It’s time to move forward with NAFTA, not backward without it
Canada and Mexico will apparently not make counterproposals to U.S. demands for tougher NAFTA automotive content rules but instead will offer rebuttals and pepper American negotiators with technical questions later on Monday. Video provided by Reuters Newslook
No one knows the North American Free Trade Agreement better than Wisconsin farmers and business owners, and no one knows better than Wisconsin farmers and business owners that a withdrawal from NAFTA would have devastating consequences for our state.
Ahead of another round of negotiations, and just after passage of a tax reform bill that could bring a wave of economic growth and job creation to our state and nation, it’s time to move forward with NAFTA — not backward without it.
We know NAFTA well because roughly 249,000 Wisconsin jobs depend on trade with Canada and Mexico. Our farmers, manufacturers, and service providers rely heavily on these two markets. Of our state’s total exports, 46% head to our North American neighbors. That percentage increases when looking specifically at agriculture: 52% of Wisconsin’s agricultural exports are destined for Canada and Mexico.
NAFTA is especially critical for our state’s manufacturers. Wisconsin follows only Indiana as the state with the largest share of manufacturing jobs as a percentage of total employment, and manufactured goods account for 84% of our state’s exports.
Put two and two together: When you consider that Canada and Mexico are buying almost half of Wisconsin’s exports, it becomes clear that any interruption to our manufacturers’ ability to access those markets will undoubtedly destroy manufacturing jobs in our state.
Wisconsin is not alone. Trade with Canada and Mexico supports nearly 14 million jobs across the U.S., roughly five million of which can be traced to the increase in trade initiated by NAFTA. Thirty-nine U.S. states count Canada or Mexico as their No. 1 trading partner. More than two million jobs are supported by exports of U.S. manufactured goods to these two countries alone.
We win in Wisconsin when the businesses that make our state great can compete on a level playing field with foreign competitors. NAFTA tore down barriers put in place by Canada and Mexico in an attempt to block our companies from accessing their markets. Without NAFTA, those barriers would return.
The good news is that a modernized NAFTA is now within our grasp. We urge negotiators to take this opportunity seriously because there is potential to derive even greater benefits from an agreement that has already served our state’s economy well. For example, perhaps no state would benefit more than Wisconsin if Canada opened its market to our dairy under a modernized NAFTA.
If the opportunity to update NAFTA is squandered, though, we risk losing access to Mexico, the dairy industry’s largest export market. As the International Dairy Foods Association explains, returning to pre-NAFTA tariff rates would mean exporters could face Mexican tariffs ranging from “20% to 60% on cheese and up to 45% for skim milk powder.” This would occur just as Mexico is finalizing trade negotiations with the European Union, whose dairy producers directly compete with our own.
Some of the proposals under discussion in the NAFTA negotiations would cause major problems for Wisconsin farmers and businesses, such as a five-year sunset clause and a higher rules-of-origin requirement for autos. Practically speaking, if proposals like these were implemented, uncertainty would prevail over long-term economic stability and the manufacturing activity that keeps Wisconsin humming would be driven abroad.
If a notice of withdrawal is issued, U.S. farmers and businesses — including those in Wisconsin — would feel the shock first. Our reliable customers in Canada and Mexico would immediately look for certainty elsewhere and begin to source from our competitors, resulting in canceled contracts, lost sales and a tougher road to growth.
For Wisconsin, there is simply too much at stake for the NAFTA negotiations to fail or for the U.S. to withdraw from the agreement. Our state helped put President Donald Trump in the White House, and we are eager to see this administration’s efforts to unleash economic growth, create jobs and lift incomes come to fruition. A wrong move on NAFTA would jeopardize all of it.
Day in and day out, the industries, businesses, farmers, and workers that make Wisconsin what it is — including “America’s Dairyland” — rely on NAFTA to get the job done. It would be a profound mistake to abandon it.
Kurt Bauer is president and CEO, Wisconsin Manufacturers and Commerce; Jim Holte is president, Wisconsin Farm Bureau Federation; and Tim Sheehy is president, Metropolitan Milwaukee Association of Commerce.