NAFTA trading partners recount gains since 1994

Agriculture officials from the Canadian and Mexican embassies detailed benefits of the North American Free Trade Agreement for their countries’ respective industries at the ninth annual Governor’s Conference on Agricultural Trade.

Michael Hawkins, counsellor for agriculture at the Canadian Embassy, and Carlos Vazquez, minister of agricultural affairs for the Mexico Embassy, were panelists for the conference’s March 6 presentation on “Partners’ View—Importance of NAFTA for North American Agriculture: Past Benefits, Future Opportunities.”

NAFTA is an agreement reached among Canada, Mexico and the U.S. in 1994, creating a trilateral trade bloc. Its goal was to eliminate barriers to trade and investment among the three countries, and it eventually eliminated most tariffs on Mexico’s exports to the U.S. and U.S. exports to Mexico. Most U.S.-Canada trade was already duty-free.

Agriculture was a controversial topic during NAFTA negotiations, and agricultural trade was the only portion of the agreement not negotiated trilaterally. Instead, three separate agreements were signed between each pair of countries.

In the years since NAFTA was signed, Vazquez said, Mexico has become the world’s 12th-largest producer of food, and food products from Mexico can be found in 126 countries. Trade between Mexico and the U.S. in 2016 was valued at nearly $43 billion, which is 521 percent greater than in 1993.

More than 80 percent of Mexico’s agricultural exports go to the U.S., Vazquez explained, with many of them being transported between October and May. But the trade is truly bilateral, he noted. Beer is a major Mexican export, “but guess what? We buy the hops from Canada and the U.S.” and import barley as well.

And as far as Virginia agricultural exports, “we love your pork, and we love your peanuts.”

Hawkins said Canadian and U.S. products are entirely likely to cross the two countries’ border more than once. He gave the hypothetical example of a Colorado cattle feed producer who exports feed to a farm in Alberta, which exports cattle to a feed lot in Nebraska, which then sells the cattle to a processor in Missouri. The resulting meat, he said, is sold in an Ontario supermarket.

“We don’t just trade things together, we really make things together,” he elaborated, noting that traded goods include plant varieties, animal genetics and livestock and meats, as well as supply products like fertilizer and farm machinery.

“It’s this interaction that really drives our mutual competitiveness,” Hawkins said.

He noted that 70 percent of Canada’s exports and 50 percent of its agricultural exports go to America. The average Canadian, he said, consumes $629 in U.S. food and other agricultural products annually.

Bilateral trade was valued at $545 billion in 2016, and bilateral ag trade was valued at $47 billion.

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