NPPC White Paper Details Benefits of NAFTA

US - Following last week’s notification by the Trump administration that it will renegotiate the North American Free Trade Agreement (NAFTA), the National Pork Producers Council yesterday released a white paper on the benefits of the trade deal among the United States, Canada and Mexico.
calendar icon 26 May 2017
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The paper, which focuses primarily on trade with Mexico, makes the case for not abandoning the 23-year-old pact and for not disrupting trade in sectors for which the agreement has worked well, including US pork. Mexico is the No. 2 export market for US pork, and Canada is No. 4.

For all US goods and services, Canada and Mexico are the top two destinations, accounting for more than one-third of total US exports, adding $80 billion to the US economy and supporting more than 14 million American jobs, according to US government data.

While considerable attention has been given to the $63 billion trade deficit the United States has with Mexico, NPPC’s paper highlights two key facts: When NAFTA took effect 1 January 1994, trade between the United States and Mexico was only $50 billion each way.

Last year, US exports to Mexico were nearly quintuple that amount at $231 billion, and those exports supported 5 million US jobs. And while imports to the United States from Mexico were $294 billion, those, too, supported millions of US jobs. (Nearly 40 per cent of Mexican imports include US content.)

For US agriculture, Canada and Mexico are the second and third largest foreign markets. They imported more than $38 billion of US products in 2016, or 28 per cent of all US agricultural exports. Those exports generated more than $48 billion in additional business activity throughout the economy and supported nearly 287,000 jobs.

Disrupting US agricultural exports to Mexico and Canada, the NPPC paper points out, would have devastating consequences for America’s farmers and for the US processing and transportation industries. US pork producers would be particularly hard hit.

Iowa State University economist Dermot Hayes calculated that if Mexico placed a 20 per cent duty on US pork – a likely response to a US withdraw from NAFTA – and allowed other countries duty-free access, the US pork industry eventually would lose the entire Mexican market. That equates to a loss of 5 per cent of US pork production, which would reduce the US live hog market by 10 per cent at a cost of $14 per hog, or a nearly $1.7 billion aggregate loss to the industry.

“A loss in exports to Mexico of that magnitude would be cataclysmic for the US pork industry,” said Nick Giordano, NPPC’s vice president for global government affairs, who will share highlights of the paper at the NAFTA: From Cars to Carrots panel discussion hosted by the Global Business Dialogue later yesterday, 25 May. “Pork producers will support updating and improving NAFTA but only if duties on US pork remain at zero and pork exports are not disrupted.”

The NPPC paper also notes that NAFTA has provided benefits beyond trade, including improved relations with Canada and Mexico, better regional investment and supply chains, increased cooperation with Mexico in fighting drug trafficking and terrorism and greater political stability in that country.

Further Reading

You can view the NPPC's NAFTA white paper by clicking here.

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