History of Free Trade Agreements in North America
Improved trade agreements between Canada and the US have existed since 1989, a period of 36 years. Over this time, tariffs have been significantly reduced and completely removed in many sectors of the economy, bringing increased economic growth for both countries. Liberalizing trade rules between these two countries began in the mid-1980s. This was all following two years of negotiations and discussions, as well as the 1988 Canadian federal election being solely about this trade agreement, which was signed in October 1988 and came into effect on January 1st, 1989. The key elements of the Canada-US Free Trade Agreement included elimination of tariffs, reduction of many non-tariff barriers, and the implementation of a dispute settlement mechanism for the fair and expeditious resolution of trade disputes.
After just two years, the success of this agreement was increasingly evident and discussions began between Canada, the USA, and Mexico about negotiating a North American-wide trade agreement. In 1993, the North American Free Trade Agreement (NAFTA) concluded and was ratified by the three partners, coming into effect on January 1st, 1994. This agreement forced Mexico to liberalize many of their national protectionist policies and to join Canada and the USA in science-based regulations and risk assessments. NAFTA had more economic benefits for Mexico than Canada or the USA, with Mexico’s exports to these two countries rising by 300% between 1994 and 2020. Exports from Mexico to the USA in 1994 were US$31 billion and rose to $200 billion by 2019.
Back in 2017, President Trump signalled a desire to open NATFA up for re-negotiation. This was a reasonable request, as the economies of all three partners had changed substantially over the 23 years that the agreement had been in place, not to mention the global economy. After one year of negotiations, a refreshed agreement, the Canada-US-Mexico Agreement (CUSMA and in the USA, known as USCMA) was reached, coming into effect July 1st, 2020. As part of this agreement, a provision was made for a joint review be held in 2026. With his re-election, President Trump has signalled his intent to begin the joint review process in 2025.
GM Crop Production in Mexico
From the lens of Canadian and USA agricultural production, the challenge of this joint review is whether to continue to include Mexico in this agreement. The Mexican government has completely abandoned science-based regulations and risk assessment, putting them at complete odds with Canada and the USA, raising legitimate and serious questions about the value of proceeding with a three-nation review. Mexico abandoned science-based policy four years ago and its agricultural and environmental policies have increasingly been influenced by activist organizations and their campaigns of false information. We have seen this as Mexico pushes to ban GM corn (maize).
This is disappointing, as Mexico was one of the first countries in the world to embrace the technology of genetically modified (GM) crops, approving GM Bt cotton for production in 1996. The first GM crop (tomato) was commercialized in the USA in 1994, with corn, cotton and soy following in 1996. Canada’s first GM crop was canola which was commercialized in 1995. In Mexico, GM cotton quickly became an important tool for reducing pesticide use, which fell by 50% by 2003 and generated annual benefits of US$2.7 million, with 85% of benefits accrued to farmers. In 2012, GM soybeans were approved and by 2018, over 1 million hectares of GM cotton and soy were being grown in Mexico.
Permits for the production of experimental plots of GM corn have existed since 2004, with over 170 approvals having been granted. Two GM corn have received formal federal production approval, one in 2010 and the other in 2015. Both approvals lagged the actual production of GM corn in Mexico as it has been grown throughout Mexico since the late 1990s. In 2001, GM corn was detected growing in Mexico. This triggered an environmental assessment as to how this occurred. The environmental assessment was provisioned under NAFTA, as it enabled the establishment of the Commission for Environmental Cooperation (CEC), which was part of the environmental cooperation portion of NAFTA. In 2003, an expert committee was established that examined all aspects of GM corn detection, which identified that migrant Mexican workers most likely introduced and planted GM corn after having experienced its results and benefits in the USA. This report identified that the poverty levels of many Mexican farmers resulted in them preferring to adopt GM corn given its protection against insect damage. The unapproved production of GM corn in Mexico had a tremendously positive impact on yield and ultimately farmer profitability (Figure 1). Between 2003 and 2004, corn production in Mexico increased by 68%.
Mexico says Adios GM Corn
After 25 years of safe and beneficial GM crop production in Mexico, the federal government completely abandoned science-based regulations, announcing that it intended to ban all GM corn imports. Mexico imports 86% (Figure 2) of the corn required and this government degree would have cost Mexico an additional US$3 billion in high corn import costs. These higher costs would have had significant impacts on food prices as they would have raised the price of livestock feed, especially poultry production costs, which is a key protein source. The higher food prices would have had a devastating impact on poverty rates in Mexico, which in 2020 was 44%.
Abandoning Science and Evidence
Mexico’s government has bizarrely claim that GM corn has all kinds of negative health and environmental effects. Their claims were in total opposition to the over 4,400 risk assessment decisions from regulatory agencies in over 70 countries, not to mention the 25 years of safe production around the globe. Of course, they had no evidence for their claims, it seems that their decision is based on activist organization reports that were never published in peer-reviewed science journals and lack robust science-based evidence upon which to base policy. In addition to banning GM corn imports, the government announced a ban on using glyphosate which could reduce yields by up to 30%, requiring greater corn imports and even higher food prices and poverty rates.
Canada and the USA were deeply troubled by this rejection of scientific evidence by Mexico and launched a trade dispute case against Mexico, arguing the ban on GM corn imports was illegal as there was no robust evidence to support Mexico’s case. The former NAFTA provision for a trade dispute settlement mechanism is science-based, and the panel concluded that Mexico’s case for banning GM corn imports lacked all evidence. This will force Mexico to remove this intended policy. However, within mere days of the panel’s ruling, Mexico’s President indicated that Mexico intends to ignore the ruling and would ban the planting of GM corn, which will be virtually impossible to achieve. Leaving the question, if they won’t play by the trade rules, should they be included in further trade agreement discussions?
The Looming CUSMA Review
Given Mexico’s crystal-clear intentions of abandoning science and evidence, there is no reason to include Mexico as part of the discussions and negotiations to review CUSMA. If Mexico rejects science-based evidence this blatantly in the agricultural sector, why would it respect science-based evidence in any other economic sector? There is substantial potential that Mexico’s rejection of science and evidence will lead to a never-ending series of trade disputes, as Mexico attempts to enact more and more policies based on activist propaganda. Canada and the USA will waste untold hours and significant fiscal resources to quantify the rejection of Mexico’s future activist policies. Based on this recent agricultural experience, Canada and the USA would be better off concluding a new trade agreement without Mexico.
Science and evidence are the cornerstone of the global economy. If Mexico chooses to align itself with false information created by activist organizations, then Canada and the USA’s agriculture sectors would be advised to sever any and all trade agreements. Those most adversely affected by the Mexican rejection of science and evidence will be the millions of people living in poverty in Mexico. Mexico’s most recent federal election occurred in 2024, meaning that this government and president will be in power until 2030 before an opportunity exists for Mexicans to elect a credible government that rejects activist propaganda. For this time, Mexico should not be part of any North American trade discussions, negotiations, or agreements.
