What's in Store for Food & Agriculture?
In July, the United States Trade Representative announced his negotiating objectives to modernize the North American Free Trade Agreement (NAFTA). WITA (Washington International Trade Association), in conjunction with the Clayton K. Yeutter Institute of International Trade and Finance, presented this discussion of food and agriculture featuring Jaime Castaneda, Gary Martin, Melissa San Miguel, and Tom Stenzel moderated by Ambassador Darci Vetter.
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[00:00:00.834]Okay, everybody, we're gonna get rolling.
[00:00:02.954]A very good morning to you, I'm Carolyn Gleason.
[00:00:06.520]McDermott, can we hear?
[00:00:10.217]McDermott, little louder?
[00:00:13.104]McDermott, McDermott office head here in DC
[00:00:18.198]on behalf of McDermott, a very warm welcome to everyone.
[00:00:22.974]We are particularly proud to be welcoming as well
[00:00:28.402]the University of Nebraska Law School by video conference.
[00:00:33.709]A very early good morning to all of you.
[00:00:37.590]They are coming to us in conjunction
[00:00:39.558]with the new Clayton Yeutter Institute
[00:00:41.432]of International Trade and Finance.
[00:00:44.661]More on them from our subsequent speakers.
[00:00:48.145]We are, of course, also very proud
[00:00:50.028]to be cosponsoring this event with WITA,
[00:00:53.377]part of their NAFTA series, the subject for today being
[00:00:57.910]what's in store for food and agriculture.
[00:01:01.457]It is hard to believe that we're only 29 days
[00:01:04.076]into these negotiations.
[00:01:06.119]I don't think we have ever seen ever
[00:01:08.838]in the first 29 days of any negotiation,
[00:01:12.334]at least US negotiation, two formal substantive rounds
[00:01:17.108]of negotiations, 24 some odd chapters tabled,
[00:01:21.883]and some public threats to terminate
[00:01:26.134]propping up along the way.
[00:01:28.927]Even with that dizzying calendar and dizzying developments,
[00:01:35.209]I don't think too many of you in this room
[00:01:37.296]will dispute the large challenge of closing
[00:01:40.385]these talks before the end of the year.
[00:01:43.079]Doha and TPP and TTIP showed us that there is
[00:01:48.498]no inevitable correlation between negotiating schedules
[00:01:52.494]and negotiating success.
[00:01:55.064]The new NAFTA can, of course, be modernized in large part
[00:01:58.615]by simply migrating over provisions from TPP,
[00:02:02.783]all three countries have accepted it.
[00:02:05.599]But this administration has pledged to deliver much more,
[00:02:09.878]not only to expand trade opportunities
[00:02:12.689]for food and agriculture and other industries,
[00:02:15.383]but to address the needs of those sectors
[00:02:19.634]and those interests that have been harmed
[00:02:22.045]by the current agreement.
[00:02:23.998]Our distinguished set of NAFTA speakers today
[00:02:26.560]will talk to us about, among other issues,
[00:02:30.092]how best to reconcile these arguably competing aims
[00:02:34.266]in a way that keeps the three countries at the table,
[00:02:40.075]pleases the White House, advances the interests
[00:02:43.556]of food and agriculture and other interests, and
[00:02:48.044]delivers ratification, ultimately delivers ratification
[00:02:51.072]in the three capitals.
[00:02:52.586]Up next to further introduce our distinguished panel
[00:02:57.443]of speakers is Ken Levinson, executive director of WITA.
[00:03:01.234]Thank you, Carolyn, and thank you to your team
[00:03:04.341]at McDermott Will & Emery for hosting us today,
[00:03:07.490]we're very grateful for your support for the event
[00:03:10.120]and for hosting us in this lovely venue
[00:03:11.960]of yours on Capitol Hill.
[00:03:13.265]For those of you in the University of Nebraska,
[00:03:15.226]can't see it, we actually have a beautiful view
[00:03:16.822]of the Capitol, and if it wasn't raining, we'd be able
[00:03:19.030]to see even the Washington monument from here, so thank you.
[00:03:22.209]On behalf of the board of directors of WITA,
[00:03:23.806]the Washington International Trade Association,
[00:03:26.586]we're very pleased to welcome all of you
[00:03:29.037]and we're thrilled to be live streaming the event with the
[00:03:31.002]Clayton Yeutter Institute of International Trade and Finance
[00:03:34.177]at the University of Nebraska.
[00:03:35.844]Ambassador Yeutter was a great friend of many of us
[00:03:39.647]in this room and a long time supporter of WITA,
[00:03:43.523]and it's a great honor for us to be partnering
[00:03:45.523]with you in Nebraska for this event.
[00:03:48.257]This is the first of our five NAFTA series events
[00:03:51.200]we'll be holding this fall with four more events
[00:03:54.575]in the first part of 2018.
[00:03:57.270]A special thanks to the National Pork Producers Council
[00:03:59.758]who's sponsoring our entire NAFTA series.
[00:04:02.498]In addition to our regular policy and education events,
[00:04:06.060]we'll also be holding a special trade community wide event
[00:04:08.871]in late October to celebrate the 70th anniversary
[00:04:11.412]of the signing of the GATT.
[00:04:14.138]Which is a seminal moment in the creation
[00:04:15.361]of the global trading system that animates
[00:04:17.364]WITA's membership and our mission today.
[00:04:20.515]To find out how to be part of that event
[00:04:22.108]and to participate in our other events,
[00:04:23.950]please contact my colleague Diego Anez or myself.
[00:04:28.277]Information on all these can be found
[00:04:29.664]on our website, www.wita.org.
[00:04:33.792]Including information about our intensive trade seminar
[00:04:36.243]later this month, which is selling out quickly.
[00:04:38.122]We hope people who are new to the trade community or
[00:04:40.992]are learning about trade will consider attending that event.
[00:04:44.590]You can also find information about trade policy
[00:04:47.118]on our website.
[00:04:48.137]We have another one, www.americastradepolicy.com,
[00:04:52.699]where we share cutting edge research
[00:04:55.003]and commentary on trade from around the world.
[00:04:58.303]Now to our program.
[00:04:59.852]Thank you to all our speakers today,
[00:05:01.651]and a special thanks to ambassador Darci Vetter.
[00:05:04.018]Darci, like ambassador Yeutter, is a great friend
[00:05:06.800]of many of us in this room and a true leader
[00:05:09.079]on trade in Washington and around the world.
[00:05:11.933]We're incredibly grateful for your service to our country
[00:05:14.708]as our chief agriculture negotiator on trade.
[00:05:18.015]And we're delighted for your new role with the university.
[00:05:20.653]Darci will introduce and moderate
[00:05:22.044]our two panel discussions today.
[00:05:24.445]I'll hand it to you now, thanks, Darci.
[00:05:30.283]Thank you very much, Ken, and thank you, Carolyn,
[00:05:32.283]for hosting us.
[00:05:33.961]I am just thrilled to be here this morning
[00:05:35.918]and to be sort of in both of my homes at once.
[00:05:39.639]Here at my home in DC with many of you
[00:05:41.715]that I know well in the agriculture community,
[00:05:44.124]but at least virtually, I guess,
[00:05:46.329]at home in Nebraska where I grew up
[00:05:48.448]and where I'm so excited to be working
[00:05:50.893]with the Yeutter Center on International Trade and Finance.
[00:05:54.821]Welcome to all of you and to all of the Nebraskans
[00:05:57.984]who are joining us this morning as well.
[00:06:01.168]This is a critical time for US agriculture and trade.
[00:06:05.747]The US agriculture community has been very clear
[00:06:08.238]about how important the NAFTA relationship is
[00:06:10.972]for the way that they do business.
[00:06:13.345]These are, Canada and Mexico are two
[00:06:15.230]of our top trading partners.
[00:06:17.592]One and two or two and three, depending on where China falls
[00:06:20.654]on any given year.
[00:06:22.338]And the US ag community, to its credit,
[00:06:24.969]got out early when these NAFTA negotiations began
[00:06:28.062]or when this process began, to remind the administration
[00:06:31.739]and our negotiators that this was the case.
[00:06:34.315]And their mantra of first, do no harm has been heard loudly.
[00:06:38.352]And we've heard it echoed by the administration,
[00:06:40.755]that their goal is to do no harm in these negotiations.
[00:06:44.397]But when they say that, it typically comes across as
[00:06:47.132]we're not going to put agriculture directly on the table.
[00:06:50.209]And that is the way by which we will do no harm
[00:06:53.028]or hold it harmless.
[00:06:55.314]But I think the real question is,
[00:06:56.701]in a widespread negotiation, even if there's not
[00:07:00.016]an affirmative agenda on agriculture,
[00:07:02.507]can you do no harm when we are broadly looking
[00:07:06.217]at the way that the agreement operates?
[00:07:08.544]And that's one of the issues we'd like to explore today.
[00:07:12.636]And do no harm sort of status quo agenda
[00:07:16.106]also does not recognize that there are some opportunities
[00:07:18.927]in agriculture to make this agreement work better.
[00:07:21.745]We have very good and reliable partners
[00:07:23.539]in Canada and Mexico, but there's always the opportunity
[00:07:27.103]to examine that relationship and use the opportunity
[00:07:29.833]of the NAFTA negotiations to see
[00:07:31.627]how we can improve that as well.
[00:07:34.078]So I hope we can explore all of those themes today.
[00:07:38.565]We have two great panels who will look at,
[00:07:41.585]first of all, setting sort of the economic context
[00:07:44.038]for these negotiations and getting the perspective
[00:07:47.058]of commodity groups and producer groups in the negotiations.
[00:07:51.393]And our second panel will look a little bit more
[00:07:53.434]at what happens in the retail and
[00:07:54.949]the processed foods sector, and the opportunities
[00:07:57.647]and challenges they see in NAFTA.
[00:07:59.730]So let's jump right in.
[00:08:01.684]I wanna begin with Joe Glauber,
[00:08:03.852]who is known by many of us and a former chief economist
[00:08:07.449]at USDA, but also currently a senior research fellow
[00:08:11.501]at the International Food Policy Research Institute
[00:08:14.598]or IFPRE, and I've asked Joe to sort of
[00:08:16.646]set the stage a little bit about what's at stake
[00:08:19.382]and some of the context behind our NAFTA relationships.
[00:08:23.225]Joe, go right ahead.
[00:08:24.983]Great, well, thanks, Darci.
[00:08:27.109]Yeah, let me, and I'll do this fairly briefly,
[00:08:29.607]but let me make three major points, I think,
[00:08:31.935]about these negotiations.
[00:08:33.728]One is yes, there's a lot at stake for US producers.
[00:08:37.328]I think that's pretty well known.
[00:08:39.776]Exports is, I think, for fiscal 2018
[00:08:42.800]are projected at $40 billion.
[00:08:46.112]And as Darci mentioned, these are
[00:08:48.029]our number two and three markets.
[00:08:49.787]Canada, for many years, has been our number one market,
[00:08:52.519]but recently China has taken over.
[00:08:54.645]But again, real strong number two and number three
[00:08:59.544]with a lot of important products being moved across borders.
[00:09:03.538]If you look at Mexico, you look at a lot of grain,
[00:09:06.033]you look at dairy, you look at pork in any given year,
[00:09:10.276]and Canada is a wide mix of processed products,
[00:09:15.354]primary products, all sorts of things for agriculture.
[00:09:18.051]So I think that there's no question.
[00:09:20.727]If you look at the growth of trade
[00:09:22.488]over the last 25 years starting with CUSTA
[00:09:25.877]and then with the integration into NAFTA,
[00:09:28.815]these have become extremely important products.
[00:09:33.073]The second point I wanna make is this agreement
[00:09:35.896]is very important for consumers as well,
[00:09:37.937]and I think that sometimes it's lost.
[00:09:40.268]You know, we import about $45 billion worth of trade
[00:09:45.327]of agricultural products, a lot of that
[00:09:48.634]counterseasonal products, so you look at fruits
[00:09:50.513]and vegetables, look at things that come in year round.
[00:09:56.682]It's staggering, if you look at the per capita consumption
[00:10:00.193]for a lot of fruits and vegetables
[00:10:01.709]over the last 15-20 years, they have all jumped.
[00:10:05.507]Not all of them, but many of them may have jumped.
[00:10:07.955]And largely because the availability
[00:10:09.711]of being in a grocery store 12 months out of the year.
[00:10:13.536]And I think that's, you know, something
[00:10:14.967]that's oftentimes overlooked.
[00:10:16.564]The other thing is we import a lot of intermediate products.
[00:10:19.100]So the integration of these industries like
[00:10:23.316]the pork industry and the beef industry
[00:10:25.480]where we import feeder cattle and pigs
[00:10:29.436]come over the border and they're finished here,
[00:10:31.854]processed and then sent abroad.
[00:10:34.219]These are all just, the growth of a value added industry
[00:10:38.710]and the lengthening of these global value chains
[00:10:41.856]I think is extremely important and
[00:10:44.438]would there be a big cost to, I think, disrupt that
[00:10:47.744]with imposition of tariffs and other things again.
[00:10:51.916]And lastly, I think the other thing that's oftentimes lost
[00:10:56.237]is this is a long process, these things are not easy,
[00:10:59.387]I think Carolyn made that point at the very beginning.
[00:11:03.111]You know, I think that luckily, we have
[00:11:05.476]a very competent team of negotiators
[00:11:07.557]who will be spending time on this and are very prepared
[00:11:10.588]and know line by line how to go through these negotiations.
[00:11:14.628]But the fact is, they could be doing other things.
[00:11:17.782]And other things like negotiating other trade agreements
[00:11:20.270]and trying to open markets.
[00:11:22.109]So rather than looking backwards, could be looking forwards.
[00:11:25.255]And now, I'm not saying that trade agreements
[00:11:28.401]shouldn't be looked at occasionally and seen
[00:11:31.309]if they can be improved, and these trade agreements
[00:11:34.253]are 25 years old.
[00:11:36.171]I think many people looked at TPP as some improvement in,
[00:11:40.498]that would lead to improvements in NAFTA.
[00:11:42.665]But there's no question, these trade agreements
[00:11:44.919]can be improved.
[00:11:46.683]But in the meantime, the rest of the world doesn't wait.
[00:11:49.667]They're not saying well, let's see what happens
[00:11:51.422]in NAFTA and then we'll go about our business.
