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Farm groups mull options as NAFTA’s future in limbo



WASHINGTON, D.C. — The USDA is making contingency plans in case the North American Free Trade Agreement (NAFTA) is dissolved. At the same time, members of Congress recently asked those in the agricultural industry about NAFTA, and ag representatives stood together with strong support for international trade deals in general and NAFTA, specifically.

USDA Secretary Sonny Perdue says he is working closely with the Trump administration and Congress to protect farmers and ranchers from the potential impact if the United States withdraws from NAFTA.

“We're talking with the administration and Congress about some mitigation efforts if that were to occur, about how we could protect our producers,” he said.

He does think an agreement will be reached with NAFTA, that contingency plans won't be needed, but trade is important to American farmers and people will be nervous until the new agreement is reached.

On Nov. 7, members of the House Agriculture Committee and representatives of the Senate Agriculture Committee talked with industry stakeholders in two separate meetings. While NAFTA renegotiation has stalled, Michael Dykes, president and CEO of the International Dairy Foods Assoc., said the ag representatives all urged Congress to encourage engagement on the trade deal.

The existing agreement isn't perfect and needs to be changed, but withdrawal would be devastating to the U.S. agricultural industry, he explained. The dairy industry exports about 15 percent of all its products and about 25 percent of that goes to Mexico.

In contrast, there are two major issues dairy has with the Canadian market: an increase in its milk production, which is flooding the world market, and the lack of dairy's presence in the current NAFTA agreement, which means tariffs are still in place on dairy imports from the United States, Dykes said.

“We cannot jeopardize our current markets in Mexico for some issue in some other place,” he said. “That's why we think renegotiating NAFTA is the right approach, not withdrawing.”

There are almost 3 million jobs directly or indirectly related to the dairy industry. Across the U.S., about 23 million food and agricultural manufacturing jobs are in place. Withdrawing from NAFTA would create market uncertainty and be destructive for the food and agricultural industry, Dykes said.

Dairy isn't the only industry with concerns, as the meetings had representatives from the American Farm Bureau Federation, the grain and corn industry, pork, fresh produce and wine. Dykes said regardless of concerns within their own industries, everyone attending the meeting wanted to remain part of NAFTA.

The dairy and poultry industries were two concerns for House committee Ranking Member Collin Peterson (D-Minn.). He said the supply management program was allowed to continue under NAFTA and the tariffs Canada's government is putting in place have hindered dairy and poultry imports.

“I'm supportive of efforts to renegotiate NAFTA, but we need to make sure the end result will work for agriculture and that we don't cause any harm to agriculture markets,” he said.

Committee Chair Michael Conaway (R-Texas) said everyone attending the meeting agreed NAFTA was important to agriculture and the sector needs to remain a top priority in the renegotiations. “I am hopeful that both Canada and Mexico will come to the next round of negotiations prepared to have substantive conversations,” he said.

Dykes said everyone in the agriculture industry is worried about trade. “Not only do we need to get the renegotiation of NAFTA done and done well … We need a proactive trade agenda.”

The United States withdrew from the Trans-Pacific Partnership (TPP) because the Trump administration wanted to focus on bilateral agreements. Instead, existing agreements have become the focus of the administration. Dykes said no one knows yet if the U.S. will withdraw from NAFTA or from its trade agreement with South Korea, but hearing the repeated threats means everyone in agriculture should take the issue seriously.

The other 11 countries in the TPP agreement have revised it to form the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Countries involved include Canada, Mexico, Australia, New Zealand, Chile and many Asian countries, including Japan. The deal could be finalized as early as next year.

And, China is working with more than a dozen other Asian countries on the Regional Comprehensive Economic Partnership trade agreement. If approved, China will take over as the global leader of international trade.