Withdrawing from NAFTA would hit Wisconsin hard

Carol Spaeth-Bauer
Wisconsin State Farmer
Wisconsin Department of Agriculture, Trade and Consumer Protection Secretary Sheila Harsdorf talks about Wisconsin agriculture and NAFTA  on Dec. 15 in Milwaukee.

MILWAUKEE - The message was clear from all who spoke at the Lake Express Ferry Terminal in Milwaukee - the North American Free Trade Agreement (NAFTA) works and the message needs to get out. 

A panel of U. S. agricultural stakeholders and Wisconsin business representatives discussed what's at stake for Wisconsin agriculture and business regarding NAFTA negotiations during a program on Dec. 15.

As President of Metropolitan Milwaukee Association of Commerce Tim Sheehy pointed out, it's a "fitting topic at a fitting time."

"It's a challenging time as we talk about the North American Free Trade Agreement," Sheehy said. "Wisconsin clearly is in the crosshairs of that agreement. We have a great deal at stake here."

With Canada and Mexico purchasing over $1.7 billion worth of the state's agricultural and manufacturing products last year, there was a 20 percent increase since 2015 just in agricultural products to Mexico, Sheehy explained.

Canada and Mexico make up half of the state's exports. The impact of trade in the state can be felt daily at the port in Milwaukee where goods are shipped out.

When talking about trade, Sheehy said, "We can talk about it in terms of volume, but behind that volume are jobs, lots of jobs in Wisconsin. For every job in trade, it supports another two in our economy. This is a critical issue for us."

The program, hosted through a partnership with several organizations, including the Metropolitan Milwaukee Association of Commerce and the Wisconsin Farm Bureau Federation, was held because of concerns about where things are going with NAFTA. 

NAFTA works

Renegotiations are going on with Canada and Mexico, but it's not going well, according to Christopher Wenk, executive director of international policy with the U.S. Chamber of Commerce. 

Wenk said proposals have been tabled that would "take us backward," but the biggest threat is continued talk of withdrawal. 

"The mere talk of withdrawal is really troubling," said Wenk. 

Wisconsin would be the second hardest hit state in the nation if the U.S. pulled out of NAFTA, putting 249,000 jobs and $9.6 billion in exports at risk, according to the U.S. Chamber of Commerce.

"For years we've heard politicians rail about how horrible NAFTA is," said Wenk. "If you actually look at the data, it's quite staggering what a success this agreement has been." 

Calling NAFTA  a "political piñata" Wenk called on everyone to be part of the conversation regarding NAFTA. 

Kurt Bauer, president of Wisconsin Manufacturers and Commerce, reiterated the importance of voicing concerns about NAFTA renegotiations.

Bauer said as a manufacturing and agricultural state, much of what is made in Wisconsin is shipped and businesses are constantly in need of new markets. 

"Most people don't realize how strong the balance of trade is for Wisconsin with Mexico and Canada," said Bauer. "We can't lose sight that for Wisconsin, NAFTA has been good."

Senator Ron Johnson speaks at a discussion on NAFTA on Dec. 15 in Milwaukee.

Bauer introduced Senator Ron Johnson who talked about the broken immigration system in the country, pointing to a need to fix the immigration system to help supply workers in the country. 

Johnson also noted how NAFTA has helped Wisconsin and encouraged business people to make the case for trade.

"For Wisconsin we are pretty much balanced for free trade," said Johnson. "Wisconsin will be greatly harmed if we pull out of NAFTA."

Johnson said he thinks President Trump is "getting enough feedback that he realizes it would be really bad for the American economy if we let NAFTA lapse."

Farmers can't lose NAFTA

For agriculture, exporting is a large component in Wisconsin, Jim Holte, Wisconsin Farm Bureau Federation president added. 

Wisconsin Farm Bureau Federation President Jim Holte introduces Wisconsin ag secretary Sheila Harsdorf during a discussion on NAFTA on Dec. 15 in Milwaukee.

