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The Agribusiness Council 



This statement supporting the North American Free Trade Agreement (NAFTA) 

 is made on behalf of the Agribusiness Council, an organization representing agricul- 

 tural producers from the grower to the processor and agricultural manufacturer, in- 

 cluding all aspects of marketing agricultural products, from all U.S. regions 



The Council has actively supported NAFTA because we expect that the agreement 

 will substantially expand export trade to Mexico in agricultural products as well as 

 exports of agricultural-related products, such as farm equipment and chemicals. We 

 also anticipate signficant growth in agricultural employment of 50,000 to 60,000 and 

 more in ag-related industries as the result of NAFTA over the full 15 years of tran- 

 sition periods provided in the agreement. 



Positive effects of NAFTA, including growth of production, exports, and employ- 

 ment will benefit the entire range of agribusiness sectors: seeds, farm equipment 

 and tractors, agro-chemicals, fertilizers, commodities and livestock (including fish- 

 eries), farm management, forestry, commodity handling and storage, food process- 

 ing, equipment and machinery for food processing and packaging, transportation, re- 

 frigeration, retailing, finance and insurance, consulting, accounting, environmental 

 and renewable-energy equipment (including controlled environmental agriculture). 



The Agribusiness Council has supported expanded international trade for agri- 

 business as evidenced by the Council s sponsorship of a conference in October 1992, 

 entitled "Globalization in Agribusiness: Competitive Challenges in the 1990s and 

 Beyond." A principal focus of the conference was the relationship between NAFTA 

 and economic reform and trade liberalization in Mexico. At that time the Council 

 surveyed agribusiness executives throughout the United States on international 

 business issues and responses indicated widespread interest in the completion of an 

 acceptable NAFTA agreement. 



It is widely believed in the agribusiness community that U.S. agriculture will ben- 

 efit from Mexico's need to feed an expanding population, and that economic growth 

 in Mexico will produce increasing demand for greater protein consumption, high- 

 quality fruit and vegetables, and more processed foods. 



Mexico is a mountainous country with a limited amount of arable soil. Much of 

 the land there is arid or semi-arid. These limitations coupled with the population 

 growth of Mexico's 92 million people, estimated at 2 percent per year, will result 

 in increased demand for U.S. agriculture to supply food. Also, the limitation on 

 available farmland in Mexico will cause Mexicans to turn to U.S. farm equipment 

 manufacturers and suppliers of agricultural technology to furnish the means to farm 

 the existing land intensively and efficiently. 



Within the first 5 years of the agreement, and for some products immediately, 65 

 percent of U.S. agricultural products will be allowed to enter Mexico duty free. Ap- 

 proximately half of the agricultural products exported to Mexico will receive duty- 

 free treatment from the date the agreement enters into effect. This dramatic im- 

 provement in market access to the Mexican market will benefit U.S. agriculture and 

 agro-industries. Particularly important to agriculture will be the elimination of non- 

 tariff barriers, especially import licenses, which have previously been used to re- 

 strict U.S. export trade into Mexico. 



Meanwhile, the tariff rate quota provided by NAFTA acts as a safeguard against 

 Mexican imports of agricultural goods and allows sufficient transition periods: 5, 10, 

 or 15 years in different product categories, depending on the import sensitivity of 

 the product. Special safeguards are provided for highly import-sensitive seasonal 

 products, such as tomatoes and other winter vegetables. 



Now that acceptable supplemental agreements on labor and environmental stand- 

 ards and import surge protection have been reached, the Council finds that the side 

 agreements do not change its support for the overall NAFTA agreement. In sum, 

 the Agribusiness Council anticipates substantial gains in exports and income from 

 agriculture and related industries from the NAFTA agreement. 



I. SAFEGUARDS 



The Agribusiness Council has not opposed efforts to establish enforcement of labor 

 and environmental standards on both sides of the U.S. -Mexico border so that a 

 "level playing field" will prevail in trade relations between these countries. Although 

 we have not favored trade sanctions, we accept the sanctions provided for in the 

 supplemental agreements on labor and environmental standards in the context of 

 dispute resolution procedures focusing on conciliatory and consultative methods. 



The Council also accepts the import surge protection features provided in the sup- 

 plemental agreement, entitled "Understanding on Emergency Action." The agree- 

 ment builds upon safeguards against import surges already contained in Chapter 

 8 of NAFTA while adding a Working Group on Emergency Action to consult on mat- 



