T he North American Free Trade Agreement (NAFTA) entered into force on January 1, 1994 ( P.L. 103-182 ), establishing a free trade area as part of a comprehensive economic and free trade agreement among the United States, Canada, and Mexico. Although some industries may have reduced their U.S. operations, in general, NAFTA is considered to have benefitted the United States economically as well as strategically in terms of North American relations. President Trump has repeatedly stated that he intends to either renegotiate or withdraw from NAFTA. In May 2017, the U.S. Trade Representative (USTR) notified Congress of the Administration's intent to renegotiate NAFTA. The text box provides a summary of NAFTA's provisions that address agricultural trade. In the World Trade Organization (WTO) Uruguay Round, all import quotas were converted to tariff-rate quotas (TRQs). SPS Measures and Other Non-Tariff Barriers

In addition to tariffs and quotas, NAFTA addressed SPS measures and other types of non-tariff barriers that may limit agricultural trade. For agricultural exporters, SPS regulations are often regarded as one of the greatest challenges in trade, often resulting in increased costs and product loss and also the potential to disrupt integrated supply chains. A related issue involves technical barriers to trade (TBT). Agricultural Trade Trends with NAFTA Partners

Canada and Mexico are key U.S. agricultural trading partners. Since NAFTA was implemented, the value of U.S. agricultural trade with Canada and Mexico has increased sharply and now accounts for a large overall share of all U.S. agricultural exports and imports. Exports rose from $8.7 billion in 1992 to $38.1 billion in 2016, while imports rose from $6.5 billion to $44.5 billion over the same period ( Table 3 ). As a share of U.S. trade, Canada and Mexico are ranked second and third (after China) as leading export markets for U.S. agricultural products. In 2016, leading traded agricultural products under NAFTA were meat and dairy products; grains and feed; fruits, tree nuts, and vegetables; oilseeds; and sugar and related products. Many U.S. food and agricultural industry groups claim that NAFTA has positively affected their markets. Improved Market Integration

As part of its 20-year retrospective analysis of the impacts of NAFTA on the U.S. agricultural sectors, USDA concluded that "NAFTA has had a profound effect on many aspects of North American agriculture over the past two decades," contributing to increased market integration and cross-border investment and other "important changes in consumption and production." Others see renegotiation as an opportunity to address concerns regarding certain outstanding trade disputes. Among the types of potential gains hoped for by U.S. agricultural exporters from "modernizing" NAFTA are improving agricultural market access (e.g., liberalization of remaining dutiable agricultural products that were exempted from the agreement and may be subject to TRQs and high out-of-quota tariff rates). Some farm interest groups, however, are pushing for additional changes that go beyond those in the TPP. Renegotiating NAFTA could address trade liberalization of these additional products. Ensuring SPS Enforcement

Many have been frustrated by ongoing and protracted disputes between the United States and its NAFTA partners regarding trade in some agricultural commodities. For Canada, the 2017 NTE report highlights a number of U.S. concerns over agricultural products, some of which have been notified to the WTO: 
Canada's restrictions on the sale, advertising, or importation of seed varieties that are not registered in the prescribed manner; Canada's cheese compositional standards that limit the amount of dry milk protein concentrate (MPC) that can be used in cheese making, restricting access of certain U.S. dairy products to the Canadian market; Canada's practice of supply management systems regulating its dairy, chicken, turkey, and egg industries involving production quotas, producer marketing boards to regulate price and supply, and TRQs; U.S. concerns involving Canada's concessions to the EU as part of its trade agreement involving GIs, which may restrict the sale of certain U.S. products to Canada; restrictions on U.S. grain exports due to Canadian statutory grades, which are reserved exclusively for grains grown in Canada; restrictions within Canadian provinces that restrict the sale of wine, beer, and spirits through province-run liquor control boards; and Canadian restrictions involving trade in softwood lumber.
The North American Free Trade Agreement (NAFTA) entered into force on January 1, 1994, establishing a free trade area as part of a comprehensive economic and trade agreement among the United States, Canada, and Mexico. President Trump has repeatedly stated that he intends to either renegotiate or withdraw from NAFTA. In May 2017, the U.S. Trade Representative (USTR) formally notified Congress of the Administration's intent to renegotiate NAFTA. Reactions to the announcement have been mixed, with some industries supporting NAFTA "modernization" as a way to address a range of trade concerns, while others are urging the need to proceed more cautiously so as to not destabilize current U.S. export markets.
Canada and Mexico are key U.S. agricultural trading partners. Since NAFTA was implemented, the value of U.S. agricultural trade with its NAFTA partners has increased sharply. Agricultural exports rose from $8.7 billion in 1992 to $38.1 billion in 2016, while imports rose from $6.5 billion to $44.5 billion. As a share of U.S. agricultural trade, Canada and Mexico rank second and third (after China) as leading U.S. export markets. Leading NAFTA-traded agricultural products were meat and dairy products; grains; fruits, tree nuts, and vegetables; oilseeds; and sweeteners. In general, NAFTA is considered to have benefitted the United States both economically and strategically in terms of North American relations. Many U.S. food and agricultural industry groups claim that NAFTA has been positive for their industries. As part of its 2015 retrospective analysis of the impacts of NAFTA, the U.S. Department of Agriculture (USDA) concluded in a 2015 report that "NAFTA has had a profound effect on many aspects of North American agriculture over the past two decades," contributing to increased market integration and cross-border investment and resulting in "important changes in consumption and production."
Although NAFTA resulted in tariff elimination for most agricultural products and redefined import quotas for some commodities as tariff-rate quotas (TRQs), some products—such as U.S. exports to Canada of dairy and poultry products—are still subject to high above-quota tariffs. In addition to tariffs and quotas, NAFTA addressed sanitary and phytosanitary (SPS) measures and other types of non-tariff barriers that may limit agricultural trade. SPS regulations are often regarded by agricultural exporters as one of the greatest challenges in trade, often resulting in increased costs and product loss and disrupting integrated supply chains.
The extent to which the terms of agricultural trade may be altered in a NAFTA renegotiation is unclear; however, what is clear is that U.S. agriculture has a large stake in NAFTA. Still, renegotiating NAFTA could provide an opportunity to "modernize" certain issues affecting U.S. agricultural exporters. Potential options could include the following:
Improving market access. Liberalize remaining dutiable agricultural products that are still subject to TRQs and high out-of-quota tariff rates. Updating NAFTA's SPS provisions. Address SPS concerns in agricultural trade by "going beyond" existing World Trade Organization (WTO) rights and obligations and include additional rapid response mechanism and enforcement regarding SPS and other technical barriers to trade. Addressing other trade concerns. Address concerns raised in outstanding disputes between the United States and its NAFTA partners, as well as geographical indications (GIs) or place names that identify products based on their reputation or origin.
A number of these types of trade concerns were addressed in recent U.S. trade negotiations under the Trans-Pacific Partnership (TPP) agreement, and some farm interest groups claim that the TPP could provide a blueprint for NAFTA renegotiations involving U.S. agricultural trade concerns.