Gary Jay Kushner
After several years of negotiating-and an emotional roller coaster ride for free-trade proponents-agreements have been reached that will open important international markets for U.S. produced goods.
The North American Free Trade Agreement, which took effect on Jan. 1, gives U.S. meat and other food processors access to the largest free-trade zone in the world.
And if the successful conclusion to the General Agreements on Tariffs and Trade is approved by Congress, a uniform and meaningful set of trading rules, as well as the reduction of tariffs and virtual elimination of nontariff barriers to trade, will be implemented in July 1995.
The U.S. food industry will benefit from both developments.
Trade is a goal
Although its primary objective is to eliminate tariffs between the United States, Canada and Mexico, NAFTA has many other trade-promoting goals as well. Among them are the virtual elimination of prohibitive quota programs and the removal of restrictions on investments. Some tariffs are being eliminated immediately, while others will be phased out during a period of five to 15 years; quantitative limitations will be converted to tariff-rate quotas; and products will no longer be excluded from importation.
NAFTA presents tremendous opportunities for U.S. agricultural exporters. In the past, many U.S. products were denied entry into Mexico because of long-standing import licensing requirements that will now be alleviated.
Tariffs on U.S. products entering Mexico have traditionally been much higher than U.S. tariffs on Mexican imports.
Processed foods are currently not available in the same diversity and quantity found in the United States.
Consumer demands for these products in Mexico has been steadily rising in recent years. With anticipated growth of the Mexican economy, the ability of Mexican consumers to purchase U.S. products should grow.
In actual practice, the relaxation of trade restrictions sometimes produces increased procedural complexity. NAFTA is no exception.
Importers and exporters should pay close attention to the NAFTA certification requirements, tariff preference (origin) rules, country-of-origin marking rules and restrictions on duty drawback.
A kick in the pants
Not only was enactment of NAFTA significant, it also kick-started GATT negotiations, which had been going on with diminishing success for seven years. Because an agreement was reached by Dec. 15-the date congressional fast-track authority for approval would have expired-the House and Senate can now move swiftly to consider passage.
Although expected to be even more controversial than NAFTA, its prospects for passage have been enhanced by congressional support for free trade that was evident in the NAFTA debate.
Of particular importance to U.S. food exporters, major reductions in trade-distorting agricultural subsidies and improved market access have been achieved through GATT.
The European Community even agreed to reduce farm subsidies, perhaps the biggest obstacle standing in the way of the GATT accord.
Also of unusual importance to food producers, sanitary and phyto-sanitary measures designed for the protection of human, animal and plant health and safety may no longer be applied in ways intended to burden international trade, which could mean an end to the EC hormone ban.
A successful GATT could mean an annual $270-billion increase in world economic output. This amount outweighs the economic effects of NAFTA. The measures in the Uruguay Round will translate into meaningful increases in standards of living throughout the world.
Once again, U.S. producers are expected to be major beneficiaries of the growing global market.
Procedurally, the GATT picture is murky. Negotiations continue, and the Clinton administration has until April 15 to notify Congress that a final Uruguay Round text has been OK'd.
Actual legislation will be developed after that time and may include provisions reflecting various legislative compromises. Given that 1994 is an election year and the priority for the administration in 1994 is health-care reform, it is becoming increasingly likely that the GATT legislation process will extend into 1995. MM&T
by Gary Jay Kushner
After several years of negotiating-and an emotional roller-coaster ride for free-trade proponents-agreements have been reached that will open important international markets for U.S.-produced goods.
The North American Free Trade Agreement, which took effect on Jan. 1, gives U.S. meat and other food processors access to the largest free-trade zone in the world.
And if the successful conclusion to the General Agreements on Tariffs and Trade is approved by Congress, a uniform and meaningful set of trading rules, as well as the reduction of tariffs and virtual elimination of nontariff barriers to trade, will be implemented in July 1995.
The U.S. food industry will benefit from both developments.
Trade goals
Although its primary objective is to eliminate tariffs between the United States, Canada and Mexico, NAFTA has many other trade-promoting goals as well. Among them are the virtual elimination of prohibitive quota programs and the removal of restrictions on investments. Some tariffs are being eliminated immediately, while others will be phased out during a period of five to 15 years; quantitative limitations will be converted to tariff-rate quotas; and products will no longer be excluded from importation.
NAFTA presents tremendous opportunities for U.S. agricultural exporters. In the past, many U.S. products were denied entry into Mexico because of long-standing import licensing requirements that will now be alleviated. Tariffs on U.S. products entering Mexico have traditionally been much higher than U.S. tariffs on Mexican imports.
Processed foods are currently not available in the same diversity and quantity found in the United States.
Consumer demands for these products in Mexico has been steadily rising in recent years. With anticipated growth of the Mexican economy, the ability of Mexican consumers to purchase U.S. products should grow.
In actual practice, the relaxation of trade restrictions sometimes produces increased procedural complexity. NAFTA is no exception.
Importers and exporters should pay attention to NAFTA certification requirements, tariff preference (origin) rules, country-of-origin marking rules and restrictions on duty drawback.
A kick in the pants
Not only was enactment of NAFTA significant, it also kick-started GATT negotiations, which had been going on with diminishing success for seven years.
Because an agreement was reached by Dec. 15-the date that congressional fast-track authority for approval would have expired-the House and Senate can now move swiftly to consider passage.
Although expected to be even more controversial than NAFTA, its prospects for passage have been enhanced by congressional support for free trade that was evident in the NAFTA debate.
Of particular importance to U.S. food exporters, major reductions in trade-distorting agricultural subsidies and improved market access have been achieved through GATT.
The European Community even agreed to reduce farm subsidies, perhaps the biggest obstacle standing in the way of the GATT accord.
Also of unusual importance to food producers, sanitary and phyto-sanitary measures designed for the protection of human, animal and plant health and safety, may no longer be applied in ways intended to burden international trade. This could mean an end to the EC hormone ban.
GATT could mean an annual $270-billion increase in world economic output, and increase the standard of living for millions of people. Once again, U.S. producers are expected to be major beneficiaries of a growing global economy.
Procedurally, the GATT picture remains murky as negotiations continue. The Clinton administration has until April 15 to notify Congress that a final Uruguay Round text has been reached.
Actual legislation will be developed after that time and may include provisions reflecting various legislative compromises. Given that 1994 is a congressional election year, and the priority for President Clinton is health-care reform, it is becoming increasingly likely that the GATT legislation process will extend into 1995.