[00:11:53.381]They are negotiating other trade agreements,
[00:11:55.305]and you look at the European Union,
[00:11:56.977]how active they have been in markets.
[00:12:00.406]Looking at China, looking at India,
[00:12:02.035]looking at other markets that the US has interest in.
[00:12:05.309]Even Canada and Mexico have been looking elsewhere.
[00:12:09.183]And I think these are things that unfortunately,
[00:12:11.893]that's, to me, one of the big costs of
[00:12:14.086]a negotiation like this, is the fact
[00:12:15.837]that our attention is diverted elsewhere.
[00:12:20.288]I'm a big fan of do no harm.
[00:12:22.417]I don't think the harm is gonna come
[00:12:23.730]from the agricultural negotiations, I agree with Darci.
[00:12:26.302]I think that, and I must say, Gary and others
[00:12:30.020]should be complimented, you all should be complimented.
[00:12:32.384]Because I think right out of the blocks, the ag industry
[00:12:35.938]in particular was very concerned about this,
[00:12:38.388]was meeting weekly, daily, making their points clear
[00:12:42.389]and all you need to see are the reaction
[00:12:45.660]to a tweet or whatever, how strong that reaction is
[00:12:49.332]and thankfully, some of the things like pulling out of
[00:12:52.481]Korea-US Free Trade Agreement or dissolving NAFTA
[00:12:56.969]or whatever, at least we've seen a calmer path since then,
[00:13:01.216]and I think that's in large part due to
[00:13:03.577]the things we had here.
[00:13:05.211]My concern is not agriculture, my concern is
[00:13:07.537]what happens in the non-ag issues,
[00:13:09.009]things like Chapter 19, things like rules of origin,
[00:13:11.781]things like, you name it, procurement.
[00:13:14.073]Those are the things that I think if they end up
[00:13:17.249]resulting in a trade war, ag is gonna be the casualty.
[00:13:22.027]That's my real concern.
[00:13:23.291]So with that, let me conclude and I'll pass it on to,
[00:13:28.178]I'm gonna put Gary on the spot next,
[00:13:29.838]but thank you very much, Joe, that was
[00:13:32.166]five minutes exactly, and a lot to think about there
[00:13:36.455]and some good things to come back to
[00:13:38.664]at the end in our Q&A session.
[00:13:40.945]I now wanna turn it over to Gary Martin,
[00:13:42.825]who is the president and CEO of
[00:13:44.411]the North American Export Grain Association,
[00:13:47.292]president of the International Grain Trade Coalition
[00:13:49.829]and also currently co-chairs
[00:13:51.879]the Food and Ag Dialogue for Trade agreements,
[00:13:54.902]which includes many of you in this room,
[00:13:57.557]a number of agricultural organizations
[00:13:59.799]who have come together in a coalition
[00:14:02.610]to look at NAFTA and other issues.
[00:14:04.853]So with that, Gary, I turn it to you.
[00:14:07.627]Thanks, Darci, and thanks, Joe, for pointing out some,
[00:14:11.765]at least three very important aspects
[00:14:14.257]of where we're going in the future.
[00:14:16.918]I wanna give you a little context about
[00:14:20.053]the grain industry globally, 'cause that's where I come from
[00:14:23.677]and it's a truly globally sourcing environment.
[00:14:28.315]It's the foundation of food security and economic growth
[00:14:34.280]around the world.
[00:14:35.833]The 500 million metric tons that today move
[00:14:40.174]in the agribulk system, container and bulk shipment flows
[00:14:46.549]support about 18% of consumption of those products,
[00:14:51.695]whether it's for livestock feed or direct human consumption.
[00:14:56.026]But that overall 18% of the corn, soy beans,
[00:15:00.156]wheat, rice, even pulses that move in the agribulk system,
[00:15:07.573]is a critical balance in food security
[00:15:10.311]and the foundation of economic well being
[00:15:13.656]that comes up from the consumption, processing,
[00:15:17.984]value added process that people like Jaime enjoy
[00:15:23.741]from agricultural planned products.
[00:15:27.371]So my view is very global in perspective.
[00:15:33.661]And then it comes back to understanding the dynamics
[00:15:39.429]of what's happening in the United States,
[00:15:41.469]because the United States is a leader.
[00:15:43.999]In fact, of that 500 million metric tons from North America,
[00:15:48.738]the 500 million metric tons of these products,
[00:15:51.886]bulk grains, oil seeds and other agribulks
[00:15:55.103]that move globally, up to a third of that
[00:15:58.246]is originated or traded right here in North America.
[00:16:02.628]And right within the NAFTA environment.
[00:16:06.054]And that integration that Joe talked about
[00:16:08.960]that leads to livestock products as well
[00:16:11.868]as other direct benefits to consumers
[00:16:15.460]is underpinned by the movement of grains in North America
[00:16:21.556]from and to North America to the rest of the world.
[00:16:25.892]NAFTA has become a linchpin of making all of that happen
[00:16:31.769]over the last 20 years.
[00:16:34.546]And it's been very very effective,
[00:16:37.453]and in the context of where we're at today,
[00:16:41.334]it was clear to us and has been clear to us,
[00:16:44.237]as we last year were concerned with
[00:16:46.761]the Trans-Pacific Partnership and the
[00:16:51.135]negotiations with the Atlantic side of things,
[00:16:56.564]that the environment was changing.
[00:17:00.265]There would be opportunities to clearly communicate
[00:17:05.618]the absolutely critical nature of agricultural trade
[00:17:10.274]in a new environment.
[00:17:12.236]And that led to a, as Joe articulated,
[00:17:17.911]a almost weekly consideration of providing information to
[00:17:25.110]and enabling action by the US agriculture sector.
[00:17:29.845]Cassandra Kuball is the audience, she leads our groups,
[00:17:34.007]NAFTA working group or North American Market Working Group.
[00:17:38.292]Informing and engaging with organizations like Jaime's
[00:17:43.850]to focus the message, inform the message
[00:17:48.661]and enabling messages from the US source
[00:17:52.956]because of the critical position US holds in
[00:17:58.189]the global perspective of not just the grain and oil seeds,
[00:18:01.334]but all of these agricultural products
[00:18:04.357]that any consumer must be sensitive to.
[00:18:08.277]With me today, and I'm very honored to have them with me,
[00:18:11.378]is the NAEGA board of directors.
[00:18:13.007]Largely, I think, there's seven, eight,
[00:18:14.564]maybe nine fellows here that are in the audience
[00:18:20.283]and responsible for managing the risk
[00:18:24.619]involved in international trade.
[00:18:28.211]And of that 500 million metric tons,
[00:18:30.386]I think you're probably looking at
[00:18:31.861]about 400 million metric tons of risk responsibility
[00:18:35.081]in the hands of these guys.
[00:18:37.578]And that drives what we do and our interest.
[00:18:41.581]And that brings me back to NAFTA.
[00:18:46.324]And the provisions in NAFTA and other trade agreements,
[00:18:49.972]the gains we can make from appropriately enabling
[00:18:56.433]new evolutions in regulatory communication and cooperation.
[00:19:05.081]Critical to enable the movement of grains and oil seeds
[00:19:08.792]around the world, and I would point out,
[00:19:13.322]in addition to the concern coming from the US
[00:19:17.661]about do no harm in NAFTA, Darci, and thanks
[00:19:20.850]for introducing this, the fact that we can look forward
[00:19:24.559]to improvements, that's where the improvements lie.
[00:19:29.952]Regulatory communication and cooperation and driven by,
[00:19:36.613]in particular, the innovation of new tools
[00:19:42.664]to manage information, largely driven today in digitization
[00:19:49.972]of trade information and other products, now,
[00:19:55.443]it's a matter of fact from our perspective in
[00:19:58.177]the grain trade, the risk bearers in the movement
[00:20:03.693]of these products that are fundamental to food security
[00:20:07.366]and economic well-being around the world.
[00:20:11.295]Governments are way behind in interoperability of data,
[00:20:17.708]in acceptance of and management of
[00:20:21.256]the necessary transparency that results from
[00:20:25.990]the innovation of data management.
[00:20:28.728]So regulatory cooperation and communication
[00:20:35.057]needs to be enabled as a result of, and the opportunity to
[00:20:39.468]as enable as a result of progress in the NAFTA environment,
[00:20:45.396]I'll leave it there.
[00:20:46.254]How close am I to five minutes?
[00:20:47.562]Darci is used to pulling me off the stage with a hook.
[00:20:50.746]So I wanna know how close I was.
[00:20:52.333]You've just avoided the hook there, Gary.
[00:20:54.737]But I think that was a very good reminder
[00:20:58.614]that traditionally, we have used the trade agreements
[00:21:02.745]to reduce cost and reduce the risk of doing business.
[00:21:05.966]And to make the environment more predictable.
[00:21:07.929]And in NAFTA, we're starting from
[00:21:10.699]a mostly zero tariff environment, not completely,
[00:21:13.595]we'll get to that next.
[00:21:15.591]Where you have an opportunity to then focus on those things
[00:21:18.819]if that's where we can get our negotiators
[00:21:22.380]to zero in and think about how we can further reduce
[00:21:25.647]the cost and risk of transactions in North America.
[00:21:28.793]So a very good reminder.
[00:21:30.958]I would like to turn next to Jaime Castaneda,
[00:21:34.206]who is the senior vice president of trade policy
[00:21:39.633]both for the US Dairy Export Council
[00:21:41.552]and for the National Milk Producers Federation.
[00:21:44.288]And Jaime represents an industry
[00:21:46.757]that sits in a slightly different position
[00:21:49.026]than a lot of agriculture in that most of us enjoy
[00:21:51.516]duty free access north and south.
[00:21:53.973]We, of course, do not enjoy that access with Canada
[00:21:57.285]which did not include dairy in either
[00:22:00.224]the Canada-US Free Trade Agreement or in NAFTA.
[00:22:02.958]And so there are both offensive and defensive priorities
[00:22:07.495]for the dairy industry.
[00:22:09.291]And so Jaime, I turn it over to you to talk about
[00:22:12.030]your opportunities and challenges in these NAFTA talks.
[00:22:15.148]Thank you, Darci, good morning, everyone.
[00:22:17.878]Thank you first to WITA for extending the invitation
[00:22:21.596]to the dairy industry, and it is an honor for me
[00:22:24.452]to be among these distinguished
[00:22:28.009]representatives and especially for ambassador Darci Vetter
[00:22:31.979]in which we, our gratitude always goes to you
[00:22:35.773]for all those years in which you didn't slip anything
[00:22:40.520]when you were negotiating TPP.
[00:22:44.765]Let me start by actually saying that, obviously,
[00:22:47.136]I'm the only one here without an accent.
[00:22:51.037]So that will help you.
[00:22:54.110]The second thing is that my staff told me,
[00:22:58.026]"Don't be on the news."
[00:22:59.740]So they script me, I don't tweet
[00:23:02.884]but I can say provocative things, so they script me
[00:23:05.909]to just be very clear, so I was gonna come here
[00:23:08.598]and be on a podium, read what they wrote for me and then,
[00:23:12.794]but all of that goes to hell, right?
[00:23:18.059]So they're not gonna be happy.
[00:23:22.300]Anyway, let me just start with giving you a few,
[00:23:26.770]a little bit, not many of you know a lot
[00:23:29.588]about the dairy industry in the United States.
[00:23:31.672]I mean, some of you, the old timers like myself
[00:23:34.981]think about the United States dairy industry like this
[00:23:39.389]institution that was like 30 years ago.
[00:23:42.452]But we are the largest single producer
[00:23:44.373]of cows milk in the world.
[00:23:46.859]Our cows on average are the most productive in the world.
[00:23:50.287]We export about 15% of our milk production.
[00:23:54.178]Today one day's worth of milk production each week
[00:23:57.848]gets turned into dairy products that are exported
[00:24:02.320]and it is roughly about $5 billion on export sales.
[00:24:06.273]We're the largest exporter of skim milk powder
[00:24:09.326]that is thrown into many many different things
[00:24:11.536]from milk to yogurts and other things all around the world.
[00:24:15.906]Whey, for those of you who don't know,
[00:24:18.317]whey is like when you buy all those nutritions on GNC
[00:24:22.485]or muscle milk, that's the whey.
[00:24:26.298]We're the second largest, but we were the first.
[00:24:29.157]We just became the second exporter of cheese,
[00:24:33.740]who would've thought that the United States
[00:24:35.542]would've been the largest exporter of cheese.
[00:24:38.194]We have actually, more importantly, we have won
[00:24:40.736]the most prestigious international cheese contests
[00:24:43.304]on varieties like Parmesan and others
[00:24:46.761]winning over Europeans.
[00:24:48.538]I remember actually when there was a time
[00:24:50.892]in which people would've said,
[00:24:52.812]"Oh yeah, no, the cheese, this is all about Europe."
[00:24:56.530]I can tell you that actually, across the United States,
[00:24:59.375]we're producing the best cheeses,
[00:25:01.217]and I see my good friend Jesus Zorrilla from
[00:25:03.666]the European embassy and he knows,
[00:25:05.712]he has already tried these wonderful cheeses.
[00:25:12.286]Let's imagine for a second that this room
[00:25:16.161]is full of organizations like Gary
[00:25:19.841]representing the US food and agriculture industries.
[00:25:23.972]And I would say, I ask you, raise your hand
[00:25:27.813]who has benefited from NAFTA, I would say
[00:25:30.544]the vast majority would say we all have.
[00:25:34.849]I mean, 99%.
[00:25:37.249]And if I would ask you, like Darci really did a great job
[00:25:42.517]in basically saying well, who has actually not benefited
[00:25:46.797]from NAFTA, in particularly with respect to Canada?
[00:25:50.749]And I would say that very few of us will raise our hand.
[00:25:54.465]And that's the case of the dairy industry.
[00:25:57.701]We have not had an exchange of tariffs.
[00:26:02.118]Canada remains with 300% tariff levels
[00:26:05.770]in the majority of dairy.
[00:26:08.907]We, on the other hand, export about a billion dollars
[00:26:12.543]worth of exports to Mexico.
[00:26:15.405]And Mexico is our largest market.
[00:26:21.909]So NAFTA for all of us is critical.
[00:26:26.328]But it is even more critical when you look
[00:26:29.467]at the theme of do not harm.
[00:26:34.642]But think about it for a minute that not only
[00:26:37.459]if you don't have access to certain market.
[00:26:42.527]But even worse, if you had access
[00:26:46.458]and they're gonna take it away.
