The Trump administration began talks on Wednesday to reform the 25-year-old North American Free Trade Agreement (NAFTA), a negotiation that could boost U.S. business and fulfill one of the president’s primary campaign promises or potentially end up jeopardizing the North American economy.However, there appears to be general agreement among the United States, Canada, and Mexico that NAFTA needs to be modernized. The trade agreement was written before the advent of Internet-based commerce and there is broad support for stronger enforcement of workplace and environmental protections.
NCC and other poultry groups last month delivered testimony to the House Agriculture Committee expressing the industry’s priorities for any NAFTA renegotiation.
Robert Lighthizer, the U.S. Trade Representative, in an opening news conference said “we feel that NAFTA has fundamentally failed many, many Americans and needs major improvements,” before negotiations began behind closed doors.
The Canadian and Mexican representatives emphasized their commitment to regional trade and the benefits resulting from a regional alliance. However, both Canada and Mexico maintain that the current agreement is not tilted against the United States.
On the line are trillions of dollars of trade that flow through the North American economy. As talks have approached, American farmers, ranchers, retailers and representatives of other industries have warned the administration against disrupting the pact, fearful of losing the trading advantages that NAFTA gives them.
One of the main issues is the importance of trade deficits. Americans buy more goods and services from Mexico than Mexicans buy from the United States. In 2016, the difference was $55.6 billion. The Trump administration views such an imbalance as evidence that Mexico is taking advantage of the United States.
While trade with Canada has been more balanced in recent years, USTR Lighthizer said that over time the United States has run a significant trade deficit with Canada as well.
Lighthizer said that such trade deficits “cannot continue.” And, President Trump has said that he regards trade deficits as a measure of U.S. economic health. However, Mexico and Canada both discount the importance of trade deficits. Many economists agree that focusing on bilateral trade is misplaced. A country may run a deficit with one trading partner and a surplus with another. What matters is the totality, some economists say.
The Wednesday talks are the first of several rounds between now and the end of the year, when the United States, Canada, and Mexico hope to conclude negotiations. President Trump will need to win congressional support for a revised agreement.
Meanwhile this week, more than 50 agriculture deans and academics in the United States signed a letter urging trade representatives to avoid changes to the North American Free Trade Agreement that would hamper trade. One of the signers was Mark Cochran, vice president for agriculture at the University of Arkansas System Division of Agriculture.
“Global markets are very important to the state’s economy,” Cochran said. Poultry and rice are the top commodities in Arkansas, and “Mexico has been a big market for both,” he said. “U.S. agricultural exports to Canada and Mexico account for nearly one-fourth of all U.S. employment attributed to merchandise trade with those countries,” according to the letter.