"Exporting gives farmers a chance to grow their business and share their product that they are so good at creating," said Holte. "NAFTA is something farmers cannot afford to lose."

With Mexico and Canada the state's biggest export markets, 52 percent of ag exports go to those two countries, according to Holte. 

"Our markets depend on our trade negotiations and the changing rhetoric is rather unnerving," Holte said. "With all the unknown going on in the international trade, farmers are just left hoping that we can get some degree of certainty. We need to secure solid and fair trade agreements that bring the benefits of agricultural trade to all of our farm economy."

As Holte introduced Department of Agriculture, Trade and Consumer Protection Secretary Sheila Harsdorf, she pointed out the strong role exports play in Wisconsin agriculture, contributing over $88 million annually to the economy.

Wisconsin has over 68,000 farms growing a variety of crops providing diversity in the export market, which is one of the strengths of Wisconsin agriculture, Harsdorf said. 

Wisconsin Department of Agriculture, Trade and Consumer Protection Secretary Sheila Harsdorf talks about Wisconsin agriculture and NAFTA  on Dec. 15 in Milwaukee.

"Customers around the country and world are attracted to our diversity," said Harsdorf. 

While farm numbers are decreasing across the state and country, producers continue to be efficient, due to improved technology, feeding programs, breeding programs and management practice, doubling milk production since 1950 with fewer cows, Harsdorf pointed out. 

Wisconsin cheese and organic products also provide economic opportunity in Wisconsin exports. 

"Exports play a key role," said Harsdorf. "It's how we take those products from the farm to the market, nationally and internationally." 

Wisconsin exported $2.6 billion in ag products to more than 144 countries in the first three quarters in 2017, which is a 6.7 percent increase compared to the same period a year ago. 

The bottom line for Wisconsin agriculture is that NAFTA is important, added Harsdorf. Fair and transparent trade policies are needed to maintain a competitive and strong agriculture in the state. 

"One of the things we recognize is our producers, our processors, can compete with anybody," said Harsdorf. "I'll put them up against the best, but we need a level playing field."

Businessmen (from left) Rob Gardenier, president of ME Dey & Co.; Jeff Schwager, president of Sartori Foods; Doug Biggs, vice president of Gilman Precision; and Chris Timmons, senior solutions manager at CN, respond to questions about NAFTA and how the trade agreement affects their businesses during a discussion in Milwaukee on Dec. 15.

As Katie Henry, executive director for Metropolitan Milwaukee Association of Commerce's World Trade Association, moderated questions for a panel of four businessmen, each emphasized the negative impact withdrawing from NAFTA would have on their business. 

Jeff Schwager, president of Sartori Foods, said his company, while only starting in the export market eight years ago, is looking at a 15 percent increase in trade in the next two to three years. Canada and Mexico are Sartori's largest export markets. 

"Mexico works great for us from the standpoint of NAFTA, with Canada we need some work," said Schwager. "With the new agreement that’s working there, dairy is protected in Canada, so it’s not free trade on the NAFTA side."

Doug Biggs, Gilman Precision vice president, said his company has incredible opportunity for growth within the NAFTA area. With 75 percent of Gilman Precision exports going into the NAFTA region, withdrawing from NAFTA and looking at possible duties on exports would cause a price increase into markets, some, like Canada, that are sensitive to slight increases in prices. 

"Those sorts of tariffs and duties would dramatically reduce our ability to export and to grow our business," said Biggs. 

The same holds true for dairy.

Without NAFTA, Mexican tariffs could be as high as 30 percent, Schwager pointed out.

Both Canada and Mexico are looking to other trading partners overseas. According to the U.S. Chamber of Commerce, a new EU-Mexico trade pact will guarantee European cheese makers duty-free access to Mexico, allowing them to move in on U.S. competitors. 

"We need to get our administration to realize how important this is," said Schwager. "We need to get ahead of the game, not just deal with NAFTA right now, but look at other markets too. We've got to stop playing catch up."