Friday, August 18, 2017

NAFTA renegotiations begin; farmers hold breath

Officials from the U.S., Mexico and Canada began renegotiations Aug. 16 on the North America Free Trade Agreement, a 1994 treaty that "eliminated tariffs on most goods traded among the three countries and imposed other rules in areas like intellectual property and labor standards," Danielle Kurtzleben reports for NPR.

The U.S.-Canada negotiations don't seem too contentious thus far. "Canadian companies essentially want more access to American government and construction contracts," Andrew Soergel reports for U.S. News and World Report, though they are seeking several provisions on issues that may be unpopular with the Trump administration, such as gender rights and labor and environmental standards. But the atmosphere surrounding the U.S.-Mexico negotiations has been heating up for months. Those negotiations could have a major impact on the U.S. economy, as well as the state economies of the four states that share a border with Mexico, Christopher Wilson reports for Forbes. Texas, New Mexico, Arizona and California sell 55 percent of all U.S. exports to Mexico. "They facilitate an even greater portion, providing warehousing, transportation and other services for most of the 80 percent of all U.S.-Mexico trade that crosses the land border. If NAFTA were to fall apart, it would be a disaster for the thousands of companies and more than a million jobs along the border that depend on cross-border trade and tourism," reports Wilson.

The current administration has a markedly skeptical view of NAFTA. President Trump criticized it in his campaign, calling it the "worst deal ever made in the history of the world." And U.S. Trade Representative Robert Lighthizer, who is representing the U.S. during the NAFTA negotiations, says he shares Trump's views on NAFTA and promises big changes in the trade deal to "to support higher-paying jobs in the United States and to grow the U.S. economy," Kurtzleben reports. He said the trade deal had "fundamentally failed many, many Americans and needs major improvement," but acknowledged that it had benefitted farmers and ranchers who were able to sell their goods in Canada and Mexico, Kurtzleben reports.

U.S. corn farmers have especially benefited from NAFTA, since they were able to flood the Mexican markets with cheap, U.S. government-subsidized corn, Kirk Semple reports for The New York Times. Though corn is a small fraction of the overall $525 billion in trade between the two countries, it's of huge importance to Midwestern farmers, and Mexico has used it as a symbol of Mexico's dependence on the U.S. In response to Trump's initial threats to overhaul NAFTA completely, Mexico began exploring buying their corn elsewhere and increasing domestic production. Corn farmers, who live in areas that voted heavily for Trump, were shaken by the prospect of losing Mexico as a foreign market. Philip Gordon, who grows corn, soybeans and wheat on his Saline, Mich., farm, told Semple, "If we lose Mexico as a customer, it will be absolutely devastating to the ag economy."

The Department of Agriculture says that "Mexico is not only the leading destination of American corn, but it also imports more dairy products, poultry and wheat from the United States than any other nation, and is one of the top importers of American pork, soybeans and beef," Semple reports. Supply chains for automobiles and other industries criss-cross the U.S.-Mexico border as well; some cars cross the border several times in the course of being manufactured, and eliminating the tariffs in such complicated situations has been a boon to automotive manufacturers.

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