The Trump administration’s hope of revising a two-decade-old trade agreement with Mexico and Canada is prompting fears that acrimonious talks could spark a trade war and threaten the lucrative export of soybeans and corn by Ohio’s farmers.
Although U.S. Trade Representative Robert E. Lighthizer has assured lawmakers on Capitol Hill that the administration is committed to producing “substantive results” for American agriculture, the 1993 North American Free Trade Agreement and other trade pacts have led to a thriving Ohio farming export industry.
Because U.S. farmers produce more than enough to satisfy domestic demand, many Ohio farmers depend on exports of soybeans, corn and wheat to Mexico and to nations outside NAFTA such as China and Japan.
“Today, Mexico is our largest corn market,” said Tadd Nicholson, executive director of Ohio Corn and Wheat Growers Association. “I could imagine a 20-year agreement could use some modernization, but to completely open it up makes us a little nervous because agriculture has been such a beneficiary.”
Brian Harbage, who grows soybeans and corn on his farm just east of Springfield, said “It’s all on the export side of things. Any time that we would have a surplus of crops in the United States, it’s going to push the price down. That’s going to tighten up my bottom line and make it less profitable for the commodities that I’m growing.”
Others are more optimistic. Lane Osswald, a corn and soybean farmer from the one-stoplight town of West Manchester near the Indiana line, said he has not “lost any sleep about NAFTA being renegotiated.”
A member of the Ohio Farm Bureau’s board of trustees who joined others last month in Cincinnati to meet with U.S. Agriculture Secretary Sonny Perdue, Osswald said he was “encouraged because Mexico and Canada don’t want to lose us as trading partners; they’re two of our biggest customers. And I believe that if there are any changes negotiated, it will probably be better, in the long run, for all of us.”
NAFTA has been a regular target of scorn by many Ohio politicians such as Sen. Sherrod Brown, D-Ohio, who as a member of the House in 1993 voted against the pact. Brown and other critics contend NAFTA is a major reason why Ohio has shed so many manufacturing jobs since 2000.
Brown, who supports the Trump administration’s decision to renegotiate NAFTA, said he recognizes “trade by and large has helped us with ag exports. I get that. But you negotiate this right. You don’t do it at their expense.”
“Fundamentally, we’re very aware of what agriculture wants in this, and anything that works for them I want that to work, but I want manufacturing to work,” Brown said. “Clearly, manufacturing hasn’t worked, small businesses have been hurt, in some cases farmers have been hurt.”
During his campaign last year, President Donald Trump regularly denounced NAFTA, which swept away scores of tariffs and allowed a greater exchange of goods among the United States, Mexico and Canada while integrating the auto industry’s supply chain.
In a speech last summer in Pennsylvania, Trump charged “our politicians have aggressively pursued a policy of globalization — moving our jobs, our wealth and our factories to Mexico and overseas.”
That type of rhetoric resonated with blue-collar workers and rural Americans, a major factor in Trump winning Ohio, Michigan, Pennsylvania and Wisconsin.
But even as U.S. companies have argued that automation — not trade — led to the loss of manufacturing jobs, there is no question NAFTA and other free-trade pacts have sparked a boom in farm exports.
The U.S. Department of Agriculture reports exports of Ohio farm products to all countries have nearly tripled since 2000, to $3.6 billion in 2015, making Ohio the 12th-largest state in exporting farm products.
The Ohio Development Services Agency reported last year, Ohio farmers exported more than $240 million worth of soybeans to Mexico, a figure only exceeded by the $1.1 billion worth exported from the state to China.
“Rural America and rural Ohio supported Mr. Trump very strongly, and that was predicated on the fact that he was a brilliant gentleman who thought out of the box and would make everyone’s life wonderful,” said Joe Logan, president of the Ohio Farmers Union.
“However, when it comes to agriculture — as all Ohio farmers know — that has been one of the bright sides of international trade,” Logan said. “This is one of the issues farmers are pretty nervous about. They don’t like the manufacturing going down there, but they like the bushels of corn we sell” to Mexico.
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, a nonpartisan economic-research organization in Washington, said farmers “should be nervous.”
“In the case of Mexico, the prime target for retaliation is agriculture, and the reason is in NAFTA, Mexico really opened up its agricultural markets to U.S. products,” Hufbauer said. “It would be pretty easy for Mexico to say, ‘We’re going to buy less from the United States and more from Argentina and Brazil.’”
But Kevin P. Gallagher, a professor of global development policy at Boston University who has argued that conservative economists have exaggerated NAFTA’s benefits, said “regardless” of Trump’s “manner and lack of diplomatic skills, he has more leverage than anyone else in North America because he has the keys to our economy.”
“To threaten to Canada and Mexico that we will go back to pre-1994 is a pretty scary proposition for them,” Gallagher said.
Osswald acknowledged “any time a deal that is working is discussed — just being discussed — there’s always a small bit of nervousness. But everything that I have heard has been positive for American agriculture.”
Source: Canton Rep