INTERNATIONAL TRADE

Even movie theatre popcorn and avocados could become victims of an end to Nafta

Trump blames the trade agreement for the loss of manufacturing jobs in America’s Rust Belt, the very states that helped catapult him to victory

PUBLISHED : Sunday, 05 February, 2017, 7:15pm
UPDATED : Sunday, 05 February, 2017, 10:37pm

Since US President Donald Trump pledged last week to enter 90 days of re-negotiations on possibly terminating Nafta – the North American Free Trade Agreement – hundreds of producers have already started sounding off about the devastating effects that might have.

Trump blames Nafta – signed in 1994 under President Bill Clinton and which he calls the “worst trade deal in history” – for the loss of manufacturing jobs in America’s Rust Belt, the very states that helped catapult him to victory.

Nafta eliminates trade barriers between the US and Canada and Mexico and US exports of many agricultural products to both have soared since it was enacted.

The president has the authority to give Canada and Mexico six months notice of withdrawal.

Over the weekend the head of Mexico’s largest movie theatre chain, for instance, joined the growing list of companies – which already includes General Motors, Toyota Motor and hundreds of Mexican avocado farmers – who say an end to Nafta will mean business disaster.

If there’s a surplus, we have to move that product to other countries, and to sustain the expansion, we need to expand export markets
Kent Bacus, director of international trade and market access, US National Cattlemen’s Beef Association

He was joined by largest US cattle trade group, the National Cattlemen’s Beef Association, which represents more than 175,000 cattle producers and feeders, which said it’s “very concerned” about Trump’s pledge to renegotiate the agreement.

Cinepolis de Mexico SA, the world’s fourth-largest cinema chain, buys about $10 million a year of American kernels from farmers in Kansas, Missouri and Iowa, according to chief executive officer Alejandro Ramirez.

While Cinepolis’s purchases are just a drop in the bucket of the more than $2 billion in corn that the US exports to Mexico annually, it shows the scope for potential impact if other buyers followed suit.

Kent Bacus, director of international trade and market access at the National Cattlemen’s Beef Association, said a shakeup of Nafta comes as US beef output is forecast to rise to a six-year high. More supplies mean the industry must continue to export or face a chronic oversupply.

“Americans are not going to eat more beef at the same price,” he said.

“If there’s a surplus, we have to move that product to other countries, and to sustain the expansion, we need to expand export markets.”

business-article-page