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White Paper Looks at NAFTA Impact

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On May 18th, the congressional committees that oversee trade were told that the Trump Administration wants to renegotiate the North American Free Trade Agreement (NAFTA), which started a 90 day window.

NAFTA is now 23 years old, in that time, all trade to Canada and Mexico have increased to a third of U.S. exports to the world, totaling half a trillion dollars in 2016.

There have been winners and losers in the trade deal, but Neil Dierks, CEO of the National Pork Producers Council (NPPC) says agriculture has benefited a lot from free trade, "Our sector has done well with NAFTA and we don't need any changes to our sector, to the pork industry. And I believe generally speaking, most agricultural products, what exists today is desirable."

Last week, the NPPC released a white paper going over the pros and cons of NAFTA. Calling for negotiators to leave pork out of the talks.

There have been calls by the Trump Administration to pull out of NAFTA. Dierks says the white paper shows if that happened and Mexico went to a 20 percent duty on pork, the U.S. would lose its market share in Mexico because other countries would be more competitive. To the pork industry, that would mean five percent fewer hogs and a 10 percent decrease in value. About $14 per hog by today's numbers.

Although, Dierks says it looks like Secretary of Agriculture Sonny Perdue is sympathetic to trade, "He understands trade, he's very much focused on protecting interests. And that's our point is that we understand that there are sectors of the economy where a revamp, new discussions, new new negotiations, and a modernization is very legitimate."

According to the white paper, Iowa exports $2.1 billion in goods to Mexico. It's the state's second largest export market. The corn trade generates nearly half a billion dollars and accounts for about half of Iowa's corn exports. Trade with Mexico supports more than 53,000 jobs.

On the national level, agriculture exports to Canada and Mexico were nearly $28 billion last year, accounting for 287,000 jobs.

The paper does point out there is still a deficit in total agriculture trade with Mexico of several billion dollars; but explains that's because Mexico exports products like cocoa and coffee, which the U.S. can't produce. The U.S. has a large trade surplus on commodities like pork, poultry, dairy, feed grain, wheat, rice, and oilseeds.

The NPPC white paper is sourced primarily from research from university professors as well as publicly available data from the International Trade Commission and the United States Government.

You can read it here: