Commodity prices will fall and export sales will be lost if the Trump administration withdraws from NAFTA, which generates one-third of U.S. agricultural trade, said U.S. farm and agribusiness groups in a letter to Commerce Secretary Wilbur Ross. With farm income down sharply, “2018 would be an especially damaging time to lose America’s two largest food and agriculture product markets.”
The farm groups, members of the North American Food and Ag Trade Working Group, said it would be wrong to use a notice of withdrawal as a negotiating tactic, with the belief that a new NAFTA could be concluded before withdrawal became official. NAFTA allows countries to withdraw from the pact six months after issuing a notice; there is dispute over what steps would have to be taken to implement a withdrawal.
“We are sadly confident that issuance of a notice of withdrawal from NAFTA would trigger a substantial, immediate response in commodity markets as market-specific focus would turn to a scheduled return to trade-prohibitive tariff rates,” said the letter. “Contracts would be canceled, sales would be lost, able competitors wold rush to seize our export markets and litigation would abound even before withdrawal would take effect.” The groups urged “positive engagement that would advance America’s economic interests by opening new export opportunities and by tackling non-tariff concerns.”