A Compelling Case for TAFTA?
The Proposed Trans-Atlantic Free Trade Agreement (TAFTA) remains at the centre of the North American discussions on regional cooperation. As announced by President Obama in his State of Union address on February 13th, the United States and the European Union have launched negotiations on a proposed Transatlantic Trade and Investment Partnership. This free trade agreement seeks to expand the world’s largest economic relationship, presently valued at nearly $1 trillion annually through market reforms, the reduction of tariffs and the elimination of non-tariff trade-barriers.
With more than $600 billion in annual trade, Europe stands as the United States’ most significant economic partner. A transatlantic free trade agreement would create the largest free trade area in the world, covering approximately 40 per cent of global commerce. As such, the proposed treaty has been described as the most ambitious trading deal since the founding of the World Trade Organization (WTO) in 1995. In fact, commentators suggest that TAFTA reflects the growing impatience in Brussels and Washington towards the stagnation of WTO talks on global trade expansion that were launched in Doha, Qatar in 2001.
As Foreign Policy analyst Kati Suominen suggests, while both parties recognize the potential of TAFTA, the impending battles with protectionist agricultural lobbies and eminent regulatory difference risk the dilution of the deal into a “TAFTA-lite”.
Cargill’s NAFTA Dispute with Mexico
The American company Cargill Inc. has reached a settlement with the Government of Mexico in a legal dispute grounded on the stipulations of Chapter 11 of NAFTA. Cargill is a privately held, multinational conglomerate that specializes in the trading of grain and other agricultural commodities and presently makes up for 25% of US grain export.
In 2005 Cargill filed a claim against the Government of Mexico under Chapter 11 of NAFTA, which allows companies to sue countries that are members of the treaty for actions that adversely affect their investments. Cargill charged that Mexico had implemented unlawful import restrictions on high-fructose corn syrup in order to protect Mexican producers.
The dispute resulted in a $77 million settlement award for the U.S. food giant in 2012, after a Canada-based arbitration panel ruled that Mexican trade barriers on corn syrup had, in fact, violated three provisions of the trilateral treaty. The Supreme Court of Canada let the award stand, allowing Cargill to file a federal lawsuit in New York to enforce the award in January of this year. Notably, Cargill’s award is now value at $94.6 million with interest.
Although Cargill did not disclose the details of the settlement reached in New York on February 21st, the case provides an interesting insight into the legal workings of NAFTA.