[00:26:49.434]And we're gonna talk a little bit about GIs
[00:26:52.949]and I'll ask you how many of you know about GIs.
[00:26:56.919]And worse is that if this market access
[00:27:01.120]is taken away, it's not recoverable.
[00:27:04.791]Sometimes actually we can lose a market access,
[00:27:08.064]but one way or another, we can recover it
[00:27:11.336]with lower tariffs, known tariff barriers
[00:27:13.710]trying to be addressed.
[00:27:15.930]So that is the way that actually we're looking at this.
[00:27:20.058]If Gary members that are here in the audience
[00:27:24.633]would actually not have access right now
[00:27:27.491]to Canada or to Mexico, I'm sure they would actually
[00:27:30.553]be asking you, "Hey, let's fix this."
[00:27:34.387]So this is where--
[00:27:35.220]Or I'd be fired.
[00:27:36.390](Darci and Jaime laugh)
[00:27:38.713]So this is where actually we are coming.
[00:27:41.612]We are coming from a different perspective
[00:27:43.821]in which our members are basically saying
[00:27:47.539]you need to fix, we have actually had
[00:27:49.906]a number of negotiations with Canada over the years.
[00:27:54.277]Whether it was from the Tokyo round
[00:27:58.405]to the Uruguay round in which we had an opportunity to open.
[00:28:03.830]NAFTA, of course, and then, obviously, TPP, in which
[00:28:09.686]we tried, I know that actually ambassador Vetter
[00:28:12.561]tried her hardest, and still we was limited
[00:28:17.192]what we could do.
[00:28:18.628]So we see it as NAFTA having an incredible opportunity
[00:28:22.780]for us to open this market.
[00:28:26.902]But Canada not only have actually prevented us
[00:28:30.621]from entering their market.
[00:28:33.479]And you're gonna hear that, they're gonna say,
[00:28:36.413]"Well, but you export about $500 million."
[00:28:40.989]But this is not thanks to NAFTA.
[00:28:43.764]This is thanks to a re-export program
[00:28:46.414]that they have in which you can actually import product
[00:28:51.920]as long as you export the same amount of solids
[00:28:54.906]that actually came in.
[00:28:56.619]It's kind of complicated, but it's called the IREP,
[00:28:59.895]the Import Re-export Program.
[00:29:02.222]So basically, most of whatever we are exporting
[00:29:06.994]is actually coming back to the United States
[00:29:09.002]or it's going somewhere else.
[00:29:10.922]When we have actually found opportunities to export,
[00:29:16.476]Canada, over and over, they have found tools
[00:29:20.966]to prevent us from exporting that product.
[00:29:24.884]The latest one is for us something that has just become,
[00:29:32.446]something that I actually draw a line, it's so outrageous,
[00:29:35.836]to create a special class in which it will,
[00:29:39.631]there's a special class for milk price
[00:29:43.932]that will prevent the importation of product
[00:29:46.706]from the United States but also allow Canada
[00:29:50.505]to dump product in the international market.
[00:29:53.614]So just think about what's wrong with this picture
[00:29:56.102]in which you have a country that has supply management.
[00:30:00.064]That means that actually, they have the highest prices
[00:30:03.460]in the world for milk.
[00:30:05.706]But at the same time, they're exporting
[00:30:08.524]at the lowest prices for their skim milk powder.
[00:30:15.424]For us, this is one of the most important elements
[00:30:20.324]of these negotiations.
[00:30:21.955]For us, we can, and there it goes, I'm gonna be in the news.
[00:30:28.155]If actually this is not addressed under
[00:30:31.215]these NAFTA negotiations, for us, it will be a failure.
[00:30:35.460]It would, we cannot accept the fact that Canada, again,
[00:30:39.793]gets away with not only preventing our trade,
[00:30:45.017]but actually dumping product and affecting
[00:30:47.548]the international market.
[00:30:50.090]In addition to that, we are extremely concerned
[00:30:54.217]that Mexico have these negotiations with Europe.
[00:30:58.828]Canada did something that we're still trying to understand.
[00:31:04.296]Disregarding their intellectual property laws
[00:31:08.297]when they negotiated with Europe the CETA agreement.
[00:31:12.869]This actually goes to the geographical indicators
[00:31:15.570]that actually we were talking about.
[00:31:17.811]Nothing wrong with GIs.
[00:31:19.485]I mean, we can actually have all and a specific GI.
[00:31:22.921]But it is a problem when these GIs are trying
[00:31:26.270]to take away the right for consumers, producers,
[00:31:30.149]manufacturers to produce something
[00:31:32.504]that they have been not only producing for maybe a century,
[00:31:37.483]but actually also creating those markets.
[00:31:40.349]We have created the market for Asiago in Mexico,
[00:31:43.736]we have created a market for a number of these
[00:31:47.039]so-called European names.
[00:31:49.481]And now Europe is forcing Mexico
[00:31:52.673]to try to take that away from us.
[00:31:55.330]So if Mexico, just like Canada, take away
[00:31:59.246]the opportunity for us to sell cheeses
[00:32:01.495]like Parmesan, Asiago, Fontina, feta, Gorgonzola.
[00:32:07.453]That for us is a market access issue.
[00:32:10.183]And we cannot permit that.
[00:32:11.780]So with that, Darci, I hope that I didn't pass five minutes
[00:32:15.371]and I'm sure I'll make the news.
[00:32:18.850]Well, Jaime, there are obviously a number of issues
[00:32:21.146]that the dairy sector is trying to address,
[00:32:23.634]and I think you did a good job of outlining
[00:32:25.472]what is a complex environment.
[00:32:27.360]So thank you for that.
[00:32:29.158]I think maybe what we'll do, since you have been
[00:32:32.464]pretty good about your time, is do one quick question
[00:32:36.335]and then we'll throw it into the audience.
[00:32:39.068]Joe, you talked a lot about the impact of,
[00:32:43.364]or the opportunity cost of focusing on NAFTA
[00:32:46.602]at the expense of negotiations with other countries
[00:32:49.380]and how we're using our limited negotiating capacity.
[00:32:53.254]But can you also talk a little bit
[00:32:55.177]about the cost of uncertainty and
[00:32:58.007]the business community's response
[00:33:00.862]while the outcome of these negotiations are uncertain
[00:33:05.936]and what that might mean for agriculture?
[00:33:09.241]Yeah, no, and I think that, given
[00:33:12.878]the nature of these negotiations,
[00:33:15.850]a lot how things have been communicated and other things,
[00:33:20.435]I don't know, I'm sure there's people in the audience
[00:33:23.966]who can respond better to this
[00:33:26.407]or can speak specifically about their industry.
[00:33:30.451]But when you hear that okay, well,
[00:33:32.899]we're just gonna pull out of this agreement.
[00:33:35.183]And you know, a statement like that
[00:33:38.572]makes a lot of people nervous, in particular
[00:33:40.410]given how integrated these supply chains are.
[00:33:43.997]If all of a sudden, you're talking about a major supplier
[00:33:46.609]of some input now not being available,
[00:33:49.754]it's no wonder that people start looking around
[00:33:52.447]at other places for potential supply,
[00:33:54.657]and we saw that Mexico and okay, so some of this
[00:33:57.679]is negotiating ploy, I'm sure, of making statements.
[00:34:00.985]But the fact is, you look at corn, look at soy beans,
[00:34:06.457]there are markets further to the south
[00:34:09.235]or producers to the south who can supply those markets.
[00:34:12.428]And I mean, we've imported soy beans here in the US
[00:34:15.614]so they certainly can import soy beans
[00:34:17.039]into Mexico pretty easily, I think.
[00:34:20.390]So it's a concern, and I think that does create uncertainty,
[00:34:23.869]and particularly at a time when we think back a year ago
[00:34:27.746]where we were really talking about well,
[00:34:29.996]when can we get TPP passed finally
[00:34:32.405]and when can we get on with TTIP?
[00:34:35.342]No one was expecting now to kind of turn around 180 degrees
[00:34:40.811]and say okay, let's check our rear now and make sure that,
[00:34:45.992]you know, we're not gonna lose access
[00:34:48.036]in markets that we've secured like Mexico and Canada.
[00:34:54.045]Jaime, maybe a question for you.
[00:34:55.767]You talked about the fact that Mexico and Canada
[00:34:59.280]have concluded or are negotiating with Europe.
[00:35:02.629]I think of our TPP partners, they are engaged,
[00:35:05.895]or the countries that we negotiated TPP with
[00:35:08.104]are engaged in 27 other negotiations.
[00:35:12.186]Many of those also including Europe.
[00:35:14.558]So how does the timeline for these negotiations
[00:35:18.718]and what we might be able to do on GIs,
[00:35:21.662]how does that interact with your goals?
[00:35:25.127]Yeah, no, that's an incredible good question.
[00:35:29.999]Primarily because, as you know, Darci,
[00:35:33.466]you worked tireless with other folks
[00:35:38.115]in the US government to protect common names.
[00:35:44.160]And we had actually a pretty good chapter
[00:35:47.542]on intellectual property in TPP.
[00:35:50.400]It is unfortunate that actually, we don't have that
[00:35:53.587]to protect us and certainly we didn't have it
[00:35:56.694]with respect to Canada.
[00:35:58.606]We expect that we're gonna be very strong
[00:36:01.588]in these negotiations, especially with respect to Mexico.
[00:36:06.119]And certainly, we will deal with Canada
[00:36:09.237]and that action at a later time.
[00:36:12.507]But you know, as you have stated,
[00:36:16.717]Europe actually right now is pushing very hard to Mexico.
[00:36:22.314]And of course, we're trying to work
[00:36:25.009]with the Mexican industry to hold that line.
[00:36:30.368]If we don't move fast on these negotiations,
[00:36:34.643]I'm afraid that actually we can see a result
[00:36:39.069]that we would be very disappointed.
[00:36:42.547]And this is not just, of course, as you know, with Mexico.
[00:36:45.984]Europe is negotiating now with Mercosur.
[00:36:49.978]Europe has finished negotiations with Japan, Vietnam.
[00:36:54.917]So this is why, you know, TPP was important
[00:36:58.508]from that perspective, and that we have to
[00:37:01.533]really get moving, as Joe said,
[00:37:04.801]with respect to new opportunities not only to open markets,
[00:37:09.212]but to prevent the European Union from taking markets away
[00:37:12.527]from US dairy producers and manufacturers.
[00:37:17.875]Gary, a question for you.
[00:37:19.222]A little bit about process.
[00:37:20.857]You've been through, and this is not your first rodeo
[00:37:23.106]in terms of trade negotiations and trade policy.
[00:37:26.704]And now as the leader of this food and agricultural dialogue
[00:37:30.541]that is helping to put forward recommendations
[00:37:33.605]from the ag community, how is that process impacted
[00:37:38.556]by the fact that we are heading toward round three
[00:37:41.660]of a NAFTA negotiation, and yet we have
[00:37:44.399]no chief ag negotiator.
[00:37:46.812]At commerce, at USTR and at USDA, there's essentially
[00:37:50.656]one political appointee in place
[00:37:53.228]and no sort of undersecretaries or deputies there.
[00:37:56.788]How is that affecting the negotiating process
[00:37:58.955]and the ability of the agriculture community
[00:38:01.705]to really make their priorities known
[00:38:04.108]and have them be adopted?
[00:38:07.045]Well, thanks, Darci, and thanks for
[00:38:09.124]the other two questions and answers, they were great.
[00:38:14.889]Inside the US, one thing we've really enjoyed
[00:38:18.685]is incredible access to the negotiating process.
[00:38:23.083]I think it's unique in the world,
[00:38:27.267]the involvement that we've had in trade negotiations
[00:38:30.768]in the past and, of course, that was tied to Congress
[00:38:36.518]having a degree of control over what's
[00:38:39.397]in the negotiations as well as the process that is outlined
[00:38:44.686]under the TPA or the Trade Promotion Authority.
[00:38:50.478]It's been quite interrupted by a lack
[00:38:53.582]of communication channels.
[00:38:58.076]Perhaps it's been interrupted by chaos.
[00:39:03.307]I have a son who studied chaos theory,
[00:39:05.311]he was a Nobel Prize winner up here
[00:39:07.022]at University of Maryland in chaos theory,
[00:39:08.986]and I talked to him about how chaos might influence process.
[00:39:15.720]And we're learning.
[00:39:17.263]I think the important aspect here is information
[00:39:24.005]flows faster today than ever before,
[00:39:27.338]and it flows through more vectors or more lines
[00:39:31.826]of communication than ever before,
[00:39:34.888]and we've had to learn how to push information
[00:39:38.376]through new vectors, the most important of which
[00:39:44.942]with respect to the NAFTA process,
[00:39:50.581]which we have to reflect on, the lack of appointments
[00:39:56.174]within the administration, the most important of which
[00:39:59.564]is at the grassroots and grasstops level.
[00:40:03.128]Incredibly impactful and effective communication
[00:40:07.057]is occurring today from states, not just from governors,
[00:40:12.016]but from enabled and informed people from
[00:40:15.528]the Farm Bureau, Dave's here today from the Farm Bureau.
[00:40:18.838]From the National Grain and Feed Association
[00:40:21.122]that we work with jointly.
[00:40:24.636]And we've learned now that it's not all inside the Beltway.
[00:40:31.807]We've got to engage locally and have that local flow
[00:40:40.047]of information, well-informed information,
[00:40:43.802]impact not quite so directly as the process we're used to,
[00:40:50.054]but today's world is different.
[00:40:53.195]Information moves through different channels.
[00:40:55.399]Communication works through different channels.
[00:40:57.932]Something we've had to adopt to, the food
[00:40:59.734]and agricultural dialogue for trade
[00:41:02.651]precisely was organized to provide for that information
[00:41:06.030]and enable that sort of engagement, not just within the US
[00:41:12.363]government circles that are here in DC, but also outside.
[00:41:19.662]And I think we need to get better.
[00:41:24.191]We need to react often and in a very timely fashion.
[00:41:31.326]We've talked about timely responses.
[00:41:34.224]This is a 15 second news cycle we're dealing with.
[00:41:40.963]And that makes a big difference.
[00:41:42.839]It's not as measured as process that the US enjoyed,
[00:41:46.145]and I think enjoyed uniquely globally.
[00:41:52.239]But it's reality today.
