The Politics of North American Integration in Agriculture
Technical aspects aside, two competing visions are at the center of this dispute: one that emphasizes sovereignty and self-sufficiency and the other that favors deepening integration and expanded trade. USMCA, and the North American Free Trade Agreement (NAFTA) before that, have been highly beneficial for much of Mexican agriculture, especially avocados, tomatoes, and all kinds of horticultural products[5]. Agricultural exports from Mexico to the United States have grown nearly 10 percent per year since 1993 (the year before NAFTA went into effect), skyrocketing from $2.8 billion in 1993 to $43.3 billion in 2022. U.S. agricultural exports to Mexico have also increased exponentially from a similar starting point, though only reaching $28.5 billion by 2022.[6]
Of course, the benefits of this trade are not felt or perceived equally across the U.S. and Mexico. In the United States, that perception culminated in the election of Donald Trump, who promised to scrap NAFTA. The agreement – and the economic interdependence of the three countries – was saved in the early days of the Trump Administration by the U.S. agricultural sector, personified by Secretary of Agriculture Sonny Perdue, who convinced the president that withdrawing from NAFTA would harm U.S. farmers.[7] Thus began the negotiating saga that led to USMCA and the preservation of continental free trade. Ironically, the main win for U.S. crop farmers in the agreement – besides preserving duty-free access to Mexico – was the setting of “unprecedented standards for agricultural biotechnology.”[8]
President Andrés Manuel López Obrador (AMLO), whose economic instincts are similar to President Trump’s in many ways, took office the day after USMCA was signed (November 30, 2018). AMLO issued the original version of the decree in 2020[9] – and a revision in 2023 – citing the need for self-sufficiency and food sovereignty in requiring a complete ban on GMO corn imports by January 31, 2024. This populist move infuriated farmers north of the border (and livestock producers to its south), as over 90 percent of U.S. corn production is genetically modified.
AMLO may not have been thinking about U.S. farmers when he issued the decree, but for a group that had fought so hard to preserve NAFTA, it was personal.[10] Many in the sector had even stood up for Mexican agriculture when the U.S. Trade Representative (USTR) advanced a proposal during the USMCA negotiations that would have made it easier to apply antidumping duties to Mexican produce imports.[11] But that was based on the view that market access should be reciprocal. The 2020 decree and the 2023 revision seemed to demonstrate to U.S. farmers that Mexico would not hold up its end of the bargain on agricultural trade.[12]
The GMO Corn Context
U.S. farmers rapidly adopted GMO technology when it became available,[13] as have farmers in countries around the world where it is authorized for cultivation.[14] Mexican NGOs have resisted GMOs for cultivation and successfully blocked most approvals via the judicial system,[15] so it is unknown to what extent Mexican farmers would embrace the technology (though it would almost certainly help close the massive corn yield gap[16] with the United States). However, Mexican farmers have a GMO adoption rate of nearly 100 percent for cotton – the one approved GMO crop.[17]
Regardless, the technology is still controversial, to the continued amazement of farmers and mainstream scientists, for whom the impact of the technology has been almost all positive.[18] GMO proponents argue that regulatory authorities globally have been closely examining this technology for decades with no substantiated cases of adverse health impacts.[19] Indeed, the health effects appear to be largely positive, as GMO corn contains significantly lower levels of mycotoxins, which are toxic and carcinogenic for humans and animals.[20] GMO technology has also enabled the expansion of “no-till” and other conservation tillage practices that have reduced soil erosion.[21] Opponents of this technology primarily base their arguments on theoretical health risks and socioeconomic factors.[22] In the case of Mexico, this also has a distinct cultural element, given that Mexico was the birthplace of corn, and it remains an integral part of the Mexican diet and society to this day.[23]
The Legal Dispute
The legal claims[24] made by USTR fall primarily under the USMCA’s Sanitary and Phytosanitary (SPS) Chapter. USTR targets two main policies included in the 2023 decree in its request for a panel review:
- The ban on GMO corn for corn flour production (e.g., tortillas and dough).
- The instruction to substitute GMO corn for animal feed and other human production.
The SPS Chapter – and the closely related SPS Agreement at the World Trade Organization (WTO) – affirms the right of governments to set their own level of protection to protect human, animal, or plant life or health, but with constraints so that protection does not become protectionism and legitimate trade restrictions are based on scientific principles backed by scientific risk assessments.
