Withdrawing from NAFTA could devastate U.S. farmers

With one in five jobs in our state — almost half a million of them — dependent on it, Iowans can be forgiven if they’re more than a little concerned about the recent rhetoric on trade.

And while the talk on trade from the White House seems to have moderated, and recently filled positions in the Trump administration, including former Gov. Terry Branstad as U.S. ambassador to China, portend positive actions on trade, many are taking a wait-and-see posture.

Farmers in Iowa and across the nation are particularly worried about the renegotiation of the North American Free Trade Agreement, the 23-year-old deal among the United States, Canada and Mexico.

That’s because NAFTA has been an overwhelming success for American agriculture — and for many other sectors of the U.S. economy. Canada is the No. 2 market for U.S. agricultural products; Mexico is No. 3. In 2016, U.S. farmers exported more than $38 billion of products to the two nations, or 28 percent of all U.S. agricultural exports. Those exports generated more than $48 billion in additional economic activity and supported nearly 287,000 U.S. agricultural jobs.

Mexico is particularly important to Iowa farmers. The top three U.S. farm exports to that country are corn, soybeans and pork, with a combined $5.4 billion in 2016, and Iowa happens to be the No. 1 U.S. producer of those commodities.

While critics of the agreement point to a $60 billion trade deficit the United States has with Mexico — U.S. trade with Canada is nearly in balance — they fail to mention two salient facts: When NAFTA took effect, trade between the United States and Mexico was only $50 billion each way; last year, U.S. exports to Mexico were nearly quintuple that amount at $231 billion, and they supported 5 million U.S. jobs. And while imports to the United States from Mexico were $294 billion, those, too, supported millions of American jobs.

Additionally, it should be pointed out, 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.

Certainly, after nearly a quarter of a century, NAFTA could do with some modernizing. After all, when the agreement was being negotiated 25 years ago e-commerce, for example, was just evolving — the internet began gaining popularity in the mid-1990s; NAFTA took effect Jan. 1, 1994. And in redoing the deal, we can work with our NAFTA partners to make North American standards the global benchmarks, whether for agriculture or automobiles.

But what U.S. farmers like me can do without is any disruption in trade with our neighbors to the north and south. And withdrawing from the deal, which still is a possibility, would be devastating for American agriculture. U.S. pork producers would be particularly hard hit if exports to their No. 2 (Mexico) and No. 4 (Canada) markets were interrupted. In 2016, more than a third of U.S. pork exports — $2.2 billion worth — went to those two countries.

Iowa State University economist Dermot Hayes calculated that if Mexico placed a 20 percent duty on U.S. pork — a likely response to a U.S. withdrawal from NAFTA — and allowed other countries duty-free access, the U.S. pork industry eventually would lose the entire Mexican market. That would result in a loss of 5 percent of U.S. pork production at a cost of $14 per hog; the cumulative impact on the U.S. pork industry would be $1.7 billion.

By all means, update NAFTA, but let’s make sure the tremendous benefits of that agreement are maintained in any renegotiated deal.

John Weber is a pork producer from Dysart, past president of the National Pork Producers Council and current chairman of its Trade Policy Committee.