IDFA, along with 85 other food and agriculture groups, sent a letter this week to U.S. Secretary of Commerce Wilbur Ross, stressing that a withdrawal from the North American Free Trade Agreement (NAFTA) would cause “immediate, substantial harm” to their industries and the U.S. economy. The letter specifically mentioned dairy, saying that ending the agreement would cause tariff rates to soar and would undermine the market for U.S. dairy exports in Mexico.
The groups submitted the letter in response to comments made by the Secretary earlier this month, when he called warnings of harmful consequences for agriculture in a NAFTA withdrawal “an empty threat.”
“Notice of withdrawal from NAFTA would result in substantial harm to the U.S. economy generally and food and agriculture producers, in particular,” the groups said. “We are sadly confident that issuance of a notice of withdrawal from NAFTA would trigger a substantial, immediate response in commodity markets as market-specific focus would turn to a scheduled return to trade-prohibitive tariff rates.”
The groups also stressed that a NAFTA withdrawal would disrupt supply chains, shut down markets, eliminate jobs and raise prices on American consumer goods.
“The negative impact on the United States will far outweigh any benefits from higher U.S. tariffs, including a net loss of 256,000 U.S. jobs, a net loss of at least 50,000 jobs in the U.S. food and agriculture industry and a drop in GDP of $13 billion from the farm sector alone,” the groups said.
Specifically, the groups called out the harm a withdrawal would cause the U.S. dairy industry.
“Over $1 billion a year in U.S. dairy products are shipped to Mexico,” the groups said. They added that if the United States, Mexico and Canada return to pre-NAFTA tariff rates, they could “range from 20 to 60 percent on cheese and up to 45 percent for skim milk powder, undermining the largest market by far for U.S. dairy exports at a time when Mexico is preparing to finalize negotiations with the EU, the world’s largest dairy exporter and a region keen to act as a substitute for U.S. dairy.”
The letter concluded with a request that Secretary Ross and the Trump Administration “do no harm” during the current NAFTA renegotiation efforts.
For more information contact Beth Hughes, IDFA director of international affairs, at bhughes@idfa.org.