The provisions for agricultural goods were negotiated bilaterally. As a result, different provisions apply as to trade between Mexico and the United States, than to trade between Canada and Mexico. For trade between the United States and Canada, the NAFTA incorporates the provisions of the United States-Canada Free Trade Agreement (CFTA).
Annex 703.2, Section A, of the Agreement applies to trade between the United States and Mexico. Mexico will replace import licensing requirements on U.S. agricultural products with either a tariff-rate quota or an ordinary tariff, that will be phased out over a 10-year period, with the exception of corn, dry beans and milk powder which will be phased out over a 15-year period. Import quotas imposed under Section 22 of the U.S. Agricultural Adjustment Act, as amended (7 U.S.C. 624) will be replaced with tariff-rate quotas for Mexico which will also be phased out over a 10-year period, with the exception of peanuts which will be phased-out over a 15-year period. Section 22 import quotas will remain in place for all imports from countries other than Mexico, including those from Canada. Quantities within the quota amounts will be subject to duty-free treatment while quantities in excess of the tariff-rate quota will be subject to an over-quota tariff.
Mexico and the United States will gradually liberalize bilateral trade in sugar. Both countries will apply tariff-rate quotas of equivalent effect on third country sugar by the sixth year after the Agreement enters into force. All restrictions on trade in sugar between the two countries will be eliminated by the end of the 15-year transition period. Details on the special provisions relating to market access for sugar during the transition period are provided in Annex 703.2, Sections A and B.
Section B of Annex 703.2 relates to trade between Canada and Mexico. Both countries will eliminate all tariff and non-tariff barriers on their agricultural trade, with the exception of those in the dairy, poultry, egg, sugar and syrup sectors. Canada immediately exempted Mexico from import restrictions covering wheat, barley, and their products, beef and veal, and margarine. Canada and Mexico eliminated immediately or will phase out within five years tariffs on many fruit and vegetable products, while tariffs on remaining fruit and vegetable products will be phased-out over 10 years.
Safeguard provisions were included in the NAFTA to protect against import surges of certain sensitive goods while their tariffs are being phased out. A NAFTA country may invoke this safeguard mechanism in the form of a tariff-rate quota for agricultural goods specified in Annex 703.3 of the Agreement. This means that a designated quantity of imports will be allowed to enter at the NAFTA preferential tariff rate. Once the trigger level is met, the importing country may apply an over-quota rate which is to be the lesser of the most-favored-nation (MFN) rate in effect as of July 1, 1991, or the prevailing MFN rate. Tariffs on the in-quota volume will be phased out over a ten-year period. However, there will be no phaseout period for the over-quota tariff, until the tenth year of the Agreement, at which time the in-quota and the over-quota tariffs will be eliminated. These safeguard provisions apply bilaterally for trade between Canada and Mexico, and for trade between the United States and Mexico.
For trade between the United States and Canada the "snap-back" provision under the Canada-United States Free Trade Agreement will remain in effect for those products designated under that Agreement. "Snap-back" is a mechanism that allows the United States or Canada to apply a temporary duty on certain fresh fruits and vegetables originating in the other country and imported into its territory when import prices fall below a certain percentage of the average monthly import price, and planted acreage of the agricultural product is within certain limits.
Agricultural Marketing Standards
The NAFTA provides that when either Mexico or the United States applies a measure regarding the classification, grading or marketing of a domestic agricultural good, it will provide no less favorable treatment to like products imported from the other country for processing.