NAFTA: Review and recalibrate

Gallery: What has NAFTA done for Illinois? Plus, why people blame the agreement for job displacement and how renegotiation could be a good thing.

The agricultural community heaved a collective sigh of relief earlier this spring when President Donald Trump announced he wouldn’t terminate the North American Free Trade Agreement.

“NAFTA is probably one of the best things we’ve had in terms of a trade agreement,” notes Tamara Nelsen, Illinois Farm Bureau. “Exports have quadrupled, while ag and food exports have created more than 6 million jobs. It’s been a resounding success for American agriculture in the last 23 years.”

Trump agreed to renegotiate NAFTA, and a 90-day comment period is now open, allowing national groups, state commodity organizations and USDA advisory committees to outline the positives and negatives of the agreement before Congress officially renegotiates the details this fall.

Why does NAFTA have such a bad rap?
While NAFTA has not been bad for the U.S. or agriculture, the agreement got a bad rap throughout the 2016 presidential campaign and beyond.

The disconnect lies with manufacturing: People blame NAFTA for displaced manufacturing jobs without new opportunities to fill the voids, Nelsen says. For example, a skilled laborer whose job moved from California to Mexico wasn’t trained and moved into a new transportation or marketing role.

Is that a trade issue? Nelsen argues that trade agreements focus a lot on tariffs and access but don’t always address cost differences between the U.S. and the partner nation — things like tax and environmental policies, health-care costs, or state and federal regulations.

“Those are the policies that can be incentivized so manufacturing companies stay here rather than moving overseas,” she explains.

A silver lining
On the whole, a NAFTA face-lift may not be a bad thing. “The agreement is more than 20 years old and needs a little modernizing,” Nelsen explains. “A lot has happened in 23 years.”

New agreement terms to address health and sanitary regulations, transparency, patent laws, and stricter labor standards would level the playing field for manufacturing companies, Nelsen adds, and give all three countries an opportunity to be more competitive.  

These discussions will no doubt take time. What happens with exports in the interim? 

It’s business as usual with NAFTA countries — almost.

“The agreement continues, and the cross-border investments, relationships and ag trade groups all stay in place,” Nelsen explains. “The challenge is that there are some hurt feelings on both sides.”

But the relationships built over the past 23 years are strong, and Nelsen is confident that a renegotiated, mutually beneficial agreement is possible. 

“Our relationships will make it through this as long as we keep talking.”

Check out the gallery below for a look at how NAFTA impacts U.S. and Illinois ag markets by the numbers. You can also download the full infographic.

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