Commodity Exporters Paying Attention to NAFTA Renegotiations

 

The North American Free Trade Agreement renegotiations are under way with the first round concluded over the weekend, and the second scheduled to start September 1st in Mexico City. Because NAFTA has been such a positive for agricultural trade, everyone in the agriculture industry is watching with some concern over how the negotiations play out. Mike Zick is the Facility Manager for COFCO (Cough’-coe) International, an ag exporting company that ships commodities all over the world. The best outcome from the negotiations for his industry is one that doesn’t interrupt the flow of agricultural goods between the U.S., Canada, and Mexico…

“We don’t want to see any big barriers, obviously.  A lot of our wheat and corn goes to Mexico, and you have barriers, free trade agreements, hit some hurdles, and you’re talking about Mexico looking at we’re going to have an import tariffs for some of their goods, and their reaction will be having some tariffs on some of our goods, or buy from South America, or someplace like that.

Obviously, none of that is really good for our industry.  We didn’t really have a lot of problems with the way it was before, but it needs to be updated for different things, like data, computers, internet, emails, all that kind of stuff really wasn’t around.”

Zick says several of the Trump Administration’s biggest concerns with NAFTA don’t have anything to do with ag exports and he’s hopeful those areas will be the only ones to see any changes…

“Some of the big pushes from the Trump Administration are intellectual property, has to do with data and things like that.  Obviously that stuff has to be updated.  Does it really have a big effect on our business?  Not really.  But, for our industry, we really don’t want to see any really big trade barriers, tariffs, things like that that are going to impede our trade with Mexico and Canada.”

He also says the three countries involved in NAFTA really rely on each other’s trade markets to keep their economies running…

“I don’t know the exact numbers, but Canada does import some of our corn, we import grains and things like that from Canada, oats, barley, things like that.  So, we definitely wouldn’t want to see any obvious barriers that would affect trade, comes right down to it, exports are a major part of our soybean supply/demand.  Corn was, but now we end up using about two-thirds of our corn, if not more, of our corn crop domestically.  It’s really only our surpluses of corn that get exported, but a big share goes to Mexico.”

Zick says if the U.S. suddenly loses Canada and Mexico as key trading partners, where will all those exports wind up going instead? Plus, with the downturn in the agricultural economy, it would be that much more difficult for farmers to turn any kind of profits as their costs are still high.


A native of the Texas Panhandle, Rhonda was born and raised on a cotton farm where she saw cotton farming evolve from ditch irrigation to center pivot irrigation and harvest trailers to modules. After graduating from Texas Tech University, she got her start in radio with KGNC News Talk 710 in Amarillo, Texas.

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