YAKIMA, Wash. – In recent months, Yakima-based Northwest Horticultural Council has focused on representing the tree fruit industry in a number of key policy discussions including the ongoing renegotiation of the 24-year-old North America Free Trade Agreement.
The council, which works on policy matters – including international trade and government regulations – on behalf of Washington, Idaho and Oregon tree fruit growers and shippers, is keeping a careful watch on NAFTA negotiations as well as developments in U.S.-China trade.
A negative outcome with NAFTA or China could hurt the tree fruit industry in this state and in the Yakima Valley as China, Mexico and Canada are key export markets. About $100 million in apples, pears and cherries, for example, is exported to China, which also is the top export market for cherries. Meanwhile, Mexico and Canada purchase about 40 percent of Washington state apple exports.
Mark Powers, council president, recently sat down with the Yakima Herald-Republic to discuss the NAFTA negotiations and concerns about trade with China.
Q: How does your organization deal with the fact that much of the negotiations and decisions on these trade issues are beyond its direct influence?
A: In many cases, events are outside our control. China’s the perfect example. The issues there have arisen not because of anything we’ve done or we can do or will do. It’s really about other national priorities. You have to understand those political dynamics. That doesn’t mean you don’t voice the problems that the retaliation, in this case from China, will cause. But you do have to be realistic.
We voice the benefits (of trade relationships) and, in the case of China, the economic impacts (of a trade war). You can affect change by going to political leaders in the administration. You can affect change by going to Congress.
With NAFTA, the negotiations are confidential. I’m an adviser. When the negotiators are developing positions, we’re able to weigh in at that time. With the NAFTA negotiations, I went down to Mexico and Canada for a couple of negotiation sessions. You’re there meeting with negotiators and laying out priorities and answering questions and advocating for the best interest of the growers. Many times, there is work ongoing behind the scenes that isn’t visible.
But your point is well-taken: While we’re big here in the Valley and in Central Washington, when compared to global economic forces and geopolitical conflict, if you will, it’s not about apples, pears and cherries. It’s about other things.
Our industry has been investing and developing export markets for decades. Our industry has had generational relationships with buyers overseas. Those relationships are strong. They tend to weather trade barriers or trade interruptions fairly well. But if these problems are protracted and they last a long time, that’s when you run into issues. If it’s a few weeks here or there, a month, even a couple of months, we probably can work around it.
Q: U.S. Trade Rep. Robert Lighthizer said last week that there are “gaping differences” on several issues with NAFTA between the U.S., Canada and Mexico. What are the issues and are any of them actual sticking points for the tree fruit industry?
A: The major issues are rules of origin for automobiles and automobile parts, intellectual property and labor. The issues involve industries that weren’t even in existence in 1994 and have some legitimate need to update the rules related to trade that affect those industries.
Overall, it’s not about tree fruit and it never was. The tariffs (under a revised agreement) will remain as zero percent as they currently are.
A trade agreement is divided into a number of different chapters. Each chapter captures the rules related to a particular trade issue. By and large, the chapters affecting our industry are done and were never terribly contentious.
There is one thing, called the seasonal perishable provision, that’s still outstanding and that hasn’t been resolved. That is potentially a concern. But we’re working with the negotiators (to see) that our concerns are addressed and voiced, and we’ll see what comes out at the end of the process.
We can’t talk about the actual details. Those are still classified. The concept is to allow fruit and vegetable industries the ability to bring anti-dumping cases (when a country takes legal action against another for accusations of exporting product at below-market prices) under revised rules. That is what is being negotiated. What those rules are will determine how it impacts our industry.
We have been the recipients of anti-dumping cases from both Canada and Mexico on apples. There’s always a concern if you make it easier for growers to bring cases, which is what this intends to do, that it will be used against us.
We’re very concerned and we don’t want the provision to move forward. If it does, we’re trying to find ways so we’re excluded from the provision or we’re not hurt from it.
Nobody is arguing against the need for those kind of protections. We would say they already exist. Clearly they are in use by a number of different industries. The proponents of this (it’s backed by various produce groups in the U.S.) would say, “That isn’t true, that’s why we’re seeking changes.” There’s a lot of back-and-forth. The trick in my mind is how can you address the legitimate concern of a particular commodity or group of producers without harming us. If that can be done and the negotiators can figure out a way they address the import concerns and protection concerns out there without harming our exports interests, that’s great.
Q: What has it been like participating in renegotiations as an adviser?
A: I can’t even communicate to our industry members what’s going on. I’m bound by confidentiality rules. That makes it difficult to tell growers what’s in the seasonal perishables provision, for instance. They’re relying on me and others that are advisers to work out the best deal. When it does become public, (we’ll have to be able) to explain how we arrived at that position – whether we were successful in getting our issues addressed or how some other political decision or factor overruled ?us.
You don’t only have the competing interests in the U.S., you also have manufacturing, labor and agriculture. And, within agriculture you have divisions and interests that aren’t always on the same page. And you have that same dynamic in Mexico and Canada. It’s really an amazing process to watch these negotiators try to put it all together. Trying to come up with something that benefits everyone is really challenging. You can sit here and say, “I want A, B, C.” But if A, B, C harms the other two parties, why would they agree it? They might if it’s offset by benefits elsewhere. That negotiation is constant.
Q: There are many different takes on how long NAFTA negotiation will go. Where do you see it going?
A: I suspect, from what I’m seeing and what I’m hearing, that we’re very far apart on some critical issues. If I had to predict, I think the solution is probably a ways away. I can always be proven wrong; they could come out in three hours and say, “We made a critical breakthrough on rules of origin for the automobiles” and the dominoes start to fall. I think there’s enough issues out there, that it’s unlikely to wrap up in the near term. In that case, as long one of the parties doesn’t withdraw from the agreement, we’ll be fine. We’ll continue to operate under the current ?NAFTA.
You can’t ignore what the president has said in the past about how terrible he views these agreements and his threats to withdraw. Whether it happens, I have no idea. I would be speculating at this point. All I can say is I hope that isn’t the case.
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