1 December 2017 - NAFTA is Important

NAFTA, the North American Free Trade Agreement has certainly had more than its share of attention since it was put into place in the 1990’s by Canada, Mexico and the United States. The three countries did it to establish trade rules that would make trade easier between the countries who shared common borders. I think it worked quite well over its lifespan and certainly increased agricultural trade to the benefit of the farmers in North America.

But then came the bombshell in the Presidential campaign a year ago when candidate Donald Trump said he would ‘blow up’ NAFTA if he were elected, calling it outdated and unfair to the United States. After seeing the negative reaction from farmers and labor unions, two days later he said he would renegotiate NAFTA and do it quickly. The word ‘quickly’ jumped out at me because my decades-long experience with trade negotiations, says nothing happens quickly. Remember the negotiations to establish the WTO - World Trade Organization? 20 major meetings over a five-year period.

The NAFTA talks started the beginning of the year with a self-imposed deadline of being done by the end of the year ahead of the Mexican election. That certainly will not happen in light of major disagreements that have surfaced already. I doubt it will come together in a year or two, due to the differences involved in trade philosophy and trade policy.

Our Commerce Secretary has said if it does fall apart, Mexico and Canada will suffer more than the United States. Yet, anytime you are involved in trade negotiations you have to come up with a final agreement that has something for everyone involved. If it is all one-sided, it will not be a good agreement and will not serve agricultural producers in Canada, Mexico and the United States.

I wish the negotiators a lot of luck and also a lot of patience, as they move forward with the renegotiations that are taking place now before the “big guys’ get involved. Let’s keep NAFTA for the benefit of all three countries.

My thoughts on Samuelson Sez.