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NAFTA 20 years later, good overall for Oregon agriculture
Oregon ag exports to Canada & Mexico grow tremendously the past two decades
Predictions of doom and gloom made 20 years ago about the North American Free Trade Agreement (NAFTA) now appear to have been largely unfounded– at least as far as Oregon agriculture is concerned. The establishment of the world’s largest free trade area has helped provide up to a four-fold increase in ag exports from Oregon to both Canada and Mexico.
“Looking at the ag sector, I believe NAFTA has been an extreme success,” says Dennis Hannapel, trade policy specialist with the Oregon Department of Agriculture. “Trade between the US, Canada, and Mexico has never been more robust. For Oregon, two of our largest international trading partners are directly to the north and south of us. The tariffs between the countries have disappeared and we are openly trading with those countries.”
Statistics from the US Department of Commerce clearly show the tremendous growth in exports of Oregon agriculture to Canada and Mexico. NAFTA went into effect in 1994 and many of the tariff reductions were well into place by the turn of the century. From 1999 through last year, the value of  Oregon agricultural and livestock products to Canada jumped from $64 million to $157 million– a 145 percent increase. The value of agricultural and livestock products to Mexico increased a whopping 1,360 percent over that same period of time, from just under $5 million to $73 million. The growth trend is the same for value-added food products. The value of processed food products from Oregon to Canada increased from $61 million to $179 million, or 193 percent, and from $2.4 million to $7.9 million, 30 percent, for Oregon processed products going into Mexico.
Certainly, the meteoric rise of exports to the two countries is not all attributable to NAFTA. Overall exports of Oregon agriculture to the rest of the world have increased substantially as well. But there is no doubt that the trade agreement has smoothed a path into all of North America.
“The proof is in the pudding,” says Hannapel. “Twenty years later, nobody seems to be complaining about NAFTA and there are additional efforts to enter into other bi-lateral or multi-lateral free trade agreements with a variety of countries. If NAFTA had not been a success to this point, I don’t think the American people or our lawmakers would be interested in pursuing additional agreements.”
For all industries, agriculture included, NAFTA now links 450 million people producing $17 trillion worth of goods and services, according to the Office of the US Trade Representative. Canada and Mexico have been the top two purchasers of overall US exports, accounting for more than 32 percent of what is sold internationally. US exports of agricultural products to NAFTA countries total about $31.4 billion with the leading categories being red meats, grains, fresh fruit, snack foods, and fresh vegetables.
Oregon’s export profile is slightly different. One snapshot of activity can be provided by phytosanitary certificates written by ODA inspectors. Data from 2012 confirms Asia as a major destination for Oregon agricultural products, but Mexico and Canada remain key export markets for Oregon. Not everything exported by Oregon requires the certificate, but ODA inspects nearly all fresh fruits and vegetables, tree nuts, and such commodities as Christmas trees, nursery stock, and grass seed. These statistics are consistent with other available export numbers. ODA’s phytosanitary data puts Mexico second among export markets and Canada sixth. Mexico receives a variety of commodities from Oregon, but gets a boost from being the state’s top customer for Christmas trees. Canada’s standing would be higher, but ODA’s statistics don’t take into account the large volume of nursery products that are sent north or the relaxation of trade between the US and its neighbor thanks to NAFTA, eliminating the need for phytosanitary certificates.
The gradual reduction and ultimate phase out of tariffs has had a tremendous trade impact in both directions. But just as important is the ability for NAFTA to create a mutually beneficial dialogue between the countries that has paved the way for many commodities.
“In the past, we’ve had phytosanitary problems getting Christmas trees into Mexico because of pest issues,” says Hannapel. “But now with the more transparent relationship, we’ve been able to negotiate a workable protocol that allows for easier exports of Oregon Christmas trees.”
NAFTA is still producing new benefits. Oregon has been trying to get fresh potatoes into Mexico beyond a 26 kilometer boundary. Hannapel is hopeful that negotiations and the improved relationship will allow the spuds to easily find their way well past the border. Mexico is a target for more Oregon products.
“Mexico is a potential export market for some of our specialty crops grown here in Oregon,” says Hannapel. “We’ve had some conversations about sending hazelnuts, blueberries, and cranberries down south.”
Among the concerns prior to NAFTA ratification were food safety and environmental issues. Through NAFTA, Canada has taken a lead in setting up a harmonization of regulatory procedures so that food safety restrictions will be the same in all three countries. That could lead to something like the Food Safety Modernization Act (FSMA) being implemented straight across the board in the US, Canada, and Mexico. A variety of technical issues and trade barriers are discussed in a frank and open manner under NAFTA.
When it was still being debated in 1993, then ODA Director Bruce Andrews noted, “NAFTA is essential if the US is going to be able to operate effectively worldwide through trade agreements with any country. If we can’t deal equitably and fairly with our two closest neighbors, there will be a lot less hope that we can deal effectively and fairly with our Asian or European partners.”
There are still some critics, but over the years, Andrews has been proven correct. An effective NAFTA has led to other free trade agreements good for Oregon agriculture, the latest being the US-Korea Free Trade Agreement. It has also led to a three-country trading bloc that benefits agriculture throughout North America.
For more information, contact Dennis Hannapel at (503) 872-6605.