NAFTA Concerns

Grassley: Talk of Possible Contingencies if US Backs Out of NAFTA

Todd Neeley
By  Todd Neeley , DTN Environmental Editor
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Sen. Charles Grassley, R-Iowa, told reporters on Tuesday he's concerned a renegotiation of the North American Free Trade Agreement won't be successful. (DTN file photo by Nick Scalise)

OMAHA (DTN) -- Ahead of a scheduled meeting with U.S. Trade Representative Robert Lighthizer, Sen. Charles Grassley, R-Iowa, on Tuesday told agriculture journalists there may be indications a renegotiation of the North American Free Trade Agreement isn't going so well.

Grassley said he has had discussions with someone in "the bureaucracy" about possible contingencies if the United States backs out of NAFTA. Chief among concerns for farmers is what happens to commodity prices if renegotiations fall through.

"There is some talk (among federal agencies) about putting together a pot of money (as a commodity price support) if we pull out of NAFTA," Grassley told reporters.

"Farmers don't want money from the federal treasury, they want it from the marketplace. I was informed of this from a person who ought to know what they're talking about. I will probably use this from my point of view that this indicates a pessimistic view of how things are going. I'm not sure what Lighthizer will say."

Grassley said members of the Senate Finance Committee expect to meet with the trade representative on Tuesday to talk about the state of the negotiations. So far, five rounds of negotiations have taken place, he said, and there continue to be "many outstanding issues" related to agriculture.

"We want progress made with Canada on dairy," Grassley said, "and we will press for specifics on agriculture."

U.S. dairy producers continue to be concerned about Canada's trade practices and have been pressing for changes.

Agriculture groups have been calling for President Donald Trump's administration to do no harm in renegotiating NAFTA.

In November, a group of 168 farm groups and companies sent letters to all 50 governors asking them to defend NAFTA. Concern has been growing that the administration is about to withdraw altogether.

U.S. Agriculture Secretary Sonny Perdue told reporters in Washington back in November that USDA was making plans in case the U.S. backs out of NAFTA.

In writing to the governors, the 168 businesses and farm groups asked them to urge the president to support modernizing NAFTA but that withdrawal would have adverse effects. The letter to governors said 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."

U.S. agricultural and food exports have grown by 450% with NAFTA, the letter said, 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 in 2016 alone.

The farm groups and businesses said a study by ImpactECON estimated that withdrawal from NAFTA would cost $13 billion in economic losses to agriculture.

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Todd Neeley

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