By now it’s no secret that changes to the North American Free Trade Agreement (NAFTA) are coming.
Quite frankly, changes are needed. When NAFTA was signed, email was in its infancy, Mark Zuckerberg was 9 years old, and cell phones were only used for phone calls. The current agreement is outdated, but not obsolete. Changes should be made to reflect the modern workforce, complex immigration issues, and the highly integrated nature of the North American economy.
Since the United States announced its intent to renegotiate NAFTA in May 2017, several rounds of highly-publicized negotiations have been held in Canada, the U.S., and Mexico. North American media has reported on the outcome of these negotiations. But what hasn’t been widely publicized is the impact of a U.S. withdrawal from the agreement, particularly on California agriculture.
California is the United States’ largest producer of agriculture, responsible for eighty-five percent of the country’s wine; two-thirds of all fruits and nuts, and one-third of U.S. vegetables. Agri-food production in California employs hundreds of thousands of people and generates over $45 billion in annual revenue.
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A U.S. withdrawal from NAFTA would result in the loss of California farm jobs and reduced market access for California farms and ranches. Overall, close to 14 million U.S. jobs depend on free trade between Canada and Mexico, including 1.5 million jobs in California. And many of these jobs are in the agriculture sector.
California’s family farms and hard-working agriculture workers will bear the brunt of new tariffs that would be implemented in the absence of NAFTA. California agriculture products exported to Canada and Mexico like wine, tomatoes, almonds, and even pastries would be subject to these tariffs, which could be as high at 11 percent for some products.
These new taxes would translate to even tighter profit margins for industries already vulnerable to external factors out of their control. And they would put further ressure on producers to reduce costs, which likely means job cuts.
Canada is California’s top destination for agriculture exports, which are valued at over $4.1 billion annually. California producers will most certainly lose market access to Canada and Mexico, because of increased costs. For example, California wineries could lose access to their largest international market, Canada.
With sales of more than $400 million annually, Canada is the single largest purchaser of California wines. Without NAFTA’s tax-free trade in goods, smaller California wineries won’t be able to compete.
California’s farm and ranching community have a vital role to play in the NAFTA renegotiations.
Californians can make their voices heard in Washington through their elected representatives in Congress. Californians should advocate for an outcome to NAFTA that maintains access to important Canadian and Mexican export markets.
The future success of California’s agriculture depends on it. NAFTA is not about who wins and who loses, but rather, how all three countries benefit from free trade in North America. Canada and Mexico are the United States’ – and California’s – largest trading partners and strongest allies. And they should be viewed as just that: friends, partners, and allies. And as such, we should advocate for changes to NAFTA that benefit all of us.
Rana Sarkar is the Consul General of Canada in San Francisco| Silicon Valley and is a member of Canada’s NAFTA Advisory Council.