soy oil, we face no duties or no tariffs of any kind. It is seamless. 

But there are always possibilities for technical barriers to trade, 

things that can come up, it can be paperwork, red tape, e-commerce 

and things like that we weren’t contemplating 23 years ago, and 

there are definitely areas where trade is taking place in different 

ways and different terms than it did 23 years ago, as it will 10 or 

20 years from now. Yes. 

Mr. ARRINGTON. Sure, and Mr. Frazier, the opening the China 

market to U.S. beef, that is a big deal, right? 

Mr. FRAZIER. Oh, yes. 

Mr. ARRINGTON. I mean—— 

Mr. FRAZIER. We have been locked out of the China market since 

2003 when we had our first case in BSE. We believe long-term that 

it offers a great opportunity for American cattlemen. 

Mr. ARRINGTON. It is a big win for this Administration and for 

our negotiator in chief to do that. Fourteen years not being able to 

enter that market, the largest market in the world. I don’t know. 

I mean, I get it. We have to be real sensitive to how we posture 

and this President needs to be sensitive about that, but I have tremendous confidence in our Administration and in our negotiator in 

chief to get a better deal for American producers and manufacturers. I think that is his heart. I think that is his intent. 

Like you said, Mr. Brown, about Mexico. I think you said it. They 

are fiercely competitive, and they are fierce at the negotiating 

table. I want American negotiators to come and negotiate from 

strength. I am very sympathetic to your industry and the story you 

have told. I mean, cotton, that resonates with me because some of 

the similar dynamics with cotton and China. I am for all American 

producers having an even playing field to compete, because I believe we will win. 

I have a few points on where reforms could apply and enhance 

the NAFTA deal. One is reducing redundant regulations. Could you 

highlight one redundant regulation that would make the biggest 

impact on this deal and the positive for your industry? Anyone? No. 

98 

Okay. I will have to take that up with the Farm Bureau then. That 

is one of theirs that they listed. 

What about expediting transit across border? Is that an area that 

we could improve on? Anybody want to talk about that? 

Mr. HAMMER. We did poll our members and ask that question, 

and we haven’t come up with anything, but we are early in this 

stage and we are going to continue to try to drill down and see if 

we can find areas where trade could be more seamless. But as of 

today, I wasn’t able to bring you any examples, Congressman. 

Mr. ARRINGTON. Okay. Well, we have to get it right, but this is 

a great opportunity. I am very optimistic about it, but we need to 

hustle and we need to get it done, and all the things you all 

brought up, I really appreciate it. I listened. I have learned, and 

I appreciate your time very much. 

Mr. Chairman, I yield back. 

The CHAIRMAN. The gentleman yields back. 

Gentlemen, thank you very much for being here this morning. 

We appreciate the perspectives you have brought for each of your 

organizations and more importantly, the producers and growers 

and men and women behind those association titles that you bring 

to us are real people, and they are really impacted. 

I had a conversation with Secretary Ross before Ambassador 

Lighthizer came in. I asked him point blank if the deals that were 

negotiated on TPP with respect to those countries, if we could consider that the floor of any bilateral deals that we do with each of 

those countries, from ag’s perspective. He said, ‘‘Yes, it would be 

the floor, and that negotiations from there would be better than 

that.’’ I know our production agriculture folks are excited. 

We have talked mostly this morning about NAFTA, but the Administration needs to be going after not only the NAFTA renegotiations, but also all of those other bilateral deals that created an opportunity for when the Administration walked away from TPP. As 

Mr. Brosch mentioned, bilateral deals are hard because you don’t 

have trades you can make with other folks to get a better deal, but 

we are looking forward to getting them done. 

Time is of the essence. You have heard the comments over and 

over about the impact that the anxiety over this deal being renegotiated, which is an appropriate thing to do, how that anxiety is affecting our trading partners and potential trading partners. I encourage the Administration to push forward, not only on NAFTA, 

on an expedited timeframe, but as well these bilateral deals because China is benefitting, the UK is benefitting, the EU is benefitting from our lack of being in the markets fulsomely. 

With that, I appreciate each of you being here. Under the Rules 

of the Committee, the record of today’s hearing will remain open 

for 10 calendar days to receive additional material and supplemental written responses from the witnesses to any question posed 

by a Member. 

This hearing of the Committee on Agriculture is adjourned. 

Thank you. 

[Whereupon, at 12:28 p.m., the Committee was adjourned.] 

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