A group of 168 farm organizations and companies wrote all 50 governors on Tuesday seeking to defend the North American Free Trade Agreement, reflecting that agricultural groups are more than just a little worried about the prospect of President Donald Trump moving to withdraw from NAFTA.
Farm groups have made it clear over the past few weeks that they are increasingly concerned the president may follow through on his desire to invoke Article 2205 of NAFTA, which allows withdrawal from the agreement within six months after providing notice to Canada and Mexico.
Tensions in the NAFTA talks are definitely heightening. Agriculture Secretary Sonny Perdue told reporters in Washington last week his department was making plans in case President Trump follows through. Mexico is also preparing an economic response if withdrawal begins. Reuters quoted Mexico’s Foreign Minister on Tuesday, stating that the Mexican government and central bank are preparing for a possible future without NAFTA.
See Reuters story here.
The next round of talks on the $1.2 trillion trade agreement begins Wednesday in Mexico, but top negotiators are scheduled to start meeting again on Friday.
House Agriculture Committee Chairman Mike Conaway, R-Texas, and other committee members met with representatives from commodity groups last week. Conaway told reporters last week during a call that farm groups are anxious that nothing is done in the trade talks that is disruptive to current trade.
“It was clear from every single one of them that they are anxious, or beyond anxious, about the idea of withdrawing from NAFTA,” Conaway said on a press call. “That came through loud and clear.”
In writing to all 50 governors, the 168 businesses and farm groups asked the governors to let President Trump know they support modernizing NAFTA but that withdrawal would have adverse impacts. “We encourage NAFTA negotiations to continue without the threat of withdrawal,” the groups stated.
The letter to governors noted the agriculture and food industry “supports more than 22 million jobs — including more manufacturing jobs than any other U.S. manufacturing sector — and accounts for 20% of the U.S. economy.”
Under NAFTA, U.S. agricultural and food exports have grown by 450%, the letter pointed out, and the U.S. holds a 65% share of agricultural products in the NAFTA region. Nearly $43 billion in food and agricultural products were sent to Canada and Mexico last year alone.
So a radical change in the tariff and quota structure for those markets would have a major impact on the agricultural economy nationally. The farm groups and businesses said a study by ImpactECON stated withdrawal from NAFTA would cost a $13 billion economic loss to the agricultural economy alone.
“NAFTA withdrawal would also disrupt critical industry supply chains, close markets, eliminate jobs and increase prices for the basic needs of American consumers,” the letter stated.
More details on the impacts of a NAFTA withdrawal on individual commodities was spelled out in the letter.
The full letter and everyone who signed it can be found here.
Conaway, again talking to reporters last week about NAFTA, said he and others in Congress would continue pointing out the harm that would be done to agriculture by walking away from the agreement. Conaway also praised President Trump as having a “long and successful history of negotiating” business deals. Yet, Conaway added there is a different mindset in business deals than trade talks.
“They (the Trump administration) want to get a deal, but if you read Mr. Trump’s ‘Art of the Deal,’ he’s not afraid to walk away,” Conaway said.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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