Can U.S. Agriculture Get a Better NAFTA Deal?05/15/2017
During the 2016 Presidential campaign, Donald Trump called the North American Free Trade Agreement one of the worst trade deals in history and promised voters he would get rid of the agreement as president.
Trump attempted to do that recently when he announced he was going to withdraw from NAFTA, only to reverse that decision less than 12 hours later. Trump says due to the urging of the leaders in Canada and Mexico he is willing to renegotiate the deal. However, what will the White House renegotiate to make the pact better for agriculture?
Farm group leaders say while they were relieved the president decided not to withdraw from NAFTA, they don’t believe they can renegotiate a better trade agreement because Mexico and Canada are top export customers for many United States agricultural products.
Dave Warner with the National Pork Producers Council says they aren’t opposed to modernizing NAFTA after 23 years to include areas like e-commerce. However, they don’t want any changes beyond that because Mexico and Canada are their top export customers.
“We got everything we want out of NAFTA so we just want to maintain our zero tariffs on pork trade in North America,” Warner says.
Colin Woodall with the National Cattlemen’s Beef Association agrees, as Mexico and Canada also stand as top export markets for U.S. beef.
“When it comes to cattle and beef we want to be left alone,” Woodall says. “It works well and because of NAFTA, we have two $1 billion markets both to the north and south.”
NAFTA has also been positive for the grain industry.
“NAFTA really opened the door for wheat in Mexico,” says Alan Tracy, President of U.S. Wheat Associates. “They had a lot of restrictions before. They dropped their tariff and it gradually declined to zero. It’s become our No. 1 market.”
Tom Sleight, CEO and president of the U.S. Grains Council, also points out positive impacts.
“Under NAFTA we’ve seen our exports of corn quintuple over this time period,” he says. “It has had tremendous impact for farmers and the agricultural economy — billions of dollars of impact.”
While Mexico is the top market for U.S. corn, there are some tweaks to NAFTA the feed grain industry would support.
“Phytosanitary, sanitary barriers and barriers for entry for things like wheat seed are really important, and of course a sound foundation for biotechnology,” Sleight says.
There’s also a fear that if the president tries to fix the trade deficit for other sectors such as manufacturing, agriculture will lose ground.
“Unfortunately, the way he’s going about it I worry that we’re going to lose some of the exports that we already have in agriculture both to Canada and Mexico,” says Roger Johnson, National Farmers Union president. In fact, Mexico has already been shopping around in South America trying to strike a deal on corn.
There are a few U.S. commodities that might benefit from renegotiating NAFTA however. The dairy industry stands to gain the most due to Canada’s new dairy pricing system, which has led to a trade dispute between the two countries and gained the attention of Trump.
“Here in the last couple of years now, they’ve developed this pricing strategy, they call it, to not only cut off exports from the U.S., what little exports we have, but also more importantly they want to dump their skim milk proteins in export markets around the world where it will compete with U.S. exports,” says Chris Galen with the National Milk Producers Federation. “We really need to challenge them on that.”
U.S. Rep. Collin Peterson, D-Minn., agrees.
“We completely gave up power over the Canadians whatsoever in NAFTA,” he says. “We gave them complete autonomy of their supply management system in dairy and poultry.”
He says this inequity needs to be fixed, but he’s not so optimistic the dairy issue can be resolved through a renegotiation of NAFTA, because Canadians weren’t willing to make any concessions as part of the Trans-Pacific Partnership.
Ray Starling, special assistant to the president for agriculture, trade and food assistance, agrees policy on dairy, poultry and fruits and vegetables could be improved, in addition to trade enforcement.
“It’s not just in the numbers we sell or what comes in,” Starling says. “Some of it comes down to how quickly we resolve disputes when we have a dispute? How do we go through those mechanisms that are in place as a part of our free trade agreements? Are they as efficient and objective as they should be?”
He says if the U.S. decided to initiate a complaint against Canada for violating NAFTA on dairy, it would take two to five years for the U.S. to get relief, which is unacceptable.
However, Starling says Trump realizes NAFTA has been good for agriculture, and that will shape their negotiations “so we are focused on keeping what we have, particularly as it relates to agriculture, and then improving upon it,” he says.
Source: Michelle Rook, Agweek