US pet food exports may suffer if Trump drops NAFTA

If US President Trump leaves the North American Free Trade Agreement, the United States pet food industry may suffer.

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(Mbruxelle | BigStock.com)
(Mbruxelle | BigStock.com)

If US President Donald Trump follows through on his threats to leave the North American Free Trade Agreement (NAFTA), the consequences would damage the United States pet food industry, said John Stewart, American Feed Industry Association manager of government affairs, during his presentation at the International Processing and Production Expo in Atlanta, Georgia, USA on January 30, 2018.

“If we were to walk away from NAFTA today, the job loss would be catastrophic,” he said. “It would absolutely wreck the economy… Our president has said that he's willing to walk away. Agriculture as a whole has said please don't do that.”

Canada is the US’ top pet food export market with a value of approximately US$526 million, he said, quoting US Department of Commerce and US International Trade commission figures. Mexico imports US$77 million worth of pet food from the US, putting it in third place.

NAFTA’s benefits to US pet food industry

“When you look at Canada and Mexico, if you were to lump those two together, you see the value and importance of the North American Free Trade Agreement and why the animal food industry is concerned, why the pet industry needs to be concerned and also why agriculture as a whole needs to be concerned.”

Since NAFTA came into effect in 1994, US pet food exports to Mexico and Canada have increased 184 percent, compared to 129 percent in the rest of the world. Mexico and Canada now account for 50 percent of total US pet food exports, up from 38 percent in 1993.

"Those are growing markets for us.” Stewart said. “That's why NAFTA is so important.”

Renegotiation of NAFTA by the Trump administration

US President Donald Trump’s administration is currently in the sixth round of NAFTA renegotiations. Renegotiations began August 16, 2017.

While many of the objections raised against NAFTA focus on the trade deficit between the US and Mexico, Stewart said the deficit isn’t the best metric to use when evaluating the trade deal.

"Trade deficit is not the best model to use for how the trade deal is doing, simply because the US has so much more buying power than those other countries,” he said. “We have so much more disposable income, so by default we buy more goods made overseas."

If the US were to withdraw from NAFTA, the pet food industry would lose the tariff-free market access that it has enjoyed in Mexico and Canada. In Mexico, World Trade Organization rules would apply, meaning there would be a 10 percent tariff, Stewart said. The situation in Canada isn’t as clear, since there was a trade agreement before NAFTA. That old trade deal would keep tariffs at zero, otherwise, the tariff would be 3.5 percent. Without NAFTA, World Trade Organization rules would mean Canada and Mexico could both export pet food to the US without paying a tariff.

AFIA urges pet food professionals to contact representatives

While modernizing some aspects of NAFTA make sense, and the pet food industry should support them, Stewart said, the US needs to avoid throwing the baby out with the bathwater.

“We can't get rid of something that’s so good just to make some changes or just for political posturing,” he said.

Stewart urged pet food professionals to contact their representatives to let them know that they support keeping NAFTA. Especially, individuals in urban areas should reach out to politicians, since those officials may not be as aware as representatives in areas where agriculture is the backbone of the economy.

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