[00:41:55.747]And we need to develop I don't think
[00:41:57.500]necessarily institutions, but just capacity
[00:42:00.729]to work through new channels of communication
[00:42:03.630]and information management, and that's all about
[00:42:07.300]informing and enabling a broader sector of stakeholders.
[00:42:12.808]Right back to, and I think I wanna really endorse
[00:42:15.936]Joe's earlier comment.
[00:42:19.374]And the gap today is the consumer side of things
[00:42:22.813]from a food and agriculture perspective.
[00:42:26.641]The informed consumer is gonna be critical
[00:42:31.096]to the understanding of the value of trade,
[00:42:33.423]whether it's an irritant like Jaime mentioned
[00:42:37.258]and detailed in quite a bit a point of view.
[00:42:42.359]Taking control of consumer decisions away
[00:42:46.201]from bureaucratic apparatus and moving them to consumers
[00:42:52.520]will be enabled by these new vectors
[00:42:56.524]of communication and information flow.
[00:43:00.113]And that, at the end of the day, I think can very aptly
[00:43:09.456]work through an environment that's not quite as structured
[00:43:14.193]and certainly not a process that we can define going in.
[00:43:20.936]I mean, the completion of the NAFTA agreement
[00:43:23.958]by the end of the year is a very aggressive agenda.
[00:43:29.142]Resolution of trade disputes in short order,
[00:43:34.739]I have to recall, and I'm gonna take
[00:43:36.611]a little bit more time here, Darci, I'm so sorry.
[00:43:39.756]I have to recall that we just recently claimed
[00:43:42.324]a great victory in the grain industry.
[00:43:44.900]For a nine month turnaround on a process
[00:43:50.451]involving a Southeast Asian country
[00:43:54.530]related to the import of grains and oil seeds.
[00:43:58.625]Their plan protection authority was misinformed
[00:44:02.471]and making decisions that were inconsistent
[00:44:04.684]with sound science and the best interest
[00:44:06.603]of their consumers and their industry.
[00:44:09.137]And we thought it was really great to turn that around
[00:44:11.014]in nine months.
[00:44:13.222]Today's world and today's communication practices
[00:44:19.020]allow us to turn it around in nine minutes, not nine months.
[00:44:26.282]So bringing governments to the accountability
[00:44:30.012]that can be driven by even a process of chaos
[00:44:35.892]that is well-informed with communication
[00:44:39.073]and information flow is a real possibility.
[00:44:43.199]So we'll have to deal with a new environment.
[00:44:46.301]The new environment is enabled by tools and technology
[00:44:50.219]that we've never seen before.
[00:44:52.985]Just need to figure out how to do it.
[00:44:56.787]I think it's hard for, in some ways, for governments
[00:44:58.659]to keep up with the amount of information coming their way,
[00:45:02.417]and it's a challenge for all of us
[00:45:04.091]to kind of marry the bureaucratic process
[00:45:06.345]with the information we have in the private sector.
[00:45:08.552]And I can speak as a negotiator how hard that was
[00:45:11.931]to try and absorb all of the latest information
[00:45:14.710]and make sure you were using relevant data
[00:45:17.730]to make sure you were presenting the best options
[00:45:20.591]and proposal to you negotiating counterparts,
[00:45:22.717]so it's definitely a partnership in that regard.
[00:45:25.743]Now I'd like to throw it open for questions
[00:45:28.306]from the audience.
[00:45:30.352]And if there are questions from our partners in Nebraska,
[00:45:34.958]I'd like to give them the chance to answer
[00:45:36.804]or to ask the first question, and please approach
[00:45:39.010]the podium and use the microphone
[00:45:41.048]and introduce yourself if you have a question there.
[00:45:48.531]He's approaching the microphone now.
[00:45:53.125]Thank you, Darci and the panel.
[00:45:55.459]This is Matt Schaefer from
[00:45:56.558]the University of Nebraska Law School.
[00:45:59.803]I wanted to ask a question on the interlinkages
[00:46:02.471]between the manufacturing issues
[00:46:04.469]and agriculture issues in the negotiations.
[00:46:07.374]And this almost, the potential for a double loss
[00:46:11.709]or a guaranteed loss.
[00:46:14.240]For example, there is proposals to strengthen or tighten
[00:46:18.207]or make more restrictive rules of origin
[00:46:20.296]in manufacturing sectors like automobiles.
[00:46:23.890]These are being resisted by industry.
[00:46:26.384]So even if they succeed, they may harm those industries.
[00:46:30.352]And if they don't succeed, and as some of your panels
[00:46:33.952]had mentioned, lead to potential retaliation
[00:46:37.214]in the agriculture sector or a trade dispute
[00:46:41.174]that harms the agriculture sector,
[00:46:44.039]how do we prevent this potential double loss
[00:46:46.814]or guaranteed loss, and what types of cooperation
[00:46:50.046]or communications are going on between the ag sector
[00:46:53.030]and the manufacturing sector to help avoid this?
[00:46:58.547]Perhaps we can start with, I think this is a key question
[00:47:00.792]we're all asking.
[00:47:02.263]Joe, can I maybe put you on the spot here?
[00:47:04.756]As a former acting chief ag negotiator, you've had to
[00:47:07.607]deal with these cross-sectoral conversations many times.
[00:47:11.013]And it is important and you often hear,
[00:47:16.274]I think it's a mantra that I'm sure Darci, you used as well,
[00:47:19.830]that to sell any ag agreement, we have to be able
[00:47:22.610]to go into every state and tell every senator
[00:47:26.446]and congressman what it does for agriculture.
[00:47:30.524]In once sense, we always make the point that you,
[00:47:33.339]agriculture needs to stand on its own,
[00:47:34.892]but at the end of the day, these are trade-offs.
[00:47:37.297]And cross-sectoral trade-offs are, you know,
[00:47:40.932]happen a lot in trade negotiations.
[00:47:43.592]And I think you're right.
[00:47:47.393]I have my own views as an economist on
[00:47:51.038]things like rules of origin and the importance
[00:47:54.155]of sourcing from all over the globe
[00:47:57.297]for things like parts and other things.
[00:47:59.432]But insofar if those negotiations are not
[00:48:04.988]a success as defined by, you know,
[00:48:10.463]obsessions with trade deficits and things like that,
[00:48:13.486]I think that's an issue.
[00:48:14.709]And hopefully, that won't be a deal breaker
[00:48:16.509]at the end of the day because I think
[00:48:18.301]agriculture could be a big, remain a casualty there.
[00:48:22.306]But I would say that at least as far as the negotiators
[00:48:25.372]are concerned, and certainly, when I was doing
[00:48:28.557]the Doha negotiations and I'm sure, Darci,
[00:48:31.202]you too with TPP, a lot of time is spent
[00:48:34.058]with our counterparts on the non-ag side.
[00:48:36.177]And we do get to spend a lot of time
[00:48:39.124]hearing from each other what the issues are and
[00:48:42.024]what the progress are in those negotiations.
[00:48:46.460]We have time, I think, for a couple--
[00:48:48.543]Darci, maybe what we'll do is
[00:48:50.489]take a couple right now.
[00:48:52.942]Maybe two or three.
[00:48:53.926]If anyone at the university wants to step to the podium,
[00:48:55.675]we'll grab one more from there and then
[00:48:56.949]we can just answer them all as a group together
[00:48:59.888]instead of going back and forth and back and forth.
[00:49:01.547]Okay, so let's just take couple.
[00:49:03.034]You'll, I think, jump in in a minute.
[00:49:04.676]Let's take a couple questions and then
[00:49:05.900]we'll answer them en masse.
[00:49:09.343]Hi, Brett Fortnam with Inside US Trade.
[00:49:11.925]There's been some talk of aspects
[00:49:14.331]that were brought forward in TPP.
[00:49:17.835]The IP chapter, for instance.
[00:49:20.901]And in the first couple of rounds of negotiations,
[00:49:23.350]there have been some discussions over biotech provisions
[00:49:26.420]and other issues that were brought forward in TPP.
[00:49:29.852]And I was wondering if we essentially wind up
[00:49:34.330]with the TPP text as it relates to agriculture,
[00:49:38.372]would that be considered a win for the agriculture sector?
[00:49:53.075]Hello, I am Jesus Zorrilla
[00:49:54.827]from the European Union.
[00:49:56.946]My question to Jaime is was not an error from the US
[00:50:04.886]to refuse to negotiate geographic indications
[00:50:07.377]while every other country is willing to do it,
[00:50:12.368]and we may start now negotiations with Australia
[00:50:15.396]and New Zealand, very strong dairy industries
[00:50:21.405]and apparently they are also ready to negotiate on that.
[00:50:27.438]Anyone at the university?
[00:50:30.298]I don't see anyone there, we can take one more here,
[00:50:31.808]Darci, and then we'll go to the panel.
[00:50:34.306]Hi, Doug Palmer with Politico.
[00:50:36.667]For Mr. Martin.
[00:50:38.436]Could you be a little more specific when you talk about
[00:50:40.388]having to find new vectors of communication?
[00:50:43.930]I mean, the sense I got is like
[00:50:47.060]you're saying Greg Doud is not in play
[00:50:48.757]so we can't go talk to Greg Doud and tell him that
[00:50:51.434]withdrawing from NAFTA is a stupid idea,
[00:50:54.292]so we have to find other ways of getting
[00:50:56.247]that message to the president.
[00:50:58.821]Is that what you're talking about,
[00:51:00.334]and how are you doing that, what are those alternative ways
[00:51:04.900]you're using to communicate your message?
[00:51:09.573]Great, well, I'll start with you, Gary,
[00:51:10.699]and then we'll let the other panelists look at these in,
[00:51:14.337]yeah, a reverse order.
[00:51:15.315]You start with that question, but other panelists
[00:51:17.032]can address the other questions as well.
[00:51:20.378]Thanks, Doug, I think I was speaking more broadly
[00:51:26.450]Whether people are there or not,
[00:51:30.322]it's a matter of fact that the broader influence,
[00:51:37.723]which includes consumers, not just direct stakeholders
[00:51:41.807]in the trade flow, needs to understand what trade means.
[00:51:48.248]And that will further enable the process
[00:51:53.351]that lacks some traditional communication vectors
[00:51:58.128]from being informed.
[00:52:01.600]It is a democratic process and there are many ideas
[00:52:06.383]and views to be expressed.
[00:52:09.451]So now, what tools do you use?
[00:52:12.818]And I think the tools you use logically
[00:52:16.880]are better ways of managing data and more local impact
[00:52:25.172]through communication direct to the consumer.
[00:52:30.188]Certainly, there's been aggressive communication
[00:52:33.090]to the producer, the manufacturer, farmer,
[00:52:39.586]as well as the value added stream in agriculture
[00:52:44.527]over the past few months, but it needs
[00:52:46.770]to be broadened even further.
[00:52:48.975]There is a nexus between buyer and seller,
[00:52:52.651]just as there is a nexus between producer and consumer.
[00:52:57.139]And it's when producers talk to consumers
[00:53:02.729]that the trade message needs to be conveyed,
[00:53:05.791]and there are tools out there to do that.
[00:53:09.945]The Internet, the compilation of data,
[00:53:12.812]the management of data that results from trade flows
[00:53:17.829]can be significantly improved and can be
[00:53:21.420]more transparent to the consumers.
[00:53:23.992]That, in turn, influences the democratic process
[00:53:27.841]here in the United States.
[00:53:29.636]Do you think it's fair, Gary, and
[00:53:32.784]a bit of an answer to this question,
[00:53:34.177]just some tangible examples here.
[00:53:37.655]You know, over the labor day weekend
[00:53:39.773]when the fire drill came that perhaps KORUS,
[00:53:43.131]the Korea-US Free Trade Agreement, was,
[00:53:46.473]withdrawal was seriously being considered,
[00:53:48.435]and I think a big network of messages
[00:53:50.761]to question that idea and to ask the administration
[00:53:53.989]not to go forward came from state governments
[00:53:57.599]and Republican governors in particular.
[00:54:00.040]And then I think their voices are a lot louder
[00:54:02.494]in communicating directly with Washington,
[00:54:04.503]maybe not through the trade associations that tended
[00:54:08.177]to work through typical bureaucratic channels in the past.
[00:54:12.339]I think there is also, we've seen the creation
[00:54:14.707]and full disclosure, an organization
[00:54:17.608]I've been involved with, the Farmers for Free Trade.
[00:54:21.132]Which is really designed at getting grassroots
[00:54:23.179]grasstops messaging out to remind people
[00:54:25.679]at community level how trade affects their pocketbook.
[00:54:29.004]And to encourage them to be speaking about
[00:54:31.213]and sort of rebuilding the consensus on trade
[00:54:33.499]that I think was lost through a lot of the rhetoric
[00:54:36.401]of this past campaign.
[00:54:37.917]And you saw Max Baucus and Dick Lugar, two former senators
[00:54:41.725]and chairs of the finance and ag committee,
[00:54:44.082]put out their op-ed on this effort
[00:54:46.121]and the importance of hearing that message
[00:54:48.696]back in communities that came out just this week.
[00:54:51.921]So I think those are two sort of different lines
[00:54:54.788]of communication and investment in a trade message
[00:54:58.384]that maybe weren't quite as prevalent before.
[00:55:02.784]Jaime, maybe moving to you on the question
[00:55:05.244]from Inside US Trade about the TPP-like provisions
[00:55:09.001]in the text.
[00:55:10.515]If the TPP text was repeated in NAFTA,
[00:55:13.908]do you think agriculture would call that a win?
[00:55:16.726]Yeah, I couldn't talk for the entire agriculture.
[00:55:19.218]I think we can certainly say that,
[00:55:22.563]put aside market access because it certainly
[00:55:25.174]is not a secret that we would've wanted to see
[00:55:28.590]more market access in countries like Japan and Canada.
[00:55:32.881]But I would think, if you look at everything else
[00:55:37.542]from the IP chapter to rules of origin
[00:55:40.764]and all the rules of the agreement, I think that that
[00:55:44.812]would've been a significant improvement of NAFTA.
[00:55:48.283]Again, remember that actually, this agreement
[00:55:51.587]from the Canadian side is 30 years old.
[00:55:55.136]So for God's sake, the Soviet Union was in play.
[00:55:58.606]So we need to actually, I don't think anybody
[00:56:01.960]is in disagreement that we need to update this
[00:56:05.055]so that TPP rules and all these other chapters,
[00:56:09.057]I think it would be a good place where we can start.
