WASHINGTON — A coalition of American agriculture and food producers implored America’s governors to stand up for trade amid fears that U.S. withdrawal from the North American Free Trade Agreement may be on the horizon.
“The adverse effects of issuance of a notice of NAFTA withdrawal would be abrupt and particularly severe for America’s farmers, food manufacturers, and agribusinesses,” wrote the 168 signatories who included the American Farm Bureau Federation, Dairy Farmers of America, Inc., and the U.S. Meat Export Federation. “For instance, the world grain market currently is experiencing the greatest oversupply of production since the 1980s – with the U.S. facing increasing competition from foreign competitors – and net U.S. farm income has declined to half what it was just five years ago. 2018 would be an especially damaging time to lose America’s two largest food and agriculture product markets.”
The fifth round of NAFTA talks resumed today, with the Trump administration indicating that their patience is wearing thin over Canadian and Mexican demands.
“I would certainly prefer them to come to their senses and make a sensible deal,” Commerce Secretary Wilbur Ross told a Wall Street Journal CEO forum Tuesday. “In any negotiation if you have one party that is not in fact prepared to walk away over whatever are the threshold issues, that party is going to lose.”
Ross said “some sort of a draft” would ultimately be sent to President Trump for consideration.
The ag industry reps said in the letter to governors that they “encourage NAFTA negotiations to continue without the threat of withdrawal” and “respectfully request that you let President Trump know that you support a modernized NAFTA that maintains and enhances food and agricultural trade between the U.S., Mexico, and Canada, and recognition that withdrawal from the accord would have adverse impacts.”
“Under NAFTA, American food and agriculture exports to Canada and Mexico grew by 450 percent,” they noted. “In 2015, the United States held a 65 percent market share for agriculture products in the NAFTA region, and in 2016, we exported nearly $43 billion worth of food and agricultural goods to Canada and Mexico, making our NAFTA partners the largest export consumers of U.S. agriculture.”
Meanwhile, NAFTA gives Americans year-round access to produce that’s plentiful south of the border, they added.
“Notice of withdrawal from NAFTA would result in substantial harm to the U.S. economy generally, and U.S. food and agriculture producers, in particular. While it has been asserted that negotiations could be completed and a new agreement approved subsequent to issuance of notice of withdrawal; but, prior to actual withdrawal, that observation underestimates the business complexity, integrated supply chains and contracting periods involved,” the letter continued.
“Such a notice of withdrawal would fuel additional uncertainty among our North American trading partners, creating a sense of urgency to explore non-U.S.-origin sources of supply. It would also trigger a substantial, immediate response in commodity markets, as market-specific focus would turn to a scheduled return to trade-prohibitive tariff rates. Contracts would be renegotiated or cancelled, sales would be delayed or lost altogether, able foreign competitors would rush to seize our export markets, and litigation would abound even before withdrawal took effect.”
The letter detailed how specific commodities could be affected, including potential 45 percent tariffs on alcohol from Canada and Mexico, an oats shortage as 90 percent of oats milled in the U.S. are imported from Canada, and a blow to the pet food industry as $673 million in annual exports go to Mexico and Canada.
In an open letter to the farm and ranching organizations, Sen. Jerry Moran (R-Kansas) affirmed that “there will be little to no benefit of tax reform to farmers and ranchers if their ability to sell what they produce around the world is diminished.”
“There are real Kansans behind these numbers who often get lost in the conversation: farmers and ranchers who hope to see the family operation stay in the hands of their kids and grandkids; teenagers and college students who want to return to the farm or ranch,” Moran wrote. “The ability of a new generation of young producers to make a living in agriculture is impacted far more by the wheat, corn, cotton, and beef being exported each year than by any single tax deduction. And tax rates are irrelevant to the farmer or rancher who loses half of their income due to lost export markets.”
The senator acknowledged that “every indication coming from the administration points toward outright withdrawal from the agreement.”
“Terminating a major trade deal would be unprecedented, which may make the threat hard for some to take seriously,” he added. “But I am convinced our country is headed down a path toward withdrawal from NAFTA unless action is taken by agricultural groups to change the administration’s course.”
Moran urged the industry groups to quickly mount a campaign of op-eds, letters, social media and more to impress upon the administration the importance of trade.
“The news that the Trans-Pacific Partnership will move forward without U.S. involvement heightens the consequences of NAFTA withdrawal,” the senator warned. “With the leadership of agricultural organizations, we can help rally farmers and ranchers to speak up about the importance of trade to the future of a livelihood in agriculture. Tough negotiations on improvements – yes; withdrawal from NAFTA – no.”