With its trade team in place, the Trump administration announced it will renegotiate the North American Free Trade Agreement, fulfilling a campaign promise by the president. Canada and Mexico are two of the three leading markets for U.S. farm exports so U.S. farm groups hope for gains in the talks but fear disruptions.
Together, Canada and Mexico are forecast to buy $39.6 billion – 29 percent – of the estimated $136 billion in U.S. farm exports in the fiscal year ending on Sept 30. Iowa Sen Charles Grassley said “the administration should soundly reject any renegotiation that would harm U.S. agriculture,” one of the few sectors of the economy to routinely run a trade surplus. Exports generate 20 cents of each $1 in farm income.
Farmers voted in a landslide for President Trump, with farm groups heartened by his promises of tax relief and regulatory reform while worried about his frequent complaints of unfair trade practices by China, Japan, Canada and Mexico – all leading markets for U.S. farm and food products. Trump withdrew from the 12-nation Trans-Pacific Partnership trade pact that was expected to provide greater access to Japanese markets for U.S. farm exports.
Groups speaking for wheat growers and exporters urged caution in the NAFTA discussions so that U.S. wheat trade is not damaged. Mexico is the No. 1 market for U.S. wheat this year. “There is nothing wrong with modernizing a 23-year-old agreement but it must be done in a way that benefits the food and agriculture sectors in both countries,” said Jason Scott, a Maryland farmer and chairman of export promoter U.S. Wheat Associates.
The National Pork Producers Council, like the wheat groups, said duty-free access to Canada and Mexico must be maintained. “We absolutely must not have any disruptions in exports to our No. 2 (Mexico) and No. 4 (Canada) markets,” said pork council president Ken Maschoff in a statement.
“We export billions of dollars of corn and corn products to these countries each year,” said president Wesley Spurlock of the National Corn Growers Association. “We want to ensure that any updates to NAFTA maintain or increase opportunities for America’s farmers and ranchers.”
Cattle groups in the United States, Canada and Mexico sent a joint letter to the leaders of the three nations, saying “we urge you to recognize that the terms of the agreement affecting cattle producers are strongly supported as they currently exist and should not be altered.” In particular, the cattle groups opposed a return of the U.S. rule requiring country-of-origin labels on packages of beef and pork.
However, the National Farmers Union, a skeptic of trade deals, said revival of the so-called COOL law ought to be allowed under the new NAFTA. “We cannot allow the interests of foreign governments and companies to dictate our laws here at home,” said NFU president Roger Johnson. Congress repealed COOL for beef and pork to satisfy a WTO judgement.
“While NAFTA has been an overall positive for American agriculture, any trade deal can always be improved,” said Agriculture Secretary Sonny Perdue, expressing confidence of a better deal ahead for U.S. farmers, ranchers and foresters.
Negotiations could begin as early as Aug 16, following 90 days of internal U.S. consultations. The U.S. trade representative’s office is obliged to outline U.S. goals for the talks 30 days before they begin.
To read the notification letter to congressional leaders, click here.