Leaders of Canadian companies and industry associations are holding their breath because U.S. president-elect Donald Trump may demolish the North American Free Trade Agreement.
Trump has said over the last 18 months in nearly every speech that NAFTA has been a horrific agreement for U.S. businesses and American workers. He has vowed to rip up or renegotiate the deal.
John Masswohl, who has worked in the arena of international trade for more than 20 years, isn’t worried by the rhetoric.
“I think you’ve got to scrape away the smoke and mirrors,” said Masswohl, director of government and international relations for the Canadian Cattlemen’s Association.
“If you can find me a presidential candidate in the last 20 years that hasn’t said they were going to change NAFTA, I’ll give you $10.”
Yes, the president-elect may want to renegotiate the deal, but that’s not the end of the world.
“The thing about NAFTA: it’s a living agreement. It’s got all kinds of working groups … that recognize it can constantly be made better,” Masswohl said from his Ottawa office. “Ultimately, I think it (re-negotiations) can be an improvement for everybody and all sides of the equation.”
Canada’s agricultural exports grew substantially in the 1990s and 2000s, thanks in part to NAFTA. The deal eliminated tariffs on Canadian agricultural exports to the U.S. with the exceptions of chicken, turkey, egg products and refined sugar, a federal government website says.
Canadian agri-food exports to the U.S. increased by 100 percent between 1993 and 2003, and exports to Mexico grew by 210 percent.
Thanks to the integrated North American market, the U.S. is the top destination for Canadian pork, beef and canola. Mexico is typically ranked in the top five:
• Canada exported $3.1 billion in canola oil and meal to the U.S. last year.
• Canola exports to Mexico were $824 million last year.
• Canada exported $1.45 billion in pork and pork products to the U.S. in 2014.
• Pork exports to Mexico were $190 million in 2014.
• Canada exported $2.2 billion worth of beef last year. Seventy percent went to the U.S.
Those numbers are massive, but Canada’s hog industry is worried about other statistics, said John Ross, executive director of the Canadian Pork Council.
“What we’re focused on right now is the number of hogs in the marketplace,” he said.
“That’s an issue for us today.”
Ross said the NAFTA threats may be a risk, but at this point it’s difficult to know if it’s a big risk or a tiny risk.
Fiona Cook, executive director of Grain Growers of Canada, is more concerned.
Trump and the Republican-controlled U.S. Congress may lean toward protectionism and throw up barriers to agricultural trade.
“I think we’re going to have to be very watchful for what comes up, in the form of ‘Buy American,’ that kind of thing,” she said.
“There are tariffs, but there is the whole growing area, in global trade, of non-tariff trade barriers.”
Trump and his NAFTA comments may be a legitimate threat, but the U.S. government under President Barack Obama wasn’t innocent when it came to agricultural trade. Obama and U.S. Agriculture Secretary Tom Vilsack vigorously defended country-of-origin labeling, which restricted Canadian hog, cattle and meat exports to America.
Canada and Mexico challenged COOL at the World Trade Organization and were ultimately successful, but it took nearly all of Obama’s two terms in office to resolve the matter.
Canada’s meat industry fought COOL through the WTO, but it also could have used NAFTA, Masswohl said.
“(There is) the national treatment provision (in NAFTA), which says you cannot apply (a rule) to an imported good that is not also applicable to a domestic product,” he said.
Such provisions are hugely beneficial, but Masswohl isn’t worried that re-opening the trade agreement will jeopardize Canada’s agri-food exports.
“I’ve never been a doomsday scenario believer,” he said.
“I’ve got to believe as smart people get engaged in policy development, nobody is going to go to the nuclear option and blow the whole NAFTA up.”