AUSTIN, Texas - With Washington D.C. distracted by dysfunction and a partial government shutdown, one trade analyst speaking at Potato Expo 2019 said the focus needs to return soon to the importance of approving the U.S. Mexico Canada Agreement.
“We are in the middle of it big political fight in Washington, DC, but we haven’t yet concluded the previous political fight that has to do with trade,” said Tony Payan, director of the Baker Institute for Public Policy at Rice University.
Despite the antagonism expressed by Trump and others toward the North American Free Trade Agreement, but he said Jan. 10 that trade relations between the U.S., Canada and Mexico would be substantially disrupted if President Trump pulled out of NAFTA without ratification of the USMCA.
“If the president were to decide to call NAFTA off in the next month and make it (part) of the fight over border security, that would be a disaster,” he said. “It would be a disaster for all of us, and it certainly would be a disaster for the agricultural industry.
Payan said NAFTA boosted trade between the U.S. and Mexico from $40 billion before the deal to $580 billion today.
“There’s hardly any question that the North American Free Trade Agreement was enormously successful in creating wealth in creating economic growth for all three countries,” he said. Some of Trump’s criticisms of Mexico — notably wage suppression — are valid. However, he said NAFTA nevertheless was a win for agriculture.
While not perfect, the new agreement modernizes NAFTA and promises future expansion of trade for U.S. potatoes and other commodities
Now, he said, Congress must act quickly to approve NAFTA 2.0, the USMCA.
“Congress is supposed to take 90 days to take a look at that agreement very carefully, through March, and then they’re supposed to have a vote on it, hopefully before July,” he said. That means the agreement is positioned to be in place by Jan. 1, 2020.
But with a prolonged government shutdown and high-pitched debate over border security, Payan said ratification of the agreement is far from sure. Mexico’s new president, Andrés Manuel López Obrador, has set a nationalistic and protectionist tone for Mexican agriculture.
“We now have matching rhetoric on both sides of the border, and we know that’s not good,” he said. Mexico needs U.S. imports to supply food to its consumers, he said.
Agricultural leaders must work to make sure the deal is approved, he said.
“I suggest that all industries in the United States, including the agricultural industry and the potato sector, get all the guns out and go up to Capitol Hill and figure out a way in which you can communicate to both sides of the aisle to approve this agreement,” he said. He also said U.S. agricultural leaders also need to make the case to Mexican leaders.
“We need to make sure that we create the right allies in Mexico City and make them understand that we can complement the Mexican economy and supply what Mexico cannot produce,” he said.