Ag Policy Blog

Pork Producers Detail Value of NAFTA

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Together exports to Canada and Mexico account for over a third of U.S. exports to the world. As this chart compares total U.S. exports to Canada and Mexico to China and Japan.

With the great debate about the North America Free Trade Agreement expected to soon happen, the National Pork Producers Council issued a white paper on Thursday defending the three-way trade of NAFTA.

Last week, U.S. Trade Representative Robert Lighthizer wrote Congress notifying them of the start of a 90-day window for consultation to detail objectives for renegotiating the trade deal.

The NPPC report has data from both countries, but mainly focuses on U.S. trade with Mexico. The report cites that trade was about $50 billion each way before NAFTA, but in 2016, the U.S. exported $231 billion in goods to Mexico, while importing $294 billion -- a deficit of $63 billion.

"This begs the question: Would we be better off if we reverted to balanced trade at $50 billion each way and sacrificed the jobs that exist today because we increased trade with Mexico under NAFTA?"

U.S. exports to Canada were $266 billion in 2016.

Pork exports to Mexico, at $1.27 billion in 2016, have grown 670% under NAFTA. Mexico is the largest U.S. pork importer by volume and second-largest market by value.

The loss of those pork exports to Mexico "would be cataclysmic for the U.S. pork industry," the report stated.

Canada is the third-largest market for U.S. pork, valued at $779 million, up 1,561% since NAFTA.

NPPC cited that NAFTA needs to be modernized, but the pork producers stated there are "enormous risks associated with withdrawing if efforts to negotiate a more modern agreement fail."

Farmers and ranchers would be hit hard, the group stated. Pulling out of NAFTA would expose U.S. agricultural products to Mexico's normal agricultural tariff rates of 15.6% applied while Mexican products coming into the U.S. would have a 5.2% tariff rate.

The NPPC report also points to the dangers of protective tariffs. The report highlighted the Tariff Act of 1930, commonly known as the Smoot-Hawley Tariff Act. Coming off the stock crash of 1929, the NPPC report notes Congress thought a tariff would save jobs despite the concerns of more than 1,000 economists who asked President Herbert Hoover to veto the bill. Once it went into law, Canada imposed tariffs on 30% of U.S. exports into the country. U.S. trade, both imports and exports, fell dramatically.

The full NPPC report can be viewed at http://nppc.org/…

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