[00:56:12.862]And do you want me to--
[00:56:15.148]Yeah, actually, I think there was obviously the question
[00:56:17.194]on GIs and those negotiations, I'd be interested
[00:56:19.891]to hear your take, but also actually, Joe.
[00:56:22.954]That GI agenda has been on the--
[00:56:25.391]Do you want him to go first?
[00:56:26.283]Yeah, you can go first, Jaime.
[00:56:28.004]For a while, you dealt with it during the Doha round.
[00:56:30.700]So if you have some thoughts on that too.
[00:56:32.823]And actually, Joe did a great job in holding
[00:56:37.551]any attempt by the European Union to do that
[00:56:40.163]in the Doha round.
[00:56:43.925]But what I think that it is critical here
[00:56:47.069]is that we didn't refuse to negotiate.
[00:56:49.280]And again, Jesus, very good friend.
[00:56:51.613]And we actually refused to negotiate
[00:56:54.754]in the terms of the European Union,
[00:56:57.164]which I think is a big difference.
[00:56:59.530]And the terms of the European Union,
[00:57:01.607]let me just give you an example, is that,
[00:57:04.631]when a couple of countries in Central America
[00:57:07.368]refused to actually negotiate on the GIs
[00:57:10.191]on the terms of the European Union,
[00:57:12.396]the parliament in Europe refused to grant
[00:57:15.952]the free trade agreement with those two countries
[00:57:18.814]until they come in line.
[00:57:21.531]It's different that we don't want to.
[00:57:23.752]We have a trademark system in which actually,
[00:57:26.813]many of the GIs benefit from that,
[00:57:30.441]from tequila to Roquefort to Prosciutto di Parma.
[00:57:37.741]So we have a system, and in fact, many of these products
[00:57:41.696]have been expanding, have been growing.
[00:57:44.071]So we just are refusing to negotiate
[00:57:46.883]in the same terms or the terms that actually
[00:57:49.297]the European Union want us to do that.
[00:57:55.107]A couple of things.
[00:57:55.940]One, I appreciate the softball that Brett threw up.
[00:57:58.782]Yeah, I think getting TPP, those provisions for NAFTA
[00:58:02.255]would be a huge improvement, I mean,
[00:58:03.769]that would be a great improvement, a great outcome.
[00:58:06.917]And certainly goes a lot beyond do no harm,
[00:58:09.737]I think it would improve in those areas.
[00:58:13.041]And as Jaime said, some of these areas are,
[00:58:15.659]like e-commerce and other things, are really,
[00:58:17.945]weren't even envisioned 25 years ago or 30 years ago.
[00:58:22.720]The tougher issue I think is the GI issue.
[00:58:25.997]And I thank Jaime for all the compliments,
[00:58:29.315]but it was actually Peter Allgeier who was dealing
[00:58:31.814]with all the GI stuff in the Doha round.
[00:58:35.531]But I think actually, this points to a thing
[00:58:38.922]where I feel pretty strongly that multilateral negotiations
[00:58:42.270]are really the places to sort of,
[00:58:44.278]we should be trying to address these issues.
[00:58:46.244]Because here's the issue with a lot of bilateral agreements.
[00:58:50.037]You can set these standards between two countries,
[00:58:53.472]but these global value chains extend beyond
[00:58:57.231]just two countries.
[00:58:59.434]So you get this often talked about spaghetti ball
[00:59:02.659]of all these different agreements with conflicting standards
[00:59:05.519]and other things.
[00:59:06.536]I mean, this is a place where the WTO, I think,
[00:59:09.560]could really help if we were able to sit down
[00:59:12.626]and get some negotiations in this area.
[00:59:15.279]Unfortunately, again, another area that,
[00:59:18.014]may I, I dare say you haven't had
[00:59:22.737]a panel yet on MC11, which is coming up in December.
[00:59:28.077]And yet, you know,
[00:59:30.683]again, here we are, we're focused on something
[00:59:33.006]that we're doing us best to make sure there's no damage.
[00:59:38.485]Thank you very much, and thanks to all of our panelists
[00:59:40.733]on panel one for an excellent discussion.
[00:59:43.800]Yeah, perfectly on time.
[00:59:49.570]Thank you, panel one.
[00:59:50.916]We are not having a formal break,
[00:59:52.099]we're just gonna do a quick stage changeover.
[00:59:54.558]If folks wanna grab coffee, you can,
[00:59:55.821]but it's gonna be 60 seconds till we're back up again.
[01:00:03.305]All right, all right.
[01:00:04.572]Right there, thanks.
[01:00:08.659]Thank you, Darci.
[01:00:10.696]I'm gonna come right back up.
[01:00:15.892]Oh, that's a good question, he's gonna...
[01:02:02.033]If folks can take their seats,
[01:02:03.545]we're gonna try to get restarted.
[01:03:05.726]If people can please take their seats,
[01:03:07.738]return to their seats, we're gonna get restarted.
[01:03:27.682]If folks could take their seats,
[01:03:29.684]I think we'll go ahead and move toward
[01:03:31.891]the second panel here and try to begin.
[01:03:35.971]In our second panel, we are going to focus a little bit,
[01:03:39.034]we talked mostly about movement of commodities
[01:03:41.199]and sort of set the stage for what's at stake in NAFTA
[01:03:43.887]and some of the negotiating dynamics.
[01:03:45.646]In panel two, we're gonna look a little bit more
[01:03:47.932]at the impact on specific products.
[01:03:50.425]And in those sectors that are dealing more
[01:03:52.723]at the retail level and what issues they see
[01:03:55.662]as both challenges and opportunities
[01:03:57.219]in a renegotiated NAFTA.
[01:03:59.839]I did get a question in between panels in the last comments
[01:04:03.823]that Joe Glauber mentioned preparations for MC11.
[01:04:07.782]And for those of you who don't speak trade
[01:04:09.908]or think about it all the time, MC11
[01:04:11.948]is the Eleventh Ministerial Conference of the WTO
[01:04:14.846]which will happen in December.
[01:04:17.141]And in trade and government negotiating time,
[01:04:21.025]that's like five minutes from now.
[01:04:23.438]So I think it is interesting that we haven't seen very much
[01:04:26.214]about what's on tap for that conference.
[01:04:30.418]Anyway, back to our second panel.
[01:04:33.482]I'd like to start with Tom Stenzel, who is the president
[01:04:36.794]and CEO of the United Fresh Produce Association.
[01:04:40.671]And Tom occupies an interesting space
[01:04:43.117]in that produce is both, on the one hand, a commodity
[01:04:46.544]and working with groups of farmers.
[01:04:48.298]On the other hand, it's often branded and sold directly
[01:04:53.039]as fresh product on the grocery store shelf.
[01:04:55.489]And so United Fresh and other produce associations
[01:04:58.795]sort of have to straddle that line
[01:05:01.160]between being both producers and retailers.
[01:05:04.099]And so with that in mind, maybe you can share
[01:05:06.751]what you think are some of the challenges
[01:05:08.258]and opportunities of NAFTA.
[01:05:10.764]Great, thank you, Darci, and thank you, Carolyn,
[01:05:12.875]for hosting us, and thank you to WITA for the invitation.
[01:05:17.003]Turn that on?
[01:05:18.812]I think so, are you on?
[01:05:23.026]Okay, now we're on.
[01:05:24.416]I said thank you to everybody.
[01:05:27.630]So as I sit here and start this transition from, you know,
[01:05:30.938]strictly commodity agriculture into retail agriculture
[01:05:34.932]in the food and beverage sectors,
[01:05:37.503]I'm struck by the diversity that we really experience
[01:05:40.069]in the fruit and vegetable trade.
[01:05:42.079]So within agriculture, there's tremendous diversity already.
[01:05:46.032]But within our sector, we really are
[01:05:48.437]a group of different commodities.
[01:05:50.273]So strawberries are affected differently from grapefruit,
[01:05:53.572]and they're affected differently from avocados.
[01:05:56.962]So for the broad fruit and vegetable industry,
[01:05:59.861]we have to retreat a little bit from just looking
[01:06:02.636]at individual commodity issues and go back to
[01:06:06.514]what are principles of free trade.
[01:06:08.686]Tariff free, quota free trade enhances opportunity
[01:06:13.080]for everyone in our sector with goods moving
[01:06:16.190]in multiple directions.
[01:06:17.802]But that does create some stress because,
[01:06:20.470]if you've just focused strictly on deficits
[01:06:22.796]and movement of goods, there are gonna be some commodities
[01:06:25.780]that have deficits in one direction
[01:06:28.148]and others in back in the opposite.
[01:06:30.478]So we have to try to broaden across
[01:06:32.847]all of those different issues.
[01:06:35.047]Something that Joe said in the first panel
[01:06:36.802]that we also think a lot about is the impact on consumers.
[01:06:40.461]So for us, that is a big part of
[01:06:42.917]the missing discussion right now.
[01:06:44.906]We're strictly looking at grower impacts.
[01:06:47.852]We're missing a whole range of the value of NAFTA
[01:06:50.787]in what we've seen.
[01:06:52.013]Joe mentioned the increase in per capita consumption
[01:06:54.538]of a variety of fruits and vegetables in the last 25 years.
[01:06:58.825]And that's important to the health of America.
[01:07:01.192]It's important to all of us in many many different ways.
[01:07:05.358]The year round availability of high quality,
[01:07:07.926]low cost fruits and vegetables is something
[01:07:10.457]that we can't lose sight of when we look at
[01:07:12.954]simply which direction goods are moving.
[01:07:16.220]The other thing that I would call your attention to
[01:07:18.265]in the last 25 years is a tremendous integration
[01:07:21.783]of the fruit and vegetable supply chains
[01:07:24.237]across the three countries.
[01:07:27.426]We'll start with investment.
[01:07:29.096]So with the free flow of investment dollars,
[01:07:31.793]the vast majority of products that are moving
[01:07:33.839]into the United States are with US company involvement.
[01:07:38.215]So we do not see small growers in Mexico
[01:07:41.640]necessarily exporting directly to the US.
[01:07:44.830]These are a part of comprehensive supply chains
[01:07:47.768]that are managed by US companies.
[01:07:50.706]I'll give you an example in the avocado sector,
[01:07:52.831]which is probably the largest single increase
[01:07:55.814]in consumption of any fruit or vegetable
[01:07:57.811]from Mexico to the US.
[01:08:00.340]There are about five US companies
[01:08:02.458]that are responsible for 95% of that volume.
[01:08:06.663]And those were US avocado companies before
[01:08:09.363]and they're US-based avocado companies now.
[01:08:12.831]You can also look at the issue of jobs
[01:08:15.084]and impact on the economy in a very different way
[01:08:17.858]than simply looking at cross-border commodity trade.
[01:08:21.619]If you think about how much money goes back
[01:08:24.229]to the source country, in our industry, it's about 30%.
[01:08:28.524]So two thirds of the economic value of imports
[01:08:33.310]stays in the United States.
[01:08:35.433]In distribution, wholesaling, retailing,
[01:08:39.107]repacking, further processing.
[01:08:42.414]So when you are strictly looking at the movement of goods
[01:08:46.006]and what crosses the border, again, we're missing
[01:08:48.457]the integration and the economic wellbeing of trade.
[01:08:52.495]And that goes in both direction as well.
[01:08:54.736]So you look at the US apple industry
[01:08:57.393]and its exports to Mexico been extremely successful.
[01:09:01.393]I'll close with just a comment on the avocado story,
[01:09:04.370]because I think this is one that
[01:09:07.433]the ancillary benefits are so impactful,
[01:09:10.300]and yet most people don't really understand this story.
[01:09:13.071]Consumption of avocados in the US has gone up four times,
[01:09:16.752]400-fold, since the start of NAFTA.
[01:09:19.567]We are now having avocados available year round.
[01:09:22.712]And the avocado industry in the US was based in California.
[01:09:27.440]The California growers could not grow
[01:09:29.035]nearly enough avocados to meet that demand.
[01:09:32.780]And yet has this been difficult competition?
[01:09:36.996]California avocado growers have had the highest returns
[01:09:41.113]back to the grower in their history in the last five years.
[01:09:45.200]So we are seeing what is a win-win.
[01:09:47.864]And if you wanna talk about benefits across other issues,
[01:09:52.359]there are an estimated 300,000 harvest jobs associated
[01:09:57.015]with the Mexican avocado industry in Mexico today.
[01:10:01.059]300,000 new jobs in Mexico that didn't exist.
[01:10:06.129]You don't need a wall, you just need better trade.
[01:10:10.782]Very well said, Tom, thank you very much.
[01:10:13.799]Our next panelist is Melissa San Miguel.
[01:10:17.101]She's the senior director for global strategies at GMA,
[01:10:19.835]the Grocery Manufacturers Association,
[01:10:21.913]which represents a number of the companies that put
[01:10:25.223]the brands you're familiar with
[01:10:26.650]on our grocery store shelves and will talk to us a little
[01:10:29.182]from that perspective about opportunities
[01:10:31.103]and challenges of NAFTA.
[01:10:33.226]Thanks, Darci, and thanks to organizers
[01:10:35.189]for inviting me to be here today at this great event.
[01:10:38.370]Many of the speakers before me have touched
[01:10:40.823]on a lot of the points that I would like to make,
[01:10:43.153]including my own personal great love of avocados.
[01:10:45.808]So I'm gonna wing it a little bit.
[01:10:47.439]Let me tell you a little bit about who we are at GMA
[01:10:50.342]and what we do.
[01:10:51.970]A bit about what I did not think I would be working on
[01:10:54.184]at GMA, and then some of the opportunities
[01:10:56.272]that we have been pursuing in this new
[01:10:58.884]kind of challenging environment.
[01:11:01.004]The Grocery Manufacturers Association,
[01:11:02.796]we represent about 300 companies across
[01:11:05.122]the food and ag value chain, as well as personal care
[01:11:07.408]and household products.
[01:11:08.873]So we have a really diverse membership.
[01:11:10.552]Every brand you can think of and a lot that you can't
[01:11:12.796]or didn't know were brands that you don't know.
[01:11:16.669]We have about 2.1 million direct employees
[01:11:21.942]in 30,000 communities across the United States,
[01:11:24.762]which makes us, probably even to our own great surprise,
[01:11:28.032]the largest employer in US manufacturing.
