In this article published by the Global Farmer Network and written by Cherilyn Nagel, a farmer in Saskatchewan, Canada, we learn more about the true cost of lost trade agreements with Canada and Mexico. Illinois farmers need NAFTA in place until Congress ratifies USMCA and we need a vote to ratify USMCA by summer 2019.
As Washington whispers about collusion and Ottawa sinks into a scandal that will dominate the media for months pre-election, the economies of the United States and Canada continue to hum along.
But I’m concerned they will face disruption if we fail to confront the turmoil that’s brewing in our trading partnership.
I’m a farmer in western Canada, and when I was president of the Western Canadian Wheat Growers Association I did everything in my power to ensure our long, shared border had open communication and a strong working relationship.
Most Americans must want the same thing: namely, the economic opportunities and consumer choices that flow from free trade.
A new report, completed by agriculture economists at Purdue University, in coordination with the Farm Foundation, however, highlights the emerging risks: “If the current U.S. trade policy were to continue towards protectionism… U.S. agricultural exports would drop by $21.8 billion.”
That’s a lot of money, even in Canadian dollars.
The report, written by three economists at Purdue University and released on Monday at the National Press Club in Washington, D.C., shows how much America’s trade warfare puts that at risk.
It describes the starkest of cases, analyzing what would happen if the United States were to quit NAFTA and not replace it with the USMCA, the successor pact that trade negotiators for the United States, Mexico, and Canada completed last year. This action alone would cause more than half of the damage that the Purdue / Farm Foundation report says is possible: a loss of more than $12 billion in agricultural exports for U.S. farmers and ag businesses.
That’s a worst-case scenario. Yet it’s hardly unimaginable: As recently as three months ago, President Trump threatened to withdraw from NAFTA as a way to pressure Congress to approve USMCA.
Most of the rest of $21.8 billion in potential farm-export losses comes from $8.4 billion in trade retaliation, including measures by China and Europe. The decision in 2017 to quit the Trans-Pacific Partnership (TPP) accounts for an additional sum of almost $2 billion.
The combined result would devastate farmers. “On average,” says the Purdue / Farm Foundation report, “such an export reduction is equivalent to $4,000 per person employed in the agricultural and food sectors.” It would hurt non-farmers as well: “This scenario would also result in an aggregate loss of economic well-being of $42.5 billion or over $500 per U.S. household.”
Trade tariffs are taxes by another name, and so this is essentially a big tax hike on every American.
The news isn’t wholly bad. In fact, the Purdue / Farm Foundation’s report highlights a couple of opportunities for American policymakers. Replacing NAFTA with USMCA, for example, would boost U.S. farm exports by $454 million. And rejoining TPP would deliver $2.9 billion in new sales.
As these numbers reveal, however, the threats dwarf the opportunities.
Here in Canada, we’re still striving to improve our trading partnerships and prospects. We’re members of the TPP: Our government signed the pact last year, giving us preferential access to Japan, Australia, New Zealand, and other markets around the Pacific Rim. We also have a new trade deal with the European Union.
I hope the United States will join us, both in the USMCA as well as the TPP. We’re better off when we work together.
It doesn’t matter where we produce food in North America. You can grow corn in Iowa, pinto beans in North Dakota, or, like me, durum wheat in Saskatchewan. We grow far more food than our combined populations can eat. Our way of life requires export markets.
Of course, increased agricultural trade helps more than farmers. It fills our grocery stores with food from around the planet: avocados from Mexico, papayas from Hawaii, and maple syrup from Quebec. That’s good for the millions of people who never set foot on farms. And most people I know expect that kind of access, regardless of the season of the year.
Nobody should want to turn back the clock on trade. At least now, thanks to the work at Purdue and the Farm Foundation, we can put a potential price tag on what a bad choice for the United States looks like: $21.8 billion.
So listen, even during the highly dramatic, soap opera-like scene in the political news…..don’t forget about trade. Please.
* This column first appeared at The Hill.
You won't want to miss this important feature on what's coming in the future of the American ethanol industry.Learn More
The 2018 ICGA annual report highlights a myriad of positive action on behalf of corn farmers in Illinois. Check it out and let us know what else we should be working on!Learn More
A recent analysis by the U.S. Grains Council (USGC) shows non-beverage ethanol has been the fastest growing U.S. agricultural export over the past decade by a significant margin.Learn More