NAFTA set to mark two decades of success for ag trade

WASHINGTON — The North American Free Trade Agreement came into effect Jan. 1, 1994, which makes Jan. 1, 2014, the 20th anniversary of the landmark trade agreement that has served as an example for many trade deals that followed.

In the years since NAFTA took effect, Mexico grew to become the second largest market for U.S. corn, the top market for U.S. sorghum and the premier market for distiller’s dried grains with solubles. Growth in demand for feed grains continues to be driven by a steady expansion in livestock and poultry production in the country.

“NAFTA paved the way for Mexico’s agricultural trade,” said Julio Hernandez, U.S. Grains Council director in Mexico.

“In the beginning, Mexico brought in new technologies that helped improve their efficiencies to become more profitable. With the support of the Council’s office in Mexico, Mexican importers became more efficient grain buyers, through direct contacts with U.S. suppliers and as livestock production practices improved, the Mexican consumer benefited from cheaper and better quality meat, milk and eggs which in turn stimulated rapid growth of the Mexican livestock industry.”

Changes in trade

While the U.S. and Canada had an important and close trade relationship for many years prior to the agreement, NAFTA significantly changed trade with Mexico. Since NAFTA came into effect, we’ve seen nearly a 200 percent growth in corn sales, sorghum, barley and related co-products, including corn gluten and DDGS, to Mexico,” said Julius Schaaf, USGC chairman.

“It’s just incredible, and Council programs on everything from animal nutrition to grain transportation and storage have helped that market develop and grow over the last two decades.

“We will continue supporting that market into the future. I want to congratulate the vision and persistence of the Council and our member organizations 20 years ago; we are reaping the benefits of their foresight today.”

Roots

NAFTA traces its roots back to the mid-1980s and early work that established the Canada-U.S. Free Trade Agreement. That deal was signed by President Ronald Reagan and took effect in 1988.

Soon after, Mexico confirmed its interest in joining a trade agreement and talks on NAFTA began. The agreement was signed by President H.W. Bush in December 1992. NAFTA was then passed by Congress and signed by President Bill Clinton in December 1993, creating the largest free trade area in the world.

“NAFTA was certainly a difficult trade agreement to negotiate and pass, but as tariffs and duties phased-out on schedule, with all remaining restrictions being eliminated in 2008, agriculture trade grew and blossomed,” Schaaf said.

Goal. “An important goal of NAFTA was to increase regional cooperation, and we’ve seen that over the years not only in agriculture but across numerous sectors and economic interests important to all three countries.”

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