President Trump is creating instability in the farm sector with his periodic threats to withdraw from NAFTA, said the senior Democrat on the Senate Agriculture Committee. Also at an Agriculture hearing on Wednesday, farm groups called for speedy passage of the “new NAFTA,” the United States-Mexico-Canada Agreement, which has been put in doubt by the opening of an impeachment inquiry in the House.
“Producers need to know that the administration will keep NAFTA in place until there is a new agreement — holding the devastating threat of withdrawal over the heads of farmers and other businesses is irresponsible, and it only adds to the instability,” said Sen. Debbie Stabenow of Michigan.
NAFTA assures duty-free access for most U.S. ag exports to Canada and Mexico, which between them account for one-third of U.S. food and ag trade. Exports generate 20 cents of each $1 of farm income. Analysts say the USMCA would bring marginal gains in ag trade while preserving tariff-free access. If the United States were to withdraw from NAFTA, “the result would be higher duties all around,” said the Mercatus Center at George Mason University, with U.S. agricultural products facing tariffs of 12.4 percent in Canada and 20.1 percent in Mexico.
“We strongly urge Congress to vote on the USMCA this fall,” said Iowa farmer Ron Kardel, vice chairman of the National Turkey Federation. “It should not be a partisan issue. We believe it would pass.” Leaders of groups representing cattle and hog producers also called for approval of the free-trade agreement.
Under the Constitution, the House must vote first on legislation to implement the USMCA because it would alter tariffs and is thus a tax bill. The White House says House Democrats “destroyed any chances of legislative progress” with their decision on Tuesday to open an impeachment inquiry. Already, electoral politics loomed as a barrier to congressional action in 2020.
In a statement, Senate Finance chairman Chuck Grassley raised the possibility on Tuesday that the USMCA might be sidetracked by partisan tensions over impeachment. Earlier in the day, he pointed to “all sorts of speculation [Trump] will pull out” of NAFTA if he tires of waiting for a House vote. “That would be catastrophic,” Grassley told reporters.
Trump suggested U.S. withdrawal from NAFTA last Dec. 1 as a way to force Congress to approve the USMCA. He also raised the idea of withdrawal during negotiations on the USMCA. Agriculture Secretary Sonny Perdue is credited with dissuading Trump from scrapping NAFTA in 2017 by showing him a map of states that would be affected and reminding him that rural America was pivotal to his election.
“U.S. pork producers need the certainty of ratification of the USMCA,” said Trent Thiele, president of the Iowa Pork Producers Association. Jennifer Houston, president of the U.S. Cattlemen’s Beef Association, said USMCA ratification would also be a signal to trading partners that “the United States is open for business.”
“I do have to note this administration’s chaotic and unpredictable trade agenda has overshadowed the progress we’ve made,” said Stabenow. “Farmers are seeing very real impacts on their bottom lines.”
Asked after the hearing about threats of U.S. withdrawal from NAFTA, Agriculture Committee chairman Pat Roberts of Kansas said, “I don’t think it’s a positive thing to be doing … when we are desperate for price recovery.”
To watch a video of the hearing or to read written statements by witnesses, click here.