Negotiators from the United States, Mexico and Canada gathered in Washington this month to begin updating the North American Free Trade Agreement. Their success is imperative to America’s — and Sonoma County’s — economic prosperity.
NAFTA was implemented in 1994. It eliminated trade barriers between the three nations and provided some intellectual property rights protections. It is oft-maligned as a job-killing deal, but in a country the size of the United States, the truth is much more complicated.
Old industrial areas like the Midwest Rust Belt have not always fared well under NAFTA. Some manufacturers moved production to Mexico where labor is cheaper, closing factories in Ohio, Michigan, etc.
Trade deficits remain, too, but they have diminished significantly in recent years. Fixating on them is a mistake given the realities of a large wealthy nation such as ours trading with a much poorer Mexico and much less populous Canada.
Most economists agree that access to markets and goods have been a net positive for Americans. Business leaders generally support free trade because it encourages growth. Regions with strong agricultural sectors also flourish. Indeed, California and Sonoma County specifically have benefited from NAFTA.
In 2015, the most recent year for which final data are available, Canada was California’s second largest agricultural export market, totaling $3.5 billion. Top exports were wine, processed tomatoes and almonds. Mexico ranked fifth, buying $1.1 billion worth of goods, including dairy products, almonds and table grapes.
Wine and dairy happen to be among Sonoma County’s and the rest of Northern California’s top products. Over a decade beginning in the mid-2000s, Sonoma County exports to Canada and Mexico grew an astounding 92 percent to almost $300 million. We still sent more to Asia, about $450 million, but growth was only 25 percent over the same period.
Pacific nations fill out most of the rest of the top-10 agricultural export markets, but those trade relationships likely will see significant uncertainty in coming years now that President Donald Trump has pulled America out of Trans-Pacific Partnership negotiations.
Trump’s opinion of NAFTA seems to shift with who has his ear and what he had for breakfast. On the campaign trail, he was anti-NAFTA. Then, after business leaders and elected officials from agricultural states spoke to him, he dialed it back. Now he’s down on it again.
“Personally, I don’t think we can make a deal because we have been so badly taken advantage of,” he said at a rally in Phoenix this week. “I think we’ll end up probably terminating NAFTA at some point.”
In 1994, the Internet was still primarily an academic tool, and the first popular graphical web browser was only a year old. Markets have changed since then. That’s why the current negotiations are underway. They are an opportunity to improve intellectual property protections, working conditions and e-commerce rules.
The negotiators have more meetings scheduled in coming months. They want to finish before the 2018 campaign seasons in the United States and Mexico shift into high gear. Once that happens, political rhetoric will heat up and agreement will be far more elusive. North America’s economies can’t afford that.