NAFTA and Trade Deals Equal Deficits?
One issue that is on most farmers minds is the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico. We are fortunate that in the United States we can produce a lot more food than we can consume. But, that also means we are dependent on being able to export the food to other countries. Make no mistake, farmers and agribusiness would be in a world of hurt if we lose our foreign markets. All this talk about pulling out of NAFTA and how trade deals are bad for America makes farmers very nervous.
Those that are protectionist and opposed to trade seem have a good argument. The United States has a trade deficit of $500 to $700 billion dollars. That means we import a lot more "stuff" than we export. Then you hear on the news that a country can export cars for example into the United States tax or duty free. But then when we want to export cars into their country there is a 30 percent duty or tax. Any reasonable person would ask how is that fair?
Ken Maschoff is the President of the National Pork Producers Council. Maschoff spoke about trade at the Minnesota Pork Producer Association's Annual Meeting earlier this week. He said the United States does have a trade deficit every year of $500 to $700 billion dollars. However, you have to look at the numbers inside the headline numbers of $500 to $700 billion dollars.
The United States has Free Trade Agreements (FTA) with 20 countries. NAFTA is one of those FTA agreements. The trade imbalance with those 20 countries is about zero. Some years you will see a $30 billion surplus and the next maybe a $30 billion deficit. The 150 or 160 countries that the United States does not have a FTA with is where almost of the $500 to $700 billion trade deficit comes from!
You could certainly make the argument that we need Tree Trade Agreements with more countries, not less! This is what frustrates me with the political environment we are in now. Everyone is looking for a 15 second news clip that will motivate their voters. In addition voters do not take the time or are not presented the information they need to understand an issue!