[01:11:30.890]So when we talk about the impacts of trade of manufacturing
[01:11:34.117]and agriculture, we sit at the unique intersection
[01:11:36.934]between those two issues and we have really learned
[01:11:39.673]that we need to tell that story.
[01:11:42.328]NAFTA is a big part of that success
[01:11:45.022]in our ability to drive employments
[01:11:47.148]and economic growth here in the United States,
[01:11:49.598]and also to deliver the safe and affordable
[01:11:52.702]and diverse products that our customers demand
[01:11:55.518]and rely on every day.
[01:11:57.150]I doubt very much that there's a household
[01:11:58.942]in the United States that does not touch a product
[01:12:01.599]associated with or produced by a GMA member company
[01:12:04.945]on almost a daily basis.
[01:12:07.111]So of course, NAFTA plays a big part in that.
[01:12:10.259]Canada and Mexico are our top two export markets.
[01:12:13.490]Exports of processed food and beverages alone
[01:12:16.345]account for about half of all US ag exports.
[01:12:19.738]When I came to GMA in 2014, I certainly did not think
[01:12:23.453]that I would be spending a lot of time working on NAFTA.
[01:12:26.764]I was looking at Europe and Asia as being
[01:12:29.949]my primary targets for trade policy activity and in fact,
[01:12:33.502]I took a trip to Brussels in December of 2014.
[01:12:38.078]And I was talking to our counterpart association there,
[01:12:40.082]the Food and Drink Europe.
[01:12:42.530]And they were telling me about the level
[01:12:44.854]of public discourse on TTIP.
[01:12:46.940]That people on the bus were talking about TTIP.
[01:12:49.686]Their domestic employees were asking them
[01:12:52.367]their opinions on trade policy.
[01:12:54.410]And I was a little bit younger and a little bit stupider,
[01:12:56.653]and frankly, a little jealous.
[01:12:58.820]Because I've been toiling away on trade policy
[01:13:00.371]for years already at the State Department in my first life,
[01:13:03.630]and nobody ever wanted to talk about trade.
[01:13:05.918]And now here we are and I kind of wish
[01:13:07.960]that the level of public discourse were still
[01:13:09.961]a little bit more isolated and expert on trade policy,
[01:13:14.456]because I think that it's so important
[01:13:16.542]and we are getting a little bit down a dangerous path.
[01:13:19.323]So when we articulate now our trade policy at GMA,
[01:13:22.629]our priority number one is, as everybody
[01:13:24.145]has already said, do no harm.
[01:13:26.475]Our industry is particularly integrated,
[01:13:29.488]highly integrated, highly invested.
[01:13:31.902]We have complicated supply chains and the consistency
[01:13:35.868]and predictability of those supply chains
[01:13:37.460]is absolutely critical to our brands.
[01:13:39.868]And they are not able to tolerate
[01:13:43.171]the kind of uncertainty around those supply chains
[01:13:46.355]that is already evident and that could be heightened
[01:13:50.445]depending on how things go here.
[01:13:52.894]Beyond that, we wanted to articulate
[01:13:54.570]some opportunities though for NAFTA.
[01:13:57.383]Gary mentioned earlier the real value
[01:13:59.878]in regulatory cooperation and regulatory alignment, really.
[01:14:03.870]And so of course, we focused on
[01:14:05.910]comprehensive tariff elimination with NAFTA
[01:14:09.181]and hopefully with new partners in the future.
[01:14:12.082]But one of the opportunities that we've put forward
[01:14:14.404]to the administration is really to focus
[01:14:16.735]on this issue of regulatory alignment.
[01:14:18.901]We have worked very closely with
[01:14:20.374]our counterpart associations in Mexico and Canada
[01:14:23.353]to align our messages to present a clear united front
[01:14:26.704]across our industry on the sort of traditional basket
[01:14:30.502]of rules, issues that we'd like to see in the agreement.
[01:14:33.891]Updates to the disciplines around food safety standards
[01:14:37.822]and technical barriers.
[01:14:39.414]And then also some real opportunities
[01:14:41.007]for concrete regulatory alignment.
[01:14:43.548]Interesting to have seen in the TPPan approach where
[01:14:47.324]we were reinforcing sector specific regulatory priorities
[01:14:51.892]against the broader commitments of regulatory good practice.
[01:14:55.442]So that's also something that we've been putting forward,
[01:14:57.646]and again, not only for NAFTA.
[01:15:00.376]We hope that this will serve, in the very near future,
[01:15:03.497]as the sort of platform or framework or model
[01:15:06.023]for other agreements going forward for the United States
[01:15:08.558]so that our industry can continue to drive
[01:15:11.538]the economic growth and employment and the access
[01:15:14.975]to diverse products that our consumers demand.
[01:15:19.426]Excellent, and I think a very good reminder that,
[01:15:21.673]as food and agriculture, we sometimes forget to take credit
[01:15:25.654]for the other pieces of the value chain
[01:15:27.927]or people think of agriculture as producing
[01:15:30.714]the raw commodity and forget about the following on activity
[01:15:35.415]in manufacturing and retail and shipping
[01:15:37.986]that both of you really touched on.
[01:15:40.811]And how, if you upset any part of that chain,
[01:15:43.951]there are ripple effects throughout.
[01:15:45.663]So a good reminder.
[01:15:47.177]And now I'd like to turn to our last panelist,
[01:15:49.906]last certainly but not least, Christine LoCascio,
[01:15:52.320]who's the senior vice president
[01:15:53.584]for international trade for DISCUS,
[01:15:55.587]the Distilled Spirits Council of the United States.
[01:15:59.471]I'm sure, as many of you know that alcoholic beverages
[01:16:02.534]are an important part of our trade and they deal with,
[01:16:04.785]again, the issues of branding and supply chains,
[01:16:07.109]but also are more heavily regulated
[01:16:09.398]than a number of other sectors.
[01:16:12.052]And so have to think about all of those things in trade.
[01:16:14.992]And so what is DISCUS looking at
[01:16:17.764]in these NAFTA negotiations?
[01:16:19.522]Thank you very much, and again, it's pleasure to be here.
[01:16:21.813]And if some of you are just sort of questioning,
[01:16:23.281]you know, why is somebody from
[01:16:24.267]the distilled spirits industry here on this panel
[01:16:27.051]with regard to agriculture, I can assure you
[01:16:29.114]we're an agricultural product.
[01:16:31.075]Just to give you some factoids.
[01:16:33.689]In 2016, our companies, US distillers
[01:16:37.534]used 158 billion pounds of grain
[01:16:40.896]in the production of distilled spirits.
[01:16:43.191]And that includes corn, wheat, rye, barley
[01:16:46.055]and some other products, so just to assuage any concerns
[01:16:48.789]that you may have, we are an agricultural product.
[01:16:52.467]And trade really has become more important to our sector
[01:16:56.179]specifically over the past two decades, I would say.
[01:16:59.449]And it really has, you know, become more reliant
[01:17:02.021]on exports to really fuel growth in the industry.
[01:17:04.762]And so forgive me, I'm gonna give you a few factoids.
[01:17:07.910]Our exports have increased from $278 million
[01:17:11.501]in 1990 to over 1.4 billion last year.
[01:17:15.581]And clearly, NAFTA has been an important part
[01:17:19.537]and a success story that we can report to.
[01:17:23.542]And you know, the products that we make,
[01:17:25.425]we're not talking about wine, not talking about beer,
[01:17:28.403]we're talking about products like Tennessee whiskey,
[01:17:31.267]bourbon, gin, rum, products like that.
[01:17:35.478]And so for NAFTA, our exports since NAFTA
[01:17:39.279]has been implemented have increased 571%.
[01:17:43.081]That's a clear, huge success story for us.
[01:17:45.489]Canada is our number one export market.
[01:17:48.710]Exports in 2016 were $191 million.
[01:17:52.911]And Mexico's our 10th largest market.
[01:17:54.910]So when we talk about an opportunity
[01:17:57.315]here to modernize NAFTA, I think
[01:17:59.006]we very much agree with the tenent and the mantra
[01:18:03.051]that has been stated about first, do no harm.
[01:18:05.622]So let me talk about some specifics about
[01:18:08.145]what NAFTA has done for us and how we're looking at this
[01:18:10.877]as an opportunity to build upon what was achieved in NAFTA.
[01:18:14.675]So first, with regard to tariff, we are duty free
[01:18:17.128]across the three countries for distilled spirits.
[01:18:21.421]But the challenge there is, when we talk about
[01:18:25.133]these potential threats to walk away from NAFTA,
[01:18:27.712]US distilleries would be put at a disadvantage
[01:18:29.961]if that were to happen because the United States
[01:18:32.284]has bound its tariffs at the WTO
[01:18:34.732]for the vast majority of distilled spirits at zero.
[01:18:37.748]And that's not the case for Canada and Mexico.
[01:18:40.647]So first, in regards to do no harm,
[01:18:43.791]we wanna make sure that the duty free access is maintained,
[01:18:47.057]and that's why NAFTA is so important for us to retain.
[01:18:51.137]And then secondly, we've talked about GIs
[01:18:54.646]but we have a little bit different beast
[01:18:56.276]called distinctive products in the spirits world.
[01:18:59.510]NAFTA ushered in something called
[01:19:01.390]distinctive product recognition for products like bourbon
[01:19:05.108]and Tennessee whiskey, which are distinctly American spirits
[01:19:09.188]that account for almost 70% of our exports globally.
[01:19:12.975]It's very important that we have this recognition
[01:19:16.126]with our trading partners.
[01:19:17.755]And in return, the United States agreed
[01:19:20.425]to recognize tequila and Canadian whiskey.
[01:19:23.691]So across the three countries, you have distinctive spirits
[01:19:26.956]that have enjoyed a level of protection,
[01:19:29.121]and what do I mean by that protection?
[01:19:30.836]That means that Canada, for example,
[01:19:33.001]has agreed to ensure that any product
[01:19:35.119]that is sold with the label that says bourbon
[01:19:37.326]or Tennessee whiskey is actually made
[01:19:39.365]in the United States in accordance with US law.
[01:19:42.347]That's very important for our producers who make
[01:19:44.677]that product to ensure that you can't, for example,
[01:19:47.214]have somebody set up a distillery in Canada
[01:19:49.295]and start to produce something called bourbon.
[01:19:51.828]And likewise, we afford those same protections
[01:19:53.871]for tequila and Canadian whiskey.
[01:19:56.515]So in terms of the opportunities for us, so first,
[01:19:59.547]do no harm, maintain our duty free access,
[01:20:02.158]maintain the distinctive product recognition,
[01:20:04.486]but we're also looking forward to
[01:20:06.484]how has the market changed and what are the opportunities
[01:20:08.498]to improve the agreement?
[01:20:11.453]And so with regard to distinctive products,
[01:20:13.600]one new category that we are urging be recognized,
[01:20:17.542]and this is the opportunity to do that in
[01:20:19.247]a modernized NAFTA, is a category called
[01:20:22.152]American rye whiskey which is something that,
[01:20:24.485]about a decade ago, there were only a handful of brands,
[01:20:27.235]and today, there are over 100.
[01:20:29.392]You may have seen them, if any of you go out for happy hour,
[01:20:33.568]that you've seen more American rye whiskey brands.
[01:20:36.830]So this is a concrete example of something
[01:20:38.589]that we're looking as an opportunity
[01:20:40.303]to enhance the protections for distinctly American spirits.
[01:20:44.460]And then to go back a little bit into history,
[01:20:46.742]when NAFTA and its predecessor,
[01:20:49.185]the Canada-US Free Trade Agreement, was negotiated,
[01:20:51.427]we faced some specifically discriminatory practices
[01:20:55.064]in Canada with regard to their provincial liquor boards.
[01:20:59.188]The Canada-US Free Trade Agreement
[01:21:01.393]had some specific provisions to basically address
[01:21:04.292]those discriminatory practices,
[01:21:06.414]and that was brought forward in NAFTA and
[01:21:08.129]that's very important to us that those commitments remain.
[01:21:12.223]But as with any marketplace over a couple of decade periods,
[01:21:16.589]marketplace changes and you see how implementation
[01:21:20.038]of an agreement can bring forward sort of new practices.
[01:21:23.505]We're looking at that to see, well,
[01:21:24.917]is there an opportunity to sort of enhance those provisions,
[01:21:28.151]to make sure that there are no discriminatory practices?
[01:21:31.086]So we're taking a deep look at that.
[01:21:33.535]And so again, that's an opportunity to sort of improve
[01:21:35.617]upon those obligations with regard to Canada.
[01:21:39.756]And so lastly, I would say the one thing that we talk about
[01:21:45.177]from TPP that was very important to us
[01:21:47.058]and it was referenced were annexes
[01:21:49.751]that were negotiated that were very new
[01:21:52.181]to trade agreements and that we saw in TPP.
[01:21:55.488]And so we're looking at the modernization of NAFTA
[01:21:58.642]as an opportunity to look at regulatory practices,
[01:22:02.436]and specifically a proposal that we have put forward
[01:22:05.867]with regard to an annex on spirits
[01:22:08.146]and would also hopefully cover wine as well.
[01:22:11.380]To look at sort of alignment of regulatory practices
[01:22:13.663]with regard to labeling and certification.
[01:22:15.909]And so we have some very concrete proposals
[01:22:18.037]that we have given to kind of build upon
[01:22:19.990]what was achieved in the TPP agreement.
[01:22:23.498]And maybe see if we can take it a little bit further.
[01:22:26.154]And so we've provided those recommendations
[01:22:29.139]to our negotiators, and we've actually
[01:22:31.139]worked collaboratively with our counterparts
[01:22:33.064]in Canada and Mexico so it's actually a joint effort
[01:22:36.580]on behalf of the tequila industry
[01:22:38.821]and the US spirits industry and our counterparts
[01:22:41.520]in Canada to put forward something.
[01:22:43.476]And the basic premise here is that it would provide
[01:22:45.959]more stability, more certainty.
[01:22:50.198]It would still allow, you know, governments to regulate
[01:22:52.688]our sectors, as Darci mentioned,
[01:22:54.361]we are very highly regulated.
[01:22:56.448]But provides sort of parameters or best practices
[01:22:59.468]so that producers of these products
[01:23:01.472]could have greater certainty about
[01:23:03.191]what the labeling requirements might be.
[01:23:05.845]So with that, I will stop there, thank you.