U.S. and Mexican trade lawyers must now argue the case before a USMCA dispute panel. USTR will seek a replay of its successful challenge of the European Union’s GMO restrictions at the WTO and is making many similar claims under the SPS Chapter, alleging that Mexico’s concerns about the health effects of GMOs are not scientifically supported. Mexico may attempt a more wide-ranging defense that brings in biodiversity, environmental impacts, cultural significance, and other factors, but AMLO administration officials have been clear about the goal: reduce imports and increase domestic production.[25] These defenses would likely be a smokescreen for highly discriminatory import protection objectives, not a reflection of serious attempts to achieve these objectives in a way that does not constitute a disguised restriction on trade.[26]
Economic Effects and Shift to White Corn
It is unlikely that Mexico can fully implement this policy approach without major disruptions. The “gradual substitution” of GMO corn would require U.S. farmers to either give up the Mexican market or one of the most successful agricultural technologies of the 20th century. Mexico imported 15 million tons of corn from the United States in 2022. The entire country only produces around 27 million tons,[27] roughly equivalent to corn production in the fifth largest U.S. corn-producing state.[28] To achieve self-sufficiency, Mexico would need to shift millions of hectares from other crops into corn, a commodity grain perfectly suited to the large, mechanized agriculture practices predominant in the prairie soils of the American Midwest. Without extensive subsidies to Mexican producers, low margins from this commodity grain would lead to poor returns for those farmers who are not able to produce at this scale and likely much higher prices for the Mexican livestock sector and Mexican citizens.[29]
The AMLO Administration seems to have belatedly recognized this challenge, which is why it removed the time horizon from GMO corn for animal feed in its 2023 revision to the 2020 decree. This was presented by Mexican officials as a compromise because now the immediate ban would fall only on “white corn” used for direct human consumption, especially tortillas. Mexican authorities claim it is self-sufficient in white corn, but Mexico supplements around 5 percent of its white corn needs with imports.[30] White corn is a relatively small part of U.S. corn exports to Mexico, though the market is still important for those who grow it. More important to most U.S. corn farmers are the longer-term effects of gradually substituting GMO corn in one of their biggest markets, the chilling effect that would have on agricultural innovation, and the violation of core provisions of the SPS Agreement that underpin much of global agricultural trade. Consequently, dozens of members of Congress pressured USTR into seeking formal dispute settlement.[31]
The Endgame of the Trade Dispute
U.S. farm organizations believe that the decree threatens to reverse North American integration in the highly integrated agriculture sectors while undermining global efforts to encourage innovation and science-based regulatory standards. Mexican authorities claim that banning GMOs is necessary to support Mexican farmers, human and environmental health, and Mexico’s cultural heritage. But there are ways to address those priorities without creating disguised restrictions on international trade and undermining both countries’ most important free trade agreement.
Full implementation of the decree will erode political support for Mexico within the U.S. farm sector, an important U.S. constituency that has repeatedly demonstrated its influence in support of strong trade ties between the United States and Mexico. Resolving the dispute by bringing its policies into compliance with the USMCA SPS Chapter/WTO SPS Agreement is likely the best way for Mexico to avoid an economic and political mess and help demonstrate that both sides are committed to preserving and expanding upon the gains of NAFTA and USMCA.
[1] United States Trade Representative, "United States Requests USMCA Dispute Settlement Consultations on Mexico’s Agricultural Biotechnology Measures" USTR, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2023/june/united-states-requests-usmca-dispute-settlement-consultations-mexicos-agricultural-biotechnology.
[2] Official Gazette of the Federation (Diario Oficial de la Federación), February 13, 2023, https://www.dof.gob.mx/nota_detalle.php?codigo=5679405&fecha=13/02/2023#gsc.tab=0.
[3] The word commonly used in the United States for maize, which derives from the Spanish maíz and Taíno mahiz.
[4] USDA Foreign Agricultural Service Global Agricultural Trade System, "Five-year average (2018-22). Brazil exported more than the United States in 2022/23."
[5] Wilson Center, "Mexico-US Agricultural Trade," https://www.wilsoncenter.org/article/mexico-us-agricultural-trade.
[6] USDA Economic Research Service, "Mexico Trade & FDI" https://www.ers.usda.gov/topics/international-markets-u-s-trade/countries-regions/usmca-canada-mexico/mexico-trade-fdi/.
[7] The Washington Post, "’I was all set to terminate’: Inside Trump’s sudden shift on NAFTA”, https://www.washingtonpost.com/politics/i-was-all-set-to-terminate-inside-trumps-sudden-shift-on-nafta/2017/04/27/0452a3fa-2b65-11e7-b605-33413c691853_story.html.
[8] Office of the United States Trade Representative, " UNITED STATES–MEXICO–CANADA TRADE FACT SHEET Strengthening North American Trade in Agriculture" https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets/strengthening.
[9] Secretaría de Hacienda y Crédito Público, accessed December 31, 2020, https://www.dof.gob.mx/nota_detalle.php?codigo=5609365&fecha=31/12/2020#gsc.tab=0.
[10] One could argue that most U.S. farmers should not have supported President Trump if their priority was to preserve NAFTA, but that gets into U.S. political dynamics that are well beyond the scope of this article. Here we are concerned with how the GMO case affects U.S.-Mexico political dynamics.
