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The United States and Mexico reached a two-way trade deal on Monday.  This moves President Donald Trump one step closer to another campaign promise to overhaul the North American Free Trade Agreement (NAFTA).

The new deal made with President Trump allows for no tariffs on agricultural products. As Georgia’s number one industry, this is welcomed news for state’s farmers and state leaders.

Former Georgia Governor Sonny Perdue, and current Ag. Secretary, said the following:

“This is nothing short of a great victory for farmers and ranchers, because locking in our access to Mexican markets is critical to supporting farm income and strengthening rural communities. Mexico has historically been a great customer and partner and we are happy to have this resolved for our agricultural producers,” said Perdue.

U.S. Senator for Georgia, Johnny Isakson (R-GA), released the following statement:

“I’m pleased to see that we’re making progress in modernizing our trade agreements for today’s economy, particularly in the areas of intellectual property and financial services, which are vital for many Georgia job creators. After Monday’s announcement with Mexico, it is crucial that we now bring Canada into our negotiations to finalize a trilateral agreement. Georgia exports more than $9 billion in goods and services annually to Mexico and Canada combined, and trade supports hundreds of thousands of jobs in our state. Trade is beneficial to America’s long-term economic success, and I hope the administration will move quickly toward a final agreement between our three countries that benefits Georgia farmers, manufacturers, and service providers.”

But not all of the Georgia farming industry agrees that the new deal goes far enough.

The Georgia Fruit and Vegetable Growers Association issued the following statement soon after the announcement. A portion of the statement has been provided:

This announcement is certainly disappointing. Our southeastern growers remain deeply concerned as this agreement fails to provide trade relief needed for our industry…Mexico swamps the U.S. market during our narrow marketing seasons at prices far below our production costs. What’s more, Mexico’s president-elect recently promised a significant increase in government subsidies to Mexican farmers to plant a million more hectares of fruit.”

The United States and Mexico agreed to work in unison on agriculture matters, improve the transparency and discussions on issues impacting trade and provide for non-discriminatory treatment in the grading of agricultural products.

In addition to no tariff’s, the U.S. and Mexico agreed to several provisions to reduce the use of trade-distorting policies, including:

  • To not use export subsidies or World Trade Organization (WTO) special agricultural safeguards for products exported to each other’s market.
  • Improved commitments to increase transparency and consultation regarding the use of export restrictions for food security purposes.
  • If supporting producers, to consider using domestic support measures that have minimal or no trade-distorting or production effects and ensure transparency of domestic support and supply management programs.

Coined as the “worst deal ever,” President Trump wants to terminate NAFTA and start negotiations with Canada soon.

The focus of the Mexican deal was with the automotive industry. The Associated Press reported in September of last year that auto worker wages were $2 an hour in Mexico and President Trump has encouraged Mexico to increase wages to $16 an hour.  Also, Trump has said that it will place automotive tariffs on Canadian imports if Canada rejects the changes.

Trump also looks to rename the deal from NAFTA to something else citing that the current name has bad implications.

 

 

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