Last week, 22 agricultural associations submitted a letter to the governors of each state expressing concern about the potential of a withdrawal from the important trade agreement. Among these organizations are ones very familiar to our region: Agrimark, American Farm Bureau Federation, Coalition of New England Companies for Trade (CONECT), IDFA, National Council of Farmer Cooperatives, and others.
‘Notice of withdrawal from NAFTA would result in substantial harm to the U.S. economy generally and U.S. food and agriculture producers, in particular’, the letter said. It went on to state: ‘Notice of withdrawal from NAFTA would result in substantial harm to the U.S. economy generally and U.S. food and agriculture producers, in particular. While it has been asserted that negotiations could be completed and a new agreement approved subsequent to issuance of notice of withdrawal, but prior to actual withdrawal, that observation underestimates the business complexity, integrated supply chains and contracting periods involved. Such a notice of withdrawal would fuel additional uncertainty among our North American trading partners, creating a sense of urgency to explore non-U.S.-origin sources of supply. It also would trigger a substantial, immediate response in commodity markets, as market-specific focus would turn to a scheduled return to trade-prohibitive tariff rates. Contracts would be renegotiated or cancelled, sales would be delayed or lost altogether, able foreign competitors would rush to seize our export markets, and litigation would abound even before withdrawal took effect.’
According to the authors of the letter, some possible ramifications of withdrawal are ‘the negative impact on the United States would far outweigh any benefits from higher U.S. tariffs, including a net loss of 256,000 U.S. jobs, a net loss of at least 50,000 jobs in the U.S. food and agriculture industry, and a drop in GDP of $13 billion from the farm sector alone. NAFTA withdrawal would also disrupt critical industry supply chains, close markets, eliminate jobs, and increase prices for the basic needs of American consumers.’
The letter urges the Governors to let President Trump know ‘that you support a modernized NAFTA that maintains and enhances food and agricultural trade between the U.S., Mexico and Canada, and recognition that withdrawal from the accord would have adverse impacts.’
Whether the President has the unilateral right or authority to withdraw from an existing international trade agreement, without the approval of Congress, is an issue that may have to be settled in court. This letter to our nation’s Governors is an attempt to prevent that potential legal quagmire from happening.
We will keep you informed of news on the NAFTA negotiations as they become public.