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NAFTA’s Impact on Agricultural Trade
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NAFTA’s Impact on Agricultural Trade

Staff

In 1994, the North American Free Trade Agreement (NAFTA) ended almost all trade barriers between the US, Canada, and Mexico. Almost two decades after its implementation, NAFTA (updated as the US-Mexico-Canada Agreement in 2020) has significantly impacted and integrated the economies of the three North American nations, even though certain barriers to agricultural products, especially from Canada, remain. 

Exponential Growth

Under NAFTA, the volume of agricultural trade between the partner nations rose to $82 billion from $16.7 between 1993 and 2013, a whopping growth of 233 percent. In 2016, Canada and the US exported agricultural products worth $24.9 billion and $25.3 billion, respectively, to each other, while the agricultural exports from Mexico to the US clocked $24.66 billion, and the imports from the latter touched $17.68 billion. Daniel Whitley, Administrator of the US Department of Agriculture’s Foreign Agricultural Service, says he has never seen a better working relationship between the US, Mexico, and Canada, thanks to the agreement which facilitated increased free trade access to each other’s markets.  

The agreement has given American farmers increased access to the Canadian dairy, poultry, and egg markets, while Canadians have greatly benefited from American dairy, sugar, peanuts, and cotton markets in return. Due to NAFTA, Mexico imports large quantities of corn from the Midwestern States, and the US exports cereals and meat to it.

Canadian, American and Mexican flags

Building Trade Foundations

The USMCA, which has replaced NAFTA, focuses on cementing the agricultural trade foundations built over two decades between the partner nations, ensuring preferential market access for US farm and food products and solidifying commitments to fair and science-based trade rules. For the first time, the agreement specifically addresses agricultural biotechnology – including new technologies such as gene editing – to support innovation and reduce trade-distorting policies. It also strengthens disciplines for science-based measures that protect human, animal, and plant health while improving the flow of trade. 

Dispute Mechanism

The USMCA scores over NAFTA in terms of the dispute redress system. It provides for an efficient and quicker dispute resolution mechanism for lingering trade issues. It is because of the USMCA that the three countries agreed to avoid technical barriers to trade through non-discrimination and transparency regarding sale, distribution, labeling, and certification. The agreement updates origin rules for processed fruits to ensure that US producers can benefit. Canada not only agreed to eliminate the unfair milk pricing program that allowed its farmers to undersell US producers, but it also decided to terminate its discriminatory wheat-grading system.  

This goes on to prove that the USMCA provides a pragmatic framework, updated policies, and procedures necessary to ensure continued agricultural sector growth in all three countries and expand on the economic gains made under NAFTA for producers, consumers, and workers.

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