Mexico and NAFTA
What's the Background?
NAFTA took effect Jan. 1, 1994, and under the terms of the deal, tariffs on most products traded among the United States, Canada and Mexico were eliminated. The agreement created the world’s largest free trade area, with 450 million people and a GDP of more than $20 trillion. The three NAFTA nations have a greater economic output than the 28-country European Union. Since implementation of NAFTA, U.S. trade with Canada and Mexico has more than tripled, growing more rapidly than U.S. trade with the rest of the world. The countries are the two largest destinations for U.S. goods and services, accounting for more than one-third of total U.S. exports. NAFTA has added $80 billion to the U.S. economy, and U.S. exports to Canada and Mexico support more than 3 million American jobs. While imports from Canada and Mexico to the United States have increased under NAFTA, nearly 60 percent of those imports are used in the production of American-made goods. For the U.S. pork industry, NAFTA helped significantly boost exports to Mexico, which now is the largest volume market for U.S. pork and the No. 2 value market.
Why Does it Matter to Producers?
The United States over the past 10 years, on average, has been the No. 1 exporter of pork in the world; it is the globe’s lowest cost producer of pork. In any given year, the U.S. pork industry ships product to more than 100 countries. Exports contribute significantly to the bottom line of all U.S. pork producers, adding more than $48 to the value of each hog marketed in 2015, when $5.6 billion of U.S. pork was exported. In 2015, the United States exported more than 718,000 metric tons of pork and pork products, valued at $1.26 billion, to Mexico, making it the largest volume market and the second largest value market for U.S. pork exports. According to Iowa State University economist Dermot Hayes, U.S. pork exports to Mexico have created more than 9,000 U.S. jobs. Loss of the Mexican market would be cataclysmic for the U.S. pork industry.
What is NPPC's position?
NPPC, which supported implementation of the North American Free Trade Agreement (NAFTA), would be supportive of improving the 23-year-old pact among the United States, Canada and Mexico. The organization would support updating and improving the NAFTA as long as duties on U.S. pork remain at zero and pork exports are not disrupted.