[01:23:09.377]And I think a very good example of the fact
[01:23:11.319]that in many cases, our producers
[01:23:14.627]in all three NAFTA countries have similar goals and
[01:23:17.687]I think that's instructive of a way to make progress
[01:23:20.783]in these negotiations, is when you have a joint proposal.
[01:23:23.478]When all three governments are hearing the same thing.
[01:23:25.440]So I hope that ultimately will be a successful way
[01:23:29.528]to get that proposal onto the negotiating table.
[01:23:34.095]I think I'll start with a quick question here
[01:23:36.302]for each of you, and then we'll throw it open.
[01:23:40.674]There's a lot of press about NAFTA and produce lately.
[01:23:44.015]And about differences within the industry
[01:23:46.878]about whether NAFTA has been a positive or negative.
[01:23:50.594]And what might be done about that in this renegotiation.
[01:23:56.023]Can you give us some insight into some of the differences
[01:23:58.924]among your members on, you talked a little bit
[01:24:01.625]about the breadth of your membership,
[01:24:03.017]I think that's helpful to know too.
[01:24:05.139]But also, whether you think some of the proposals
[01:24:09.093]or concerns out there would address
[01:24:12.119]some of the underlying concerns that have come up,
[01:24:15.554]especially for the producers in the Southeast.
[01:24:18.333]So Darci, I thought we had an agreement,
[01:24:19.843]you wouldn't ask me about that.
[01:24:23.922]As you referenced, we have a tremendous diversity
[01:24:25.844]in our industry, so there are certain commodities that,
[01:24:28.255]if faced increasing competition from either Mexico
[01:24:31.643]or Canada, and other US-grown commodities
[01:24:35.086]had the same impact going to Mexico.
[01:24:37.375]So Mexican apple producers probably have
[01:24:39.866]a very similar view as Florida tomato producers.
[01:24:43.996]We're extremely sympathetic to growers in both countries,
[01:24:47.443]as Canada as well.
[01:24:49.398]In terms of dealing with those challenges.
[01:24:52.299]These are competitive challenges,
[01:24:54.460]the seasonal variability matters some.
[01:24:58.011]But in our industry, these are perishable products.
[01:25:00.663]So when the products are ripe and ready, you move them.
[01:25:04.299]So that's created stress and that's where I think
[01:25:07.564]some of the discussion has come in terms of
[01:25:10.546]a dumping provision for seasonable or perishable products.
[01:25:15.198]One of the challenges with that though
[01:25:16.912]is the law of unintended effects.
[01:25:19.524]So if you think about, if you could narrowly define
[01:25:23.238]a season of a perishable product,
[01:25:26.096]the same thing is gonna come back in the other direction.
[01:25:28.833]So I will keep using the example of apples.
[01:25:31.530]So in the apple growing state of Chihuahua in Mexico,
[01:25:35.766]what would those growers ask their government to do
[01:25:38.587]to protect when their apples are coming?
[01:25:41.605]So I think all of us looking at broad trade policy
[01:25:45.316]have to be sensitive to the impact in other areas.
[01:25:49.480]Now, for our friends in Florida, our growers, our members,
[01:25:53.162]we think there is something that
[01:25:54.343]can be done to support them.
[01:25:56.632]Perhaps not in trade policy, it's a very blunt instrument.
[01:25:59.693]If you think you're going to really cure
[01:26:02.467]all the ills of an industry in trade policy,
[01:26:06.419]that's probably not gonna happen.
[01:26:08.459]In Farm Bill and other agricultural policy, there are ways
[01:26:12.380]to support an industry that are WTO compliant.
[01:26:16.746]And that's the kind of thing that we want to be focused on,
[01:26:19.204]as opposed to having trade policy be the answer.
[01:26:24.348]Thanks, Tom, that's very helpful and
[01:26:26.805]also a good reminder that technology
[01:26:30.073]and the pace of how these products move
[01:26:32.764]and consumer tastes are changing rapidly as well,
[01:26:37.010]and that's hard for producers on any side of the border
[01:26:39.333]to keep up with, and has come to light
[01:26:42.561]in this discussion as well.
[01:26:44.968]On that note, I think that brands
[01:26:47.176]also have an issue in dealing with some of that.
[01:26:51.834]Can you maybe elaborate a little bit more, Melissa,
[01:26:55.267]on the comment you made about what we do in NAFTA
[01:26:58.660]sort of becoming a platform and how, once something's
[01:27:01.678]in a trade agreement, has the chance to be more influential
[01:27:06.051]in the larger global context, and some specific issues
[01:27:08.869]you're hoping where that might happen?
[01:27:12.794]I mean, to be frank, right, we used to worry
[01:27:15.539]whether we could use the letters TPP.
[01:27:18.725]I also used to worry whether I could still say
[01:27:20.850]a 21st century gold standard trade agreement
[01:27:23.631]because that was the phrase that we used to apply to TPP.
[01:27:26.983]I think that, you know, as referenced
[01:27:29.102]in an earlier question, it seems clear
[01:27:31.591]that the provisions of the TPP
[01:27:33.390]or previously negotiated outcomes
[01:27:36.009]can be embraced openly as the basis
[01:27:39.023]for setting a new gold standard within the NAFTA.
[01:27:42.986]You know, look, like I said, we were not looking backward
[01:27:46.483]at NAFTA, we were looking into some of the fastest growing
[01:27:50.515]and emerging markets in Asia, for example.
[01:27:53.616]GMA has a long history of work on non-tariff trade barriers
[01:27:58.116]through the Asia-Pacific Economic Cooperation forum.
[01:28:01.785]Many of the, well, all of the partners
[01:28:03.749]from the TPP being members there.
[01:28:06.231]And then looking at some of the non-tariff barriers
[01:28:08.603]in Europe on the other side of the Atlantic.
[01:28:11.004]So you know, it's our hope that we can take
[01:28:12.881]this opportunity, we have a vehicle.
[01:28:15.557]If we can get some strong language in to strengthen
[01:28:17.843]the commitments, as they said, in the rules based areas,
[01:28:21.158]improve concrete regulatory alignment on things
[01:28:24.057]like our food safety systems, on our approaches
[01:28:27.570]to technical issues like fortification
[01:28:30.390]and nutrition labeling.
[01:28:32.961]We can start to diminish the impact
[01:28:35.128]of unnecessary regulatory differences, right, of course,
[01:28:38.102]acknowledging that each system has its own regulatory
[01:28:42.437]needs and approaches but that,
[01:28:44.315]if we use science-based international standards,
[01:28:47.674]if we converge where our system are similar
[01:28:50.612]and get that language into an agreement
[01:28:52.655]with our closest partners, that it start to become easier
[01:28:55.961]to talk that way in new negotiations with other partners,
[01:28:59.274]for example, in Asia, when hopefully, that happens.
[01:29:04.029]Darci, could I add one comment to Melissa's,
[01:29:05.442]because something that I hadn't focused on yet
[01:29:07.768]but really is our most critical goal
[01:29:10.580]in NAFTA renegotiation is the SPS sector.
[01:29:13.933]It is driving sound science for all of these issues.
[01:29:17.443]SPS are the number one barriers
[01:29:19.405]for fruits and vegetables globally.
[01:29:21.567]You know, that's today's new trade barriers
[01:29:24.306]and has been for a long time.
[01:29:26.262]So that really we do see the same
[01:29:28.185]as what you're seeing from GMA.
[01:29:31.172]And for those of you who, again, don't live
[01:29:32.720]in trade speak land, SPS are sanitary
[01:29:34.918]and phytosanitary barriers, so food safety
[01:29:38.433]and animal and plant health regulations
[01:29:40.874]that can often be more difficult to overcome
[01:29:42.926]than the tariffs themselves.
[01:29:45.377]But back to tariffs, I may put you you
[01:29:47.098]a little bit on the spot, Christine.
[01:29:49.032]Because this doesn't just apply to the spirits sector.
[01:29:52.411]But you made, I think, a really important comment
[01:29:55.308]in terms of our approach to NAFTA,
[01:29:57.061]which is that were our trade agreements to go away,
[01:29:59.958]whether that's NAFTA or KORUS,
[01:30:02.328]the United States has a relatively open market.
[01:30:04.697]Our tariffs on most agricultural products
[01:30:06.818]and on manufactured goods are quite low.
[01:30:09.266]But the tariffs we break through when we do
[01:30:11.926]trade agreements with other countries
[01:30:13.232]are often much higher, so the relative gain
[01:30:15.483]in terms of access is often greater on the US side.
[01:30:19.230]Could you talk a little bit about that
[01:30:20.742]from a distilled spirits perspective,
[01:30:22.903]the kind of tariff barriers you see globally?
[01:30:25.480]And just how important the FTA is
[01:30:27.646]as a basis of trade is in that sector and for ag.
[01:30:31.732]Absolutely, well, just a little bit
[01:30:33.858]of background on that, the United States and the EU
[01:30:37.089]did something in 1994 called the zero-for-zero agreement
[01:30:40.675]where they jointly agreed to eliminate
[01:30:43.324]their tariffs on distilled spirits on an MFN basis.
[01:30:47.741]So you would think, well, why would
[01:30:49.131]the US spirits industry support that?
[01:30:51.088]Well, we've supported because one,
[01:30:52.498]it's helped expand our exports tremendously.
[01:30:56.454]But also, on the importing side,
[01:30:58.004]it has allowed us to ensure that, you know,
[01:31:00.712]we have a wide range of products.
[01:31:02.914]And going back to the distinctive product distinction,
[01:31:08.512]we can't make tequila here.
[01:31:09.823]You can't have a full bar with just, you know,
[01:31:12.556]one type of product.
[01:31:13.784]You have to import scotch whiskey and Irish whiskey
[01:31:16.972]and Canadian whiskey and Japanese whiskey and cognac.
[01:31:20.198]So some of these things necessarily have to be made
[01:31:22.688]outside of the United States.
[01:31:25.286]So that was sort of the basis for why
[01:31:27.442]the industry strongly supported that.
[01:31:30.910]But yes, as a representative of
[01:31:32.627]the distilled spirits sector, we have very high tariffs
[01:31:35.279]in many markets around the world.
[01:31:37.283]One of the highest is India.
[01:31:39.160]We have 150% ad valorem tariff there.
[01:31:42.954]India is a very attractive potential market for us
[01:31:45.977]because it is the largest whiskey market in the world.
[01:31:49.146]And as I mentioned earlier,
[01:31:50.488]that's primarily what we produce.
[01:31:53.332]And export, I mean, that's not primarily
[01:31:55.676]what we produce, but it's our biggest export
[01:31:58.294]accounting for almost 70%.
[01:32:00.469]So yes, the opportunity that FTAs provide
[01:32:04.270]to eliminate tariffs on our products
[01:32:06.893]is very important to us.
[01:32:09.186]And so we hope that there are going to be
[01:32:11.972]future FTAs announced that will help
[01:32:14.996]break open these markets.
[01:32:16.343]I think, to some extend, yes, we deal with
[01:32:19.854]a lot of non-tariff barriers, but we're one of the sectors
[01:32:22.345]that still has one of these traditional,
[01:32:24.669]kind of a traditional tariff barrier, trade barriers
[01:32:27.416]which is in the tariff realm.
[01:32:30.775]I think with that, we're ready
[01:32:32.204]to look at questions from the audience.
[01:32:34.702]And I would like, if there are Nebraskans
[01:32:37.565]who would like to ask a question, if you could come up
[01:32:40.626]to the podium, go right ahead.
[01:32:43.279]And please introduce yourself.
[01:32:46.791]Hi, my name is Cody Nickel, I'm a second year law student
[01:32:49.160]here at the university.
[01:32:50.632]Thank you, panel, for being here this morning,
[01:32:52.348]and thanks to professor Schaefer
[01:32:53.534]for inviting the students to be here.
[01:32:55.898]So there's a large public discussion about
[01:32:58.798]things such as trade deficits and some of
[01:33:00.912]the more surface level, clearly visible parts of NAFTA.
[01:33:05.608]But as you guys have all alluded to this morning,
[01:33:07.738]there are a lot more nuanced discussions to be had,
[01:33:11.416]and it was referenced in the last panel,
[01:33:12.848]that there's only one political appointee
[01:33:14.607]currently representing these interests.
[01:33:16.941]So what can be done and what do you guys do
[01:33:18.777]to kind of keep these in the forefront
[01:33:20.860]during these discussions?
[01:33:28.996]Do you wanna take that or should we
[01:33:31.202]take a couple as a group and answer them?
[01:33:35.255]Why don't we take a couple around the room.
[01:33:37.446]Gonna diversify a little, Doug.
[01:33:40.300]Please identify yourself.
[01:33:42.061]I'm Barbara Bowie-Whitman.
[01:33:43.858]And I'm glad that SPS came up.
[01:33:46.708]I worked on the framework agreement
[01:33:49.894]for trade and investment with Mexico,
[01:33:52.024]which was our first stage of approving something,
[01:33:54.679]it came at the same time that
[01:33:57.170]the Canada Free Trade Agreement was approved.
[01:34:00.322]And in those discussions, one of the most thorny topics
[01:34:04.766]was something the Mexicans referred to as
[01:34:08.559](speaks Spanish language),
[01:34:14.314]the little worm, the mythological worm that eats avocados.
[01:34:17.597]So I'd like to ask if that particular issue
[01:34:21.352]has continued to be a problem,
[01:34:23.919]or whether it was a nice complicated negotiating issue
[01:34:29.344]and the trade of avocados is going
[01:34:31.262]just fine with the little worms?
[01:34:43.035]Jerry Hagstrom from The Hagstrom Report.
[01:34:45.080]I've heard a lot of talk this morning
[01:34:46.512]about communication with consumers,
[01:34:48.845]but I'm wondering if you have any specific plans
[01:34:51.704]about how to get the consumers on your side.
[01:34:55.019]Can you tweet in competition with
[01:34:57.380]what the president says or do you have some other forms
[01:35:00.815]of social media that you are using or intend to use?
[01:35:06.566]Thank you, and there is a Twitter,
[01:35:07.792]WITA Twitter handle as well for those of you
[01:35:09.585]who would like to use it.
[01:35:13.462]Hi, Bill Morley with the Altrius Group.
[01:35:15.796]There was reference to regulatory challenges,
[01:35:18.309]SPS challenges and sound science.
[01:35:21.570]My question is, some of the other challenges
[01:35:23.445]that we look forward, look ahead
[01:35:25.568]in some of the specific commodities.
