The ink had barely dried on the Trump administration’s notice of its intent to renegotiate the North American Free Trade Agreement when farm groups began issuing press releases that basically said “Do no harm.”
U.S. Trade Representative Robert Lighthizer notified Congress on May 18 the administration plans to begin negotiations with the Canadian and Mexican governments. That started a 90-day period in which the administration must notify Congress of its goals for the talks.
Most farm leaders agree the 23-year-old NAFTA needs to be updated, but they continue to emphasize the importance of agricultural exports, particularly to NAFTA-partner Mexico, to U.S. farmers and ranchers who are enduring one of the most severe downturns in the farm economy in the last 20 years.
The National Cotton Council issued a release saying the United States must remain a participant in a “vibrant” North American Free Trade Agreement because it has been and can continue to be a very positive trading platform for U.S. agriculture, including cotton and textiles.
“With 95 percent of U.S. cotton exported in some form, we need positive and stable trading relationships with our international customers to maintain a healthy U.S. cotton sector,” said Ronnie Lee, the NCC chairman and a Bronwood, Ga., cotton producer.
1 million bales to Mexico
Lee said Canada and Mexico are significant markets for United States food and fiber exports. “With purchases exceeding 1 million bales, Mexico has emerged as one of U.S. raw cotton’s top five export destinations, and NAFTA plays a critical role in North America’s highly integrated textile and apparel supply chain.”
As the process of updating and renegotiating NAFTA proceeds, the U.S. cotton industry “urges the administration to stay involved in this important trade agreement and not weaken current provisions,” he said. “A strengthening of the textile rules of origin and a modernization of NAFTA can lead to an expansion of jobs and exports for our nation. This is a very sound way to grow our economy.”
Those comments were echoed by a number of farm groups ranging from the nation’s largest American Farm Bureau Federation to a new organization called the Food and Agriculture Dialogue for Trade.
One of the more interesting responses to the notice came from a policy paper issued by Raymond Robertson of the Bush School of Government and Public Service at Texas A&M University, which shows “strong evidence for NAFTA’s benefits and warns against throwing the baby out with the bath water.
President Trump has called NAFTA “the worst trade agreement ever, but Dr. Robertson said the evidence does not support that assertion or other negative claims made by administration officials going back to the presidential campaign.
Labor market adjustments
“The objections to NAFTA are really about labor market adjustment problems more broadly,” said Dr. Robertson. “Ending NAFTA won’t solve those problems. Furthermore, Canada and Mexico are the United States’ top trading partners and empirical evidence shows that all three countries reap significant economic benefits from the relationship.”
(You can read more about Robertson’s analysis in a short policy brief titled “The NAFTA Intellect Disconnect: Actual Costs and Benefits versus Popular Perceptions,” published by the Mosbacher Institute for Trade, Economics, and Public Policy.
In the article, Dr. Robertson argues that “the most accurate way to think of the NAFTA economic area is as one integrated economy rather than three separate ones. That is, rather than thinking of Mexico as a competitor, we should think of Mexico as a partner in our national production process.”
Those ideas were reflected in a statement that “Our North American trading partners represent U.S. food and agriculture's largest export market, with total U.S. agricultural exports to Canada and Mexico more than quadrupling since NAFTA came into effect,” from the Food and Agriculture Dialogue for Trade.
The statement was issued by Food and Agriculture Dialogue Co-Chairs Gary Martin, president and chief executive officer of the North American Export Grain Association, and William Westman, senior vice president for international affairs with the North American Meat Institute.
‘Preserve the gains’
“As modernization of NAFTA is negotiated, it is critical to preserve the considerable gains that have been achieved for U.S. food and agriculture. We look forward to consulting with the administration, and interacting with Congress and other entities to incorporate the views of the U.S. Food & Ag Dialogue for Trade as the U.S. negotiating position is developed."
They said more than 200 associations, companies and individuals nationwide, including those represented by Martin and Westman, currently are participating in the Food and Agriculture Dialogue for Trade.
The National Grain and Feed Association, another organization weighing in on NAFTA, noted that one of every 10 acres of U.S. farmland grows agricultural products destined for Mexico and Canada.
“In addition, U.S. exports of pork, dairy, beef and poultry products to Mexico totaled nearly $5 billion in value in 2016. Total U.S. food and agriculture exports to Mexico and Canada have grown from $8.9 billion in 1993 to $38.6 billion in 2015. The food and agriculture sector supports more than 15 million American jobs and is the largest U.S. manufacturing jobs sector.”
American Farm Bureau President Zippy Duvall said trade is critical to the livelihood of the U.S. agricultural sector because it spurs economic growth for farmers, ranchers and their rural communities.
‘Job creator’ in rural communities
“The fact is 95 percent of the world’s consumers live outside of the United States and more than 20 percent of U.S. farm income is based on exports. Agriculture supports jobs in the food and agricultural industries and beyond,” he said. “Fully one-fifth of U.S. agricultural production goes to export markets and the money that flows back doesn’t just make American farmers richer.
“It also helps create all sorts of jobs in rural communities selling farmers products or selling things to those who sold farmers other things. A trade war could devastate rural economies that are often fragile to begin with.
To read more about Dr. Robertson’s research, visit http://bush.tamu.edu/mosbacher/takeaway/.