If Trump aims for
major reforms on agriculture trade by scrapping the North American Free Trade
Agreement, he could be shooting himself in the foot.
At new study by Al
Mussell and Doug Hedley of Agri-Food Economic Systems based in Guelph finds
that the U.S. food industry is a major beneficiary of NAFTA as it exists.
Food processors
import raw materials from Canada and the U.S. processors export their products to Canadians.
It’s what has
concerned Canadians for a couple of decades as they have watched processing
plants, such as Heinz ketchup at Leamington and Kellogg’s breakfast cereals in
London, close and transfer operations to the U.S.
“The U.S. food processing
industry is vulnerable to any change limiting its access to Canadian bulk or
intermediate product imports and/or the Canadian consumer market for its
outputs”, says Hedley, Agri-Food
Economic Systems Associate and co-author of the policy note.
“Canada has
wrestled with how to effectively expand and retain its food processing sector
to process Canadian farm products." he writes.
“Meanwhile, the U.S.
has been a major beneficiary of its imports of Canadian bulk and intermediate products
in expanding its food processing industry- with ready access to the Canadian
market for the output.”
The
threat to the U.S. from Mexico in NAFTA is reduced access to imports of fruits
and vegetables that benefit from Mexican labour.
This
workforce is scarce in the U.S. and poised to become further limited due to Trump’s
proposed changes in U.S. immigration policy.
Mussell says “the evidence does
not support U.S. agri-food as victim of NAFTA, and the U.S. actually has much
to lose in a NAFTA renegotiation.
“Understanding
what is at stake will condition the negotiating positions of Canada and Mexico
in agri-food, and should give pause to the U.S. in its pursuit of NAFTA
renegotiation”.