[01:35:27.852]Labeling requirements, taxation requirements,
[01:35:32.215]You see the soda tax in certain cities
[01:35:34.632]springing up in the United States.
[01:35:36.064]You see advertisement restrictions in the US and abroad.
[01:35:38.884]To what extent do you see that as
[01:35:40.155]a challenge in the NAFTA negotiations
[01:35:41.748]and other free trade agreements going forward
[01:35:43.295]and how should we address it?
[01:35:47.731]Well, I think the first question we heard
[01:35:50.406]was sort of twofold.
[01:35:51.922]One was how are you putting your priorities forward,
[01:35:55.145]but the second was this issue of trade deficits
[01:35:57.147]which hadn't really come up in our panel yet.
[01:35:59.599]And it's a fairly unique focus for a free trade agreement
[01:36:03.965]as being the tool you would use to somehow balance
[01:36:07.233]trade flows and make them more equal.
[01:36:10.781]And I think that there's been a lot of discussion
[01:36:13.804]about whether this is really the appropriate tool
[01:36:16.373]to be able to control something that has more to do
[01:36:18.743]with spending versus saving rates in countries
[01:36:21.320]or the way that currencies are valued.
[01:36:24.219]And so I think that's,
[01:36:27.741]it's sort of an ongoing issue that if
[01:36:29.373]what you want to do is integrate markets
[01:36:32.235]and you want there to be opportunities
[01:36:35.822]to use trade in a particular product
[01:36:38.717]to maybe produce a second product
[01:36:40.636]that might be exported to a third country,
[01:36:43.538]how do you actually keep track
[01:36:45.047]of where the value is accumulated
[01:36:47.130]and is simply the bilateral addition and subtraction
[01:36:52.359]a necessary array, an appropriate barometer
[01:36:56.158]of the value of that trade agreement?
[01:36:59.025]And I think that is a question that economists are raising,
[01:37:03.271]that we in the ag sector are raising.
[01:37:05.442]I'm not sure there's a particularly good answer.
[01:37:08.383]Or in such integrated supply chains,
[01:37:11.409]if you change the trade flows in one area,
[01:37:14.471]that it won't have perhaps those unintended consequences
[01:37:17.694]that you had talked about in another.
[01:37:21.043]But I think it is maybe worthwhile
[01:37:24.224]to spend a little time talking about how
[01:37:27.453]you have made your case and how your companies
[01:37:30.677]are looking at really making clear
[01:37:33.939]how fully integrated the back and forth flow
[01:37:37.524]of products is in your sectors, particularly when
[01:37:40.426]you're talking about these manufactured goods?
[01:37:46.712]Sure, thanks, Darci.
[01:37:48.265]I was looking around the room, I think Gary
[01:37:49.939]and Cassandra have both maybe ran away.
[01:37:53.409]The ag and food trade dialogue has done some good work
[01:37:56.351]addressing the bigger picture topic
[01:37:57.983]of trade deficits and the flow of trade within
[01:38:00.188]the ag sector, along with other associations
[01:38:03.499]who've talked about all of the other associated concerns
[01:38:05.908]that you've raised there, Darci.
[01:38:07.671]And I think that this is a key area where the broad scope
[01:38:11.676]of the negotiation comes into play where,
[01:38:13.916]even though I think the administration
[01:38:15.467]doesn't necessarily intend the trade deficit conversation
[01:38:17.962]to negatively impact the agriculture and food sector,
[01:38:21.191]changes to other parts of the economy
[01:38:23.068]will have potential consequences for us.
[01:38:25.842]For GMA's part, I can tell you that we do talk a lot
[01:38:28.785]about sort of the anecdotes and different kinds of products
[01:38:31.812]that are made with different supply chains.
[01:38:34.791]You know, it's always dicey to get into specific examples.
[01:38:38.666]One I think reasonably uncontroversial one
[01:38:41.531]is that Canada exports nearly all of its food grade oats
[01:38:45.358]to the United States where they are processed into products,
[01:38:48.548]everything from breakfast foods to baked goods to snacks.
[01:38:52.427]Many of which are sold in the United States,
[01:38:54.221]and some of which are exported back to Canada.
[01:38:56.177]And so we talk about those kinds of examples
[01:38:58.265]with the administration, sort of providing a face
[01:39:01.567]to the notion, the abstract notion of global supply chains
[01:39:05.368]and value chains and trying to make
[01:39:06.955]that feel a little bit more real.
[01:39:12.068]And maybe just brief, I mean, less on the supply chain,
[01:39:14.551]but our industry, we have at least 161 members
[01:39:18.103]across 37 states, small, medium and large distillers,
[01:39:21.946]many many small producers that didn't exist
[01:39:25.253]about a decade ago, so we're, like the craft brewery sector,
[01:39:29.773]we're experiencing that in the distilled spirits sector.
[01:39:32.322]And many of these small producers
[01:39:34.197]are very interested in exporting.
[01:39:36.526]You'd think, well, why aren't they just focusing
[01:39:38.320]on the US market?
[01:39:39.340]Well, they see the opportunities
[01:39:40.724]that export markets provide to them.
[01:39:43.051]So one of the things that we've been doing
[01:39:45.177]is trying to work with them to help them
[01:39:47.422]with their export programs and promotions.
[01:39:50.848]But just also to educate them about the opportunities
[01:39:53.870]that are out there via FTAs and the fact that
[01:39:56.238]their exports to Canada and Mexico would be duty free
[01:39:59.417]if they chose to try and explore those opportunities.
[01:40:02.245]So I think a lot of it there for us
[01:40:04.135]is working with a lot of those small distillers
[01:40:06.947]to explain these opportunities and the challenges,
[01:40:11.160]and to seek their engagement and support
[01:40:13.818]in expressing their goals for their businesses in that,
[01:40:17.760]as they export, they can hire 10 more people.
[01:40:20.990]And that's a small number, but when you,
[01:40:23.681]that's important for members of the Hill
[01:40:25.767]to hear that as well from their constituents.
[01:40:30.009]Moving on to SPS issues and avocados in particular.
[01:40:34.741]But I think that that's actually a pretty good illustration
[01:40:37.885]of what NAFTA is, which is more than the words
[01:40:40.819]written on a piece of paper.
[01:40:42.788]We know that sometimes, SPS barriers can be
[01:40:47.392]perhaps political as well as scientific and difficult
[01:40:50.778]to get over and break through once they're in place.
[01:40:54.253]Avocados used to be an area of controversy.
[01:40:57.398]Is now, as you said, an area of success.
[01:41:00.708]Can you talk a little bit maybe about,
[01:41:03.451]first of all, that particular example
[01:41:05.772]and how you solved that problem,
[01:41:07.485]but just SPS generally and how NAFTA regulators
[01:41:10.385]work together very well for your sector?
[01:41:12.766]Yeah, I think, starting with the big picture on SPS.
[01:41:17.010]This, I said, really is today's trade barrier
[01:41:19.873]in the fruit and vegetable industry globally.
[01:41:22.572]And what we see is that it is far too often political
[01:41:26.168]in our judgment.
[01:41:27.925]Many of you know that USDA APHIS has the dual responsibility
[01:41:31.359]of weighing import requests to ensure that
[01:41:34.019]we are not importing invasive species or pest
[01:41:38.225]when new products come into the US.
[01:41:39.988]But they also are assisting us in challenging SPS barriers
[01:41:44.072]in other countries.
[01:41:45.540]So they are complicated, but if we can push them
[01:41:49.095]toward a more equal scientific basis that has standards,
[01:41:53.749]international science standards,
[01:41:55.668]you take away some of the uncertainty.
[01:41:57.879]You take away the fear of politics.
[01:42:01.500]Now, in the particular case of avocados 25 years ago,
[01:42:04.203]they were not, Mexican avocados
[01:42:05.837]were not admitted to the US for some of these same fears.
[01:42:09.929]Gradually, that changed.
[01:42:12.010]APHIS originally allowed avocados
[01:42:14.584]only in the eastern seaboard of the United States
[01:42:17.895]because they didn't want to bring them
[01:42:19.201]into the California growing regions.
[01:42:21.444]So the pests were monitored and there was all kind of
[01:42:24.632]efforts to make sure that there was not going to be damage
[01:42:27.650]from pests that were going to come north.
[01:42:29.859]So eventually, we've gone to all 50 states
[01:42:32.590]and thus the success story.
[01:42:35.191]But that's where I do think partners in trade
[01:42:39.031]in Mexico and Canada are important.
[01:42:42.056]Can we make the agreement actually better,
[01:42:45.243]transition the TPP language into a modernized NAFTA?
[01:42:49.529]Yes, that would help.
[01:42:50.953]But at the same time, you do want to work together
[01:42:54.379]with partners who wanna facilitate trade, not just protect.
[01:43:00.632]We also had a question about
[01:43:04.243]the kinds of trade restrictions and standards
[01:43:06.433]and where those kinds of things fall in
[01:43:08.641]cooperation on the regulatory side.
[01:43:10.479]But I think one of your comments maybe gets at that
[01:43:14.218]a little bit, but also at preserving the markets you have.
[01:43:18.790]And have your member companies, have you as associations,
[01:43:24.306]has there been activity back and forth
[01:43:26.527]to reassure your customers in Mexico and Canada that,
[01:43:30.699]despite uncertainty, you see them
[01:43:32.616]as partners for the long haul?
[01:43:34.817]What's the communication among companies that you're seeing?
[01:43:39.586]Well, I'll start and then pass it down.
[01:43:41.751]We certainly are seeing that.
[01:43:43.180]I mentioned that the majority of product
[01:43:45.308]coming to the United States, fruits and vegetables
[01:43:47.183]are managed by US-based importing companies.
[01:43:50.729]So they have been very concerned
[01:43:52.766]about some of the rhetoric and issues.
[01:43:55.178]So very much focused on solidifying those supply chains.
[01:44:00.848]And one of the things in the perishable products
[01:44:03.020]that I represent.
[01:44:04.411]You need a diverse supply chain
[01:44:06.616]for precisely times like this.
[01:44:08.742]The tragedies in Florida of this week in Hurricane Irma
[01:44:13.032]are decimating some of the production there.
[01:44:15.644]So it's gonna be important that more product
[01:44:17.723]is able to come in the United States to meet consumer needs.
[01:44:21.115]But that's one reason why you want to have
[01:44:23.356]those diverse supply chains.
[01:44:25.597]Clearly, it's important that we bring
[01:44:28.212]a little bit of consistency.
[01:44:31.151]We were talking in the earlier panel
[01:44:32.502]that uncertainty is the big danger at this point.
[01:44:38.750]And I might try and hit just this last question
[01:44:42.514]and turn it to the two of you as
[01:44:44.139]we're winding down on our time about,
[01:44:47.937]integrating into that to Jerry's question
[01:44:50.002]about how is it that we get consumers on our side.
[01:44:53.422]Are there things you're doing, again,
[01:44:55.174]working with small distillers, for example,
[01:44:57.340]to get them to understand both the current benefits,
[01:45:00.616]but also future opportunities in a more open trade regime?
[01:45:07.709]Okay, well, I think it actually connects
[01:45:08.977]to both questions.
[01:45:10.159]So in our case, as I said earlier,
[01:45:12.142]our industries are very highly integrated,
[01:45:14.005]we have very common objectives
[01:45:16.540]with our association counterparts in Mexico and Canada.
[01:45:19.188]We share many members.
[01:45:20.699]We have large companies who have invested significantly
[01:45:24.206]in each of the three.
[01:45:25.957]US companies highly invested into Mexico,
[01:45:27.881]Mexican companies highly invested in the United States,
[01:45:29.883]also the same with Canada.
[01:45:32.571]With regard to the consumer facing efforts,
[01:45:35.022]all of us, obviously, are heavily focused on that.
[01:45:37.725]And we have very strong relationships
[01:45:39.847]with our retail partners who are often the last link
[01:45:43.852]in that chain, although many of the companies
[01:45:46.013]have their own now consumer facing activities or venues.
[01:45:52.799]I think that that part has been maybe a little bit lagging.
[01:45:57.816]We're so focused on the policy environment right now.
[01:46:00.632]And it's been traditionally a little bit difficult
[01:46:03.415]to talk about trade in a way that makes sense
[01:46:05.784]when you're really just filling your grocery cart.
[01:46:08.398]But I think that will inevitably come and in fact,
[01:46:10.848]as Gary referenced earlier, even the grassroots
[01:46:13.700]have engaged and have gotten increasingly important
[01:46:16.190]in this conversation because of
[01:46:18.875]the changes in the political environment
[01:46:20.834]and the access to different venues of communication,
[01:46:23.773]and I think that that really will play
[01:46:25.690]a very important part, as I said.
[01:46:28.216]I'll just speak for myself as a consumer of products
[01:46:30.624]made by Grocery Manufacturers Association members.
[01:46:33.571]There are many things that I like to eat every day
[01:46:36.185]that are not able to be produced
[01:46:38.920]entirely with ingredients sourced in the United States.
[01:46:42.063]And I think consumers will start to play
[01:46:44.515]a really important part in this conversation when
[01:46:46.479]they realize the impact on themselves and their families.
[01:46:51.016]Well, with that, I think we have about reached
[01:46:53.304]the end of our time, and so if we could give
[01:46:55.266]a big thank you to the participants in panel two.
[01:47:04.283]Thank you, Darci, for doing this.
[01:47:06.653]Thanks to the panelists, thanks to our first panel,
[01:47:08.815]Joe, Gary and Jaime.
[01:47:11.062]A special thanks to our friends at McDermott Will & Emery
[01:47:13.314]for hosting us today, Carolyn, thank you
[01:47:15.888]for your help and support with the event.
[01:47:18.093]Of course, to the university, to the
[01:47:19.677]Clayton Yeutter Institute of International Trade and Finance
[01:47:22.583]at the University of Nebraska, thank you for being part
[01:47:25.404]of this, it was a first time experience for WITA,
[01:47:27.574]I hope it was seamless on your end,
[01:47:29.042]it worked great on our end.
[01:47:32.061]Thanks again to the National Pork Producers Council
[01:47:33.944]for sponsoring the entire NAFTA series for WITA.
[01:47:37.579]If others of you are interested in being part
[01:47:39.132]of the series, please let us know, www.wita.org
[01:47:43.789]for more information on this and
[01:47:45.221]all our other upcoming events.
[01:47:47.181]Thanks again to everybody, safe travels.
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