US ag orgs make case for inclusion on NAFTA negotiation

24-Jan-2017 - Last updated on 25-Jan-2017 at 16:01 GMT

Multiple US agricultural and feed crop organizations are calling for the new administration to work with them in efforts to renegotiation the North American Free Trade Agreement.

An open letter to the Trump administration calling for sector involvement was released the day after that administration backed away from work with the Trans-Pacific Partnership.

In the letter, a 133-member collation, the US Food and Agricultural Dialogue for Trade, said its participants are eager to work with the new administration to improve the US’s position in the market in North America. The group includes several feed trade organizations like the American Feed Industry Association (AFIA), National Grain and Feed Association (NGFA) and US Grains Council.

“With the productivity of US agriculture growing faster than domestic demand, the US food and agriculture industry – and the rural communities that depend on it – relies heavily on export markets to sustain prices and revenues,” group members said in the letter. “Therefore, the US food and agriculture industry looks forward to working with the new administration in preserving and expanding upon the gains our sector has achieved within the North American market and strengthening our competitiveness around the globe.”

Some among the group, like the American Soybean Association (ASA), also asked the administration to be careful in its efforts to renegotiate the agreement.

“Given the size and impact of the Mexican and Canadian markets for American soybean producers, we're watching the administration’s decisions very, very closely, and it's fair to say that we're nervous,” said Ron Moore, president of the ASA. “For the last 20 years, NAFTA has been a core component in the growth of soybeans as a positive contributor to the US balance of trade.”

Protecting trade

The group of feed crop and agricultural organizations said that the trade agreement has allowed for an increase in US agricultural exports. “Over the past 25 years the share of US production that is exported around the globe has steadily risen in terms of both value and volume, proving that food and agricultural exports are a successful and valuable part of the US economy,” members said in the letter.

A measure of that success has come from “economic cooperation, integration and policy alignment” with Canada and Mexico, the group said. The collaboration offered by NAFTA has allowed US agricultural producers to be more competitive in the global economy.

US agricultural producers have benefited from the trade conducted through NAFTA, said the ASA. And, that needs to be “protected” as efforts to renegotiate the agreement start.

“Overall, US ag exports to Mexico and Canada have more than quadrupled since NAFTA enactment, growing from $8.9bn in 1993 to $38.6bn in 2015,” said Moore. “Mexico’s imports alone are a particularly notable success story for US soy, growing more than five-fold over that same time period to $2.44bn in 2015. Needless to say, there's a great deal at stake.”

Areas to address

There are, however, elements of the agreement that could be improved, said Moore, and the ASA is looking forward to being a part of the process.

“In particular, we are interested in discussing how to reduce non-tariff barriers as well as the few remaining tariffs on US ag products sold to Canada and Mexico,” he added.

The coalition also mentioned areas where barriers to trade remain. “We look forward to working with your administration on reducing the non-tariff trade barriers that continue to inhibit our exports to the North American marketplace, as well as to addressing the remaining tariffs impeding access for some US export sectors,” added the group in its letter to President Trump.

Trade details

In 2015, Canada was found to be the top export destination for multiple US agricultural products, said the US Department of Agriculture (USDA) in a Foreign Agricultural Service report. Previously the country had been the second export location.

The country accounted for $20.9bn in agricultural products, said the department. It also was the top market for high-value agricultural products from the US.

About 16% of its imports are products like animal feed or other intermediate goods, while 4% account for bulk commodities like feed grains, said the USDA.

Mexico made up the third largest market purchasing about $17.7bn in overall agricultural products, said the department. The country was the second largest market for high-value agricultural products.

In addition to eliminating tariffs for multiple products, NAFTA also called for sanitary and phytosanitary measures to be based in science, non-discriminatory and transparent so that they would not restrict trade, added the USDA in a report.

Trade among the three countries was about $82bn in 2013 up from $16.7bn the year prior to NAFTA, said the department. It amounts to an increase of 233%.