By the Institute for Agriculture & Trade Policy
The NAFTA talks are advancing rapidly with very little information available to the public on their content or the possible consequences for fair and sustainable food and farm systems. This is the first in a series of blogs examining the proposals being made by agribusiness firms that take the failed Trans Pacific Partnership as a starting point. Future blogs will take a look at corporate proposals on organic agriculture and agricultural biotechnology in NAFTA 2.0.
If the Trump administration can be said to stand for anything, it would be a concerted effort to delay and repeal regulatory protections. Through his cabinet and directly with executive orders, Trump has moved aggressively to undo rules to address climate change, food safety, agricultural pollution, and exposure to chemicals, among others. In addition, the Trump administration has adopted one-size-fits-all deregulatory policies including requiring two regulations to be repealed for every one that is enacted and considering only the costs of a policy but not its benefits.
Fortunately, some of these deregulatory initiatives have run into at least temporary legal headwinds, as civil society has challenged the legality of willy-nilly rule delays or repeals as “arbitrary and capricious,” inconsistent with longstanding laws, or undertaken without regard to the normally time-consuming — and more transparent and participatory — public notice and comment requirements of the Administrative Procedures Act.
Unfortunately, the Trump administration and its corporate allies are planning an end-run around such pesky laws blocking full-scale deregulation. Because binding rules of international trade agreements can require changes in domestic laws and exact penalties if countries do not comply, they can force policy changes that lack popular and political support. A recent example is Congress acting to repeal broadly supported requirements for country of origin labeling of meat after Canada and Mexico challenged the rules as an unfairly discriminatory trade measure, and the World Trade Organization (WTO) agreed.
Despite Trump’s public rhetoric attacking past trade deals as rigged by corporations, behind closed doors the Administration is busy promoting a corporate trade agenda. Corporate supporters of a new NAFTA are aiming to rewrite U.S. domestic policy to conform to a corporate wish-list that will hurt, not help, workers, consumers, and small-scale farmers. If they get their way, NAFTA 2.0 will prevent new regulations from being adopted and place roadblocks in the way of enforcing existing standards, reducing consumer and environmental protections to the lowest common denominator. This is a key demand of agribusiness, which objects to Trump’s talk of trade deficits and instead wants to see a beefed up regulatory chapter added to NAFTA.
Known variously as “regulatory cooperation,” “regulatory convergence” or “good regulatory practices,” the idea of a cross-border process for reviewing and collaborating on regulations seems benign. In fact, regulatory cooperation provides a powerful toolkit to corporations to achieve through secretive international meetings the policies they are unable to enact in a more public and democratic domestic process. With tariffs on most agricultural products already extremely low or nonexistent, corporations have turned their attention to getting rid of domestic regulations that increase the cost of business or, like some food safety and pesticide regulations, can prevent export of noncompliant products altogether. Big agriculture sees the renegotiation of NAFTA as an opportunity to insert intrusive “modern” provisions into an older trade deal that currently lacks these enforceable deregulatory provisions.
In plain language, regulatory cooperation aims to align standards between countries so that they are as similar as possible, increasing trading opportunities and reducing business costs. In practice, the result is generally to move to an international standard that is less protective and often drafted with heavy industry involvement. Alternatively, without formally changing a country’s protective standards, these trade provisions can allow products that do not meet food safety, pesticide residue or other regulations to be imported anyway, through a mutual recognition agreement. While proponents assert that mutual recognition cannot lower standards, in practice protections can be undermined where safety systems are very different or where implementation and enforcement are ineffective. This is a serious concern right now due to a new trade deal with China. Chicken nuggets and other cooked products from poultry raised and slaughtered in China are now being sold in the U.S. – without labeling or other identifying information — under an agreement recently inked by the Trump administration. This policy reversal comes despite a long history of “egregious food safety scandals” and a mutual recognition agreement that is supposed to assure high food safety standards in both countries.
Another regulatory cooperation feature is to scrutinize new and existing regulations at the earliest stages of development to identify and eliminate anything perceived as a trade barrier. These impact assessments have a long history of being used to delay and avoid needed regulations by underestimating public benefits and overestimating industry compliance costs. Requiring new or even existing rules to go through a gauntlet of multiple rounds of comments by industry and new layers of cost-benefit analysis will delay or even prevent adopting necessary protections, and institutionalize corporate interference.
While the original NAFTA did not include a regulatory cooperation chapter, it did establish bilateral working groups with Mexico and Canada on topics such as food safety and pesticides, institutionalized in 2010-11 as the US-Mexico High-Level Regulatory Cooperation Council (HLRCC) and the US-Canada Regulatory Cooperation Council (RCC). Both councils are composed of senior regulatory, trade and foreign affairs officials from each country, and operate mostly out of public view with heavy industry involvement and minimal public awareness or civil society participation. For example, an RCC proposal to harmonize Canadian and U.S. meat inspection, certification and processing goes straight to the North American meat industry’s playbook and seeks to incorporate “to the greatest extent possible” an industry-written plan to “reduce or eliminate certain inspection activities, certifications, and administrative procedures concerning food safety.” In Canada in particular, the result of all this industry-influenced “cooperation” has been predictable. A recent study found the Canadian government has “gradually deregulated, under-regulated and moved toward industry self-reporting in order to ‘reduce the burden’ on business” while justifying its actions by invoking the necessity of regulatory harmonization.
