The Benefits of NAFTA are in the Present


Farmers are mostly pleased with President Trump’s first year—but we’re also worried about what comes next.

Our general approval was on display last week, when the President addressed the annual convention of the American Farm Bureau in Nashville, TN.  I was at the convention for his remarks, which were often interrupted with loud applause—most obviously when he mentioned his victory on the tax bill, which includes a reform of the estate tax that will make it easier for us to keep our farms in our families across generations.

That line earned a standing ovation.

We appreciate other accomplishments as well. The booming stock market improves our retirement savings. New opportunities for rural communities to receive internet access will help us stay connected with the world. And on reducing regulations, the president has been a great champion.

“Many of you have endured burdensome fines, inspections, paperwork, and relentless intrusion from an army of regulators at the EPA, the FDA, and countless other federal agencies,” he said.

That’s so true—and we appreciate his efforts to make it easier for us to farm. A perfect example is his repeal of the EPA’s “Waters of the United States” rule. “It sounds so nice. It sounds so innocent. It was a disaster,” he said. “The title was beautiful. That’s where it stopped.”

More applause—and also laughter.

Yet our apparent good mood masked a tremendous anxiety: Despite these policy achievements, we’re worried about the Trump administration’s approach to trade—and the possibility that a withdrawal from NAFTA will devastate our ability to sell what we produce.

President Trump spoke about trade only briefly, and what he said was vague: “On NAFTA I am working very hard to get a better deal for our country and our farmers and our manufacturers.”

I’ll take a better deal. Everyone knows that NAFTA could use a few updates after nearly 25 years. We might also imagine improvements for agriculture, such as resolution of trade issues with Canada related to the dairy and forestry industries.

At the same time, we must recognize that NAFTA has been a boon for farmers and our customers. Under its provisions, our exports to Canada and Mexico have nearly quadrupled, to about $20 billion and $18 billion, respectively,  resulting in total economic activity exceeding $107 billion according to the Center for North American Studies. Together, these two countries buy about one-third of all the products farmers sell abroad.

Our country can’t afford to lose these markets—and that’s exactly what could happen if the White House were to withdraw from NAFTA.

My hope is that the rhetoric of withdrawal is merely the president’s tough-talking way of achieving a better agreement. By threatening to abandon a trade pact that also benefits Canada and Mexico, perhaps he’ll win key concessions that American farmers will cheer as loudly as we cheered his estate-tax revisions in Nashville last week.

Our fear is that President Trump really will walk away from NAFTA, much as he quit the Trans-Pacific Partnership shortly after assuming office last year. The difference is that although TPP would have helped farmers, its benefits lay in the future. They are like a gift we won’t receive—a disappointment, but not a catastrophe.

The benefits of NAFTA, however, are in the present—and withdrawal would remove an important part of our livelihood. It would feel like a theft.

The problem is complicated by our high productivity during a time of low commodity prices. Last year, my farm enjoyed a record-setting yield. New technologies promise that soon we’ll grow even more.

As much as we appreciate regulatory relief and tax reform, what we really need are markets: Unbroken access to the ones that we have now, and new ones that trade diplomats can open for us.

At the start of his speech last week, President Trump joked that he was disappointed to learn that his hosts were celebrating their 99th year as an organization. “A hundred is so much cooler,” he said. “So I’ll be back, I think. Next year, I’ll come back. All right? We’ll come back.”

His reception in 12 months will depend largely on what happens with NAFTA. If he wants the applause to continue, he’ll keep us in this trade agreement and make it even better.

The alternative is too grim to contemplate.

A version of this column first appeared January 16 at The Hill.

Daniel Kelley

Daniel Kelley

Daniel grows corn and soybeans in partnership with his brothers and son. Long history with agriculture cooperative systems, providing leadership to GROWMARK and CoBank.

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2 thoughts on “The Benefits of NAFTA are in the Present

  1. Finally someone for farmers.Good trump.

  2. Good commentary regarding your concerns about withdrawal from NAFTA. I would, however, voice concern regarding withdrawal from TPP. Though you suggest it reflects future potential loss at this time, that unrealized losses are not losses at all. However, we already have invested millions in efforts to bring the nations to the table with a forward looking agreement, not to mention the thousands of man-hours of Commodity groups, trade representatives and negotiators.

    Today, U.S. wheat farmers are on the outside of this newly signed agreement, looking in, thanks to an additional $65 per ton higher tariff rate on their wheat. Canadian and Australian wheat can come into these markets with that advantage. In the least, this represents a $200 million loss of market share to American agriculture. This is no chump change!

    Withdrawal from TPP was a major strategic blunder, a miscalculation of immense proportions. Unless we rejoin this agreement, this has tremendous negative impact on current and future business for agriculture.