NAFTA - Informative and Provocative


Why NAFTA is important to Central Illinois was the focus of the panel discussion on August 30 at Bradley University, and the discourse was lively and thought-provoking.   Led by moderator Don Samford of PAWAC, the panel looked at the ongoing negotiations and their impact on agricultural products, manufacturing, and services.  Although the voice of labor was unable to participate due to conflicts with weekend events, the moderator made a specific effort to raise the issues of wages, benefits, and environmental impacts.

Trade specialist Jim Ryan emphasized the benefits of having rules laid out for those businesses in Central Illinois who are interested in cross-border trade.  However the negotiations turn out, the rules need to be clear and long-term.  As Ryan pointed out, short-term deals or agreements that might be easily undone are very destabilizing for local businesses and decrease their likelihood of venturing into imports/exports, which might have a chilling effect on their growth or expansion.

That view was reiterated by Maggie Shelley of the U.S. Chambers of Commerce, Great Lakes Region.  She reminded the audience that Illinois is the third or fourth largest trading state of the US with both Canada and Mexico, depending on what goods are being considered.  From agriculture to manufacturing, NAFTA has been very beneficial to Illinois business growth. 

Mark Albertson noted that Mexico is a huge market for Illinois soybeans.  As head of the Illinois Soybean Association, his job is find good markets for Illinois beans, and the biggest markets are in Mexico and China.  Since some of those markets use the US beans as food for livestock, Illinois sends feeder stock to Mexico and Canada to feed lots there, or sells beans and other ag products to the feedlots there.  Illinois pork is another big winner for Central Illinois because of NAFTA.  Although President Trump has offered financial aid to support farmers hardest hit by recent tariffs, Albertson stressed that Illinois farmers would much prefer trade to aid.  He stressed the importance of a trilateral agreement that will be in place for decades, not years, in order for the agricultural community to plan for success.

Don Samford reminded the panel that labor has been most critical of the North American Free Trade Agreement.  During his presidential run at the time of its original signing, Ross Perot predicted a “giant sucking sound” as the good-paying jobs of the U.S. middle class would move south of the border.  No one on the panel disputed that some jobs have been lost to the lower cost of labor, but all of the panelists claimed net gains in new parts of the economy related to the increase in imported goods and assembly of goods made of individual parts imported from the three countries.  Shelley also noted that improvements in technology and automation have been the cause of the loss of most of the jobs, not the transfer across the border.  Ryan noted that provisions in the proposed re-negotiations include protections for higher pay.

One area the panel only touched on was environmental concerns.  Albertson noted that rules and regulations in the U.S. protect our environment, but add cost.  Mexico in particular makes less of an effort to protect their environment, and that is a concern for all three signatory countries, not just the people who live next to the offending farm or factory.  All three panelists hoped that better rules for environmental protections are part of the new agreement.

At the close of the session, it was announced that it appeared the United States and Mexico may have reached a bi-lateral agreement, but that Canada was not being considered in the same way.  All three panelists agreed that it would be a mistake to replace NAFTA with a US-Mexico agreement alone, especially when so much trade and investment heads north as well.  All were hopeful that wisdom would prevail over short-term political grandstanding.