Given these results, agribusiness should be satisfied, but it wants more. Complaining that the existing regulatory cooperation councils are ineffective, food and agriculture corporations want more enforceable and comprehensive rules written into NAFTA. The industry is promoting a model based on regulatory cooperation in CETA, the Comprehensive Economic and Trade Agreement negotiated between Canada and the European Union, and similar provisions advanced by the EU in (currently paused) negotiations for a trade deal with the U.S. The regulatory cooperation provisions of CETA have been extensively analyzed, with independent legal and policy experts concluding they will weaken pesticide protections while increasing human and environmental exposure, reduce food safety and animal welfare standards, limit protections from toxic chemicals, and ultimately subvert democracy itself by moving regulation from the public sphere to a nontransparent process dominated by corporate interests.
In public comments submitted to the U.S. Trade Representative (USTR), agribusiness corporations identified agricultural and food safety standards, food ingredient labeling, organic certification, biotech regulations, pesticide residue and chemical standards as priorities for CETA-style regulatory cooperation in NAFTA. The U.S. Biotech Trade Alliance wants “new disciplines” that go beyond what was negotiated in the TPP in order to expedite trade in products of biotechnology and calls for regulatory cooperation measures to allow sale of food contaminated with “low level” GMO even where domestic regulations do not allow it, if these products are approved for sale by countries outside of the U.S., Canada and Mexico.
The agricultural chemical industry represented by CropLife America has its own regulatory cooperation plan that would dramatically lower protections by increasing the amount of pesticide residue on food, and allowing the use of carcinogens, endocrine (hormone) disrupting chemicals, and chemicals that interfere with efforts to protect bees and other pollinators. CropLife previously flogged this plan during negotiations for a trade deal between the U.S. and the European Union. With those negotiations currently suspended, CropLife has shifted its deregulatory advocacy to NAFTA, calling for new provisions “to further harmonization of data requirements for pesticide registration” and for “innovative approaches to establish maximum residue levels (MRLs or tolerances) for pesticide residues in imported foods.” In other words, CropLife wants to allow products approved in one country to be automatically approved in another, and to increase the amount of pesticide contamination allowed on our food.
The North American Market Working Group of the U.S. Food and Agriculture Dialogue for Trade, representing over 100 agribusiness concerns, called for NAFTA to include regulatory cooperation to achieve “harmonization of food and feed safety systems; fortification standards; organics standards; and pesticide residue tolerances.” The group also wants labels to meet a “least restrictive measures” test, which would promote voluntary labeling instead of mandatory disclosure of country of origin, calories and ingredients in junk food, or GMO ingredients. The Food and Agriculture Export Alliance, comprised of U.S. Dairy Export Council, U.S. Grains Council, U.S.A. Poultry and Egg Export Council, U.S. Soybean Export Council, the National Pork Producers Council and the North American Meat Institute, likewise called for “recognition of and acceptance of international standards” and, if international standards do not exist, regulatory cooperation including “recognition of the exporting country’s standards” or “collaboration between the exporting and importing countries” to establish import tolerances such as GMO contamination and registration of pesticide products. The chemical industry seeks to establish a single standard for chemical regulation throughout North America through beefed-up regulatory cooperation in NAFTA.
The USTR itself repeatedly mentioned regulatory “cooperation” or “compatibility” and related terms in its submission to Congress outlining its negotiating goals for NAFTA, and it called for “Good Regulatory Practices” such as requiring more impact assessments to promote these goals and to avoid “unnecessary redundancies.” Even though the U.S., Canada and Mexico disagree on some big issues – the Canadian dairy supply management system, and immigration and border wall disputes with Mexico come to mind – including regulatory cooperation in NAFTA could be an area of agreement. Reportedly, Canada pushed to include it during the recent second round of negotiations. As discussed above, Canada has already agreed to the most extensive regulatory cooperation provisions in any trade agreement in CETA. CETA could be the starting point for Canada’s negotiations with the U.S. on regulatory cooperation. Canada and Mexico both signed off, with U.S. negotiators, on the Trans Pacific Partnership regulatory coherence chapter. Negotiators for all three countries have called for a renegotiated NAFTA to reduce “red tape” and regulatory costs.
While it is possible negotiations will fall apart or Trump makes good on a campaign rally boast that he will unilaterally withdraw from NAFTA, we should not let theatrics and negotiating tactics distract from the very real threat posed by these negotiations. If the U.S., Canada and Mexico do come to agreement on a NAFTA 2.0, it is highly likely that regulatory cooperation will be part of the deal. All three countries are aligned on this issue, with Canada in particular pushing hard for changes. With the biggest transnational corporations fully in support and advocating both publicly, and behind the scenes with access to secret text, and the pace of negotiations proceeding at warp speed, we should be very concerned. NAFTA 1.0 has not benefited small-scale farmers nor promoted sustainable agriculture or good food, and NAFTA 2.0 could be far, far worse.