Agricultural industries within the Central North American Trade Corridor region have developed real fear about their economic future due to the current administration’s threat to drop the North American Free Trade Agreement (NAFTA). Recent history has proven this type of agreement is key to the current and future wellbeing of this region’s agricultural core. Here’s why: Central and northern high plains agricultural producers gain access to export markets that in most instances provide outlets for as much as 85% of their current crop production.
The impact on North American agricultural productivity and profitability afforded by access to regional and global markets is real. In the past year, Mexico alone bought $2.6 billion in U.S. corn, $1.5 billion in soybeans, $2.4 billion in beef and pork, $1.2 billion in dairy products, and another $1 billion for other prepared foods. And in 2016, Canada imported $23 billion in U.S. agricultural goods while exporting $22 billion of such products to the U.S. in return.
The impact associated with rejection of NAFTA, as well as other trade agreements, will be dramatic, hammering and possibly destroying major domestic livestock and grain producer cohorts. For example, at the time NAFTA originated, U.S. exports to Mexico amounted to approximately $8.3 billion. Now we are at $38 billion. Further, since NAFTA was implemented, the North American agricultural sector has become increasingly integrated, enabling it to become a trusted agricultural product supplier internationally. The ability of producers in all three countries to coordinate, collaborate, and create agricultural production and ensuing products has also made North America a competitive force internationally. If NAFTA melts, other trade agreements will collapse, and such collapse will be catastrophic for the middle class in all three nations.
NAFTA negotiations have recently taken a decided turn for the worse, including voiced rejection of NAFTA by the U.S. President. The Central North American Trade Corridor Association now feels compelled to add its voice to that of others across North America’s industrial and agricultural sectors who are calling for a renewed agreement.
We encourage our respective trade delegations to advance toward trilateral collaboration by taking the following approach:
- Modernize NAFTA’s trade chapters to minimize harm to agricultural and food/fiber/biofuel processing industries and to harness emerging science-based decision making. These industries are typically located in rural convenience centers that contribute to local and regional prosperity and need certainty to invest for the long term. Millions of jobs and investment in local economies are currently at stake.
- Enhance and formulate additional mechanisms for State, Provincial, and Prefecture input into respective national Consultative Committees on Agriculture, thereby ensuring that local and regional input undergirds fundamental understanding of trade issues and their impacts. Such enhancement must include re-vitalization of both the U.S.-Mexico High-Level Regulatory Cooperation Council and the Canada-U.S. Regulatory Cooperation Council.
- Modernize the NAFTA chapters pertaining to Sanitary and Phyto-Sanitary provisions. These provisions are essential to ensuring that agricultural products such as livestock, plants, and seed that flow towards and between the three borders preserve the disease-free status of agricultural production within each of the three economies.
- Modernize the NAFTA chapter pertaining to Technical Barriers to Trade so that science-based decisions and transparency contribute to timely bilateral communication and cooperation. This chapter must contain language pertaining to improved regulatory alignment across all three economies.
- Strengthen Chapter 19 of NAFTA to improve and modernize its dispute resolution process.
- Develop new NAFTA chapters pertaining to improvement of efficient cross-border flows of goods, digital trade, data security, and ‘country of-origin’ issues.
The economic stakes for all agricultural producers, processors, and equipment manufacturers within the three nations could not be higher. Ninety percent of their potential agricultural customers live beyond their borders, and the diverse sector entails more than 30 million jobs. This industry is the single largest national manufacturing sector representing at least 12 to 17 percent of all manufacturing jobs within each economy. At least $550 billion in annual economic activity is at risk. Walking away is not an option.