The potato industry is one of the most successful specialty crops in terms of growth in exports. These gains have been the product of careful trade negotiations and enforcement actions over many decades and the commitment of time and resources by our industry in support of those efforts. In addition to the vital North American markets of Canada and Mexico, Asian markets, especially Japan, China, Korea and Taiwan, are top export destinations for fresh and processed potatoes. U.S. potatoes are a U.S. agriculture export success story.
Trans-Pacific Partnership Agreement (TPP)The Obama administration completed the negotiations on the TPP, an Asian-Pacific regional free trade agreement with 11 other countries in the Pacific Rim. The TPP was never brought before Congress for consideration and it was uncertain there were enough votes to support passage. Shortly after taking office, President Trump withdrew the U.S. from the TPP process ending the possibility that the U.S. would be a part of a finalized TPP.
The remaining TPP countries officially signed the agreement on February 3, 2016. They are: Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, Canada, Mexico and Japan. President Trump announced he intends to be active in negotiating bilateral trade deals and will not participate in broad multilateral deals. The U.S. withdrawal from the Trans-Pacific Partnership will negatively impact exports in markets such as Japan and Vietnam as competitors have signed free trade agreements with those countries and negotiate lower tariffs. These countries will continue to seek free trade agreements around the world to lower the prices of their products. With TPP off the table, initiating and completing bilateral agreements with key export markets, including Japan and Vietnam, are immediate priorities for the U.S. potato industry.
North American Free Trade Agreement (NAFTA) The U.S., Canada and Mexico have been attempting to renegotiate NAFTA for over one year. Prior to the commencement of those negotiations, NPC sent President Trump a letter outlining our priorities for enhancing NAFTA. Mexico is the third largest export market for U.S. potatoes. Most exports are processed potatoes, particularly fries. Frozen, dehy and fresh potatoes currently enter Mexico duty-free due to NAFTA. If the U.S. withdrew from NAFTA, U.S. frozen potato exports to Mexico ($122 million export value) and dehy ($32 million export value) would immediately face Mexico’s Most Favored Nation tariff of 20 percent. U.S. fresh potatoes to Mexico ($37 million in export value) would face either a 50 percent or 70 percent tariff. Canadian processed potatoes would likely continue to enter duty-free. Over $150 million in export sales could be lost to Canada if the U.S. fails to either renegotiate a trilateral NAFTA agreement or complete a bilateral deal with Mexico. Retaliatory tariff actions could further undermine these markets, if threats of their utilization become an enduring reality. Currently, Mexico has retaliated against frozen fries by eliminating the NAFTA 0% tariff and replacing it with a 20% rate.
Updated July 2018