Undermining NAFTA Is a Major Mistake

Undermining NAFTA Is a Major Mistake

American-Mexican-and-Canadian-flags-combinedAS WE MOVE rapidly through the rounds of negotiations designed to update the North American Free Trade Agreement (NAFTA), an observer can become so focused on today’s specific issues that they lose sight of the agreement’s value over the past 25 years.

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For the potato industry, NAFTA has been a rousing success. The volume of potato trade that occurs between the three parties (Canada, Mexico, and the U.S.) has grown by hundreds of millions of dollars annually, benefiting all players. This economic activity is certainly not limited to our industry. A host of players from financial services, technology interests, value-added manufacturing, and agriculture all have seen the benefits that reducing trade barriers offers.

NAFTA Isn’t Perfect

Does that mean all industries have seen similar results from NAFTA? Certainly not. Even within the fruit and vegetable industry, commodities that are produced in short production windows have had those marketing windows encroached upon by sophisticated Mexican operations. Their experience with NAFTA has seen an erosion in their economic opportunities and necessarily a view that the agreement has failed to protect their interests.

Our own industry was targeted by retaliatory Mexican tariffs after the U.S. canceled a program that allowed Mexican trucks limited access to cross the border hauling goods. The result was a huge loss of the Mexican market to U.S. potato products and those lost opportunities were realized by Canadian interests.

This latter example is a case where the dispute resolution mechanism (trade speak for NAFTA’s court) worked in Mexico’s favor. The U.S. did violate their obligations as the agreement was written. The Mexicans in turn defended their interests using the punitive power that NAFTA allows. In the face of millions in lost dollars, the U.S. eventually had to correct its erroneous actions.

But It’s Worth Preserving

Various groups who were particularly vocal during the recent Presidential campaign believe that withdrawing from NAFTA will improve America’s trading relationships with its closest neighbors. Those groups are wrong. There is no gentle way to explain how damaging that action would be for our own economy.

Additionally, the remedy of withdrawing from NAFTA assumes that the agreement is responsible for the ills of those aggrieved parties. However, the agreement was concluded in the early 1990s at the beginning of a wave of change that is still sweeping the globe. Countries in Asia, the Middle East, Europe, and the Americas all are having to confront demographic, industrial, and cultural upheaval. NAFTA only touches one small segment of those areas, and though it may require modernization, it has not caused these broader and deeper trends reaching far beyond Canada, Mexico, and the U.S.

The proposal tabled by the U.S. to “enhance” the antidumping provisions of NAFTA deserves close scrutiny. Those enhancements, known as the “seasonal and perishable” proposal, are intended to provide U.S. producers with a stronger ability to prevent actions by Mexican fresh produce exporters that depress prices domestically.

Though we understand the intent of this proposal, it will not be available exclusively to import-sensitive Americans. If accepted in a revised NAFTA, the Canadians and Mexicans also may be able to more easily restrict imports that they believe are damaging their fruit and vegetable sector. Our history indicates for the potato industry, both countries have shown ample willingness to use this type of authority to throttle our exports and thereby harm our industry.

As the three countries rush to conclude the NAFTA renegotiation sometime in early 2018, our message to all parties is like the medical community’s Hippocratic oath: “First do no harm.”

The National Potato Council keeps a close watch on Washington’s impact on potato growers. John Keeling is its Executive Vice President and CEO. [email protected]

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Tom says:

Why doesn’t the potato industry do we row crop growers have to do and lower their prices to Mexico to make up for a tarrif that could be imposed. Or let’s do something that I think will work,everytime drugs are found on a truck crossing into the USA we shut the border down heading north for 2 weeks to investigate.
All you industries making money on Mexico are a bunch of hypocrites,fair wages,housing,regulations ect. all go out the window as long as it doesn’t affect you. NAFTA is a bad deal for America and only benefits the drug dealers and wealthy of Mexico.
I need to recall a movie I was watching years ago and an undercover drug agent was dealing with the Mexican cartels when one of the drug dealers made a statement,when NAFTA is passed we will have an open roadway into America with our drugs,even some Hollywood writer knew that.

Greg Johnson says:

All you hear and read these days is “Buy Local”. It is about time the large producers start “Selling Local”.

john says:

Kill it like their no tomorrow,it only benefits corporate crony .The pest that have come in with this free trade has been nothing more than ecological disaster.The florida farmers have been hurt badly ,I know I’m one of them usa first!!! Free trade no, fair trade yes=tariffs.We pay more for labor more for chemical inputs a lot more regulation.Growing produce shame on you.

Eric Fredrickson says:

Signing NAFTA in the first place was a bigger mistake; not only was there wholesale relocating of factories, but of farms that ran across the border, erroneously seeking huge profits from a country that barely qualifies as third world, with a corrupt government, abysmal infrastructure, disease-tainted water supply, and a one-way trade agreement that not only prohibited American-made products to be sold in Mexico, but any businesses that relocated there had no rights, no ownership of property, either real or chattel. They barely allow personal property in Mexico; once you’re there, all the equipment you brought down, the buildings you built and paid for is no longer yours, it’s the governments. If you leave, it stays there.

The diseases brought up from Mexico increased considerably from the poor hygiene in the growing process, to their lackadaisical enforcement of pesticide use; many pesticides banned for use in the United States were allowed for use in Mexico and the crops could be imported here for general consumption, which caused many restaurants to go out of business.

I saw the job loss up close; a major factory closed its doors and moved to Mexico, causing a loss of thousands of high-paying jobs that had no replacement, and as a result, the rest of the areas businesses suffered when these people could no longer afford their goods and services, and most moved away for lesser-paying jobs. The potato industry, which I grew up in, was hit hard as well, with competition with lower-quality potatoes riddled with disease coming into this country because “it was cheaper”; but not in the long-term.

The norther border was no better; there was several diseases that came in from PEI on the seed that they were freely able to import here, but nothing was permitted to enter Canada that was grown in the U.S. Even Canadian dirt which came in on beets imported here, by law, had to go back to the farm of origin; however, Canadian dirt, once it left their country, could not be returned.

NAFTA was a one-sided trade agreement that benefited no-one in the United States, only the foreign entities across the border. In the end, a truly fair and equitable trade agreement will benefit Americans, and our trade partners.