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US agriculture benefits from NAFTA

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Well-known member
Feb 14, 2005
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Southern SD
May 16, 2005
Vol. 84 No. 10


Report says U.S. farmers benefit from NAFTA

A recent American Farm Bureau Federation economic report said that the growth in U.S. agricultural exports shows that the North American Free Trade Agreement (NAFTA) is benefiting U.S. farmers and ranchers.

"Without a doubt," the report said, "NAFTA has helped American farmers expand export markets, and thus increase farm cash receipts and income."

Exports of food and agricultural products to Canada and Mexico have more than doubled from $8.9 billion in 1993, the year before NAFTA went into effect, to $18.2 billion in 2004.

"Not only do these increased exports benefit the American farmer, but [USDA] has stated that these increased exports support nearly 300,000 other jobs in the United States," the report said.

Agricultural imports from Canada and Mexico into the United States also have grown, from $7.4 billion in 1993 to $18.7 billion in 2004. Imports from Canada are primarily snack foods, meats, live animals, and fresh and processed vegetables. Top imports from Mexico are beer and fresh and processed fruits and vegetables.

Megan Provost, AFBF trade economist and author of the report, explained its timing. She said that the current debate over whether Congress should approve the Central American Free Trade Agreement (CAFTA) has raised questions about whether the United States' other large regional trade agreement already in effect has benefited U.S. farmers and ranchers. The Bush administration signed CAFTA with Costa Rica, the Dominican Republic, El Salvador, Guatemala,Honduras and Nicaragua last year. Congress is expected to vote this year on whether to ratify it.

"We've had some requests for information about NAFTA, mainly because of the increased interest in how regional trade agreements affect U.S. agriculture," Provost said. "CAFTA and NAFTA are different agreements with different trade partners, tariff reductions and other terms. But, 10 years down the road, it is a good time to look at whether lowering barriers to trade, particularly with developing countries, has been a positive or a negative. We think it's been very positive."

When President George H.W. Bush signed NAFTA in 1992, some warned that it would devastate the U.S. economy. To the contrary, according to the AFBF report and government statistics, the U.S . economy has grown 38 percent since NAFTA was signed.

The economies of Mexico and Canada also have grown, by 30 percent and 30.9 percent, respectively. That, in addition to lower tariffs, has boosted U.S. exports. As incomes in both countries have risen, so has demand for U.S. agricultural products, the report said, particularly processed, consumer-ready products.

Mexico is now the third-largest market for U.S. farm exports. Agricultural exports to Mexico totaled $8.5 billion in 2004, according to the report. Record highs were set for exports of processed fruits and vegetables, meats, wheat, rice and soybeans.

Canada is the overall No. 1 market for U.S. agricultural exports. In 2004, agricultural exports to Canada set a record high at $9.7 billion. Specifically, record highs were set for vegetables, meats, soybean meal, bulk commodities such as corn and wheat, and consumer-ready products such as snack foods.

NAFTA reduced import tariffs on both sides of both borders, making it less costly for the three countries to export to one another and making their products more competitive with those brought in from the European Union and other countries that are not parties to the agreement.

USDA estimates that, once NAFTA is fully implemented in January 2009, agricultural exports will be $2 billion to $2.5 billion more than they would be without the agreement.

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