[11] Inside U.S. Trade, "Agriculture Letter Opposing NAFTA Seasonal Regional AD Proposal," August 30, 2017, https://insidetrade.com/sites/insidetrade.com/files/documents/aug2017/Agriculture%20Letter%20Opposing%20NAFTA%20Seasonal%20Regional%20AD%20Proposal%20-%2030%20August%202017.pdf
[12] Certainly, there are examples of U.S. hypocrisy on agricultural trade (see sugar and tomato suspension agreements).
[13] U.S. Department of Agriculture, "Adoption of Genetically Engineered Crops in the U.S.", https://www.ers.usda.gov/data-products/adoption-of-genetically-engineered-crops-in-the-u-s/.
[14] International Service for the Acquisition of Agri-biotech Applications (ISAAA), " ISAAA Brief 55-2019: Executive Summary: Biotech Crops Drive Socio-Economic Development and Sustainable Environment in the New Frontier ", https://www.isaaa.org/resources/publications/briefs/55/executivesummary/default.asp.
[15] Agriculture Census, "Mexico’s Supreme Court ratifies glyphosate and GMO corn ban”, https://www.agricensus.com/Article/Mexico-s-Supreme-Court-ratifies-glyphosate-and-GMO-corn-ban-18938.html.
[16] Wilson Center, " Corn in Mexico and the US", https://www.wilsoncenter.org/article/corn-mexico-and-us#:~:text=corn%20and%20achieve-,the%20highest%20yields,-.%20Sinaloa%20corn%20is.
[17] Nava-Camberos et al.," Agronomic and Environmental Impacts of Bt Cotton in Mexico," Journal of Intellectual Property Management, volume 10, no. 1 (2019): page 15, https://academic.oup.com/jipm/article/10/1/15/5489271.
[18] Oliver, "Why We Need GMO Crops in Agriculture," Missouri Medicine, 111, no. 6 (2014): 492-507, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6173531/.
[19] Fleming, "No risk with GMO food, says EU chief scientific advisor," Euractiv, July 24, 2012, https://www.euractiv.com/section/science-policymaking/news/no-risk-with-gmo-food-says-eu-chief-scientific-advisor/.
[20] Edminsten, "Meta-Analysis of 21 Years of Studies on GMO Corn Shows Increased Yield and Reduced Mycotoxins," NCSU, February 25, 2018, https://agbiotech.ces.ncsu.edu/2018/02/meta-analysis-of-21-years-of-studies-on-gmo-corn-shows-increased-yield-and-reduced-mycotoxins/.
[21] U.S. Food and Drug Administration, "Why do Farmers in the U.S. Grow GMO Crops?" September 2020, https://www.fda.gov/media/142249/download.
[22] Non-GMO Project, "Stand With Mexico for Food Sovereignty & Their Right to Restrict GMO Corn", https://www.nongmoproject.org/blog/mexico-sign-on-letter/.
[23] Posicionamiento de la Campaña Sin Maíz No Hay País / Ciudad de México, translation via Google, August 25,2023,https://sinmaiznohaypais.org/archivos/3776/.
[24] Office of the United States Trade Representative, " US Panel Request - Mexico Biotech", August, 2023, https://ustr.gov/sites/default/files/2023-08/US%20Panel%20Request%20-%20Mexico%20Biotech.pdf.
[25] "Mexico hopes to reduce corn imports 30-40% by 2024, official says", Reuters, https://www.reuters.com/article/mexico-agriculture/mexico-hopes-to-reduce-corn-imports-30-40-by-2024-official-says-idUSKBN2U41L4.
[26] "General Agreement on Tariffs and Trade (GATT) 1994," World Trade Organization, https://www.wto.org/english/docs_e/legal_e/gatt47_02_e.htm#articleXX.
[27] "Mexico - Country Summary", United States Department of Agriculture, Foreign Agricultural Service, https://ipad.fas.usda.gov/countrysummary/default.aspx?id=MX.
[28] United States Department of Agriculture, National Agricultural Statistics Service, "Crop Production”, https://www.nass.usda.gov/Publications/Todays_Reports/reports/crop0922.pdf.
[29] "Implications and Consumer Price Impacts of Mexico’s Biotech Corn Ban," Biotechnology Innovation Organization (BIO), https://www.bio.org/press-release/implications-and-consumer-price-impacts-mexicos-biotech-corn-ban.
[30] Capehart et al., "U.S. Corn Exports to Mexico Have Increased With the Transition to Free Trade Under the North American Free Trade Agreement”, Amber Waves, United States Department of Agriculture, Economic Research Service, August 2020, https://www.ers.usda.gov/amber-waves/2020/august/us-corn-exports-to-mexico-have-increased-with-the-transition-to-free-trade-under-the-north-american-free-trade-agreement/.
[31]Representatives Fischbach and Smith, "Fischbach, Smith Lead Call for Formal Dispute Consultations to Hold Mexico Accountable Under USMCA," https://fischbach.house.gov/2023/6/fischbach-smith-lead-call-for-formal-dispute-consultations-to-hold-mexico-accountable-under-usmca.
