South Dakota’s Economy Benefits from NAFTA

By U.S. Sen. Mike Rounds (R-S.D.)
Oct. 27, 2017

Free and fair trade is vital to South Dakota’s economy. Not only does it open up important markets for South Dakota products, it results in higher wages and supports our small businesses and producers. Last year, we exported $1.2 billion in products to other countries, including goods, machinery and electronic equipment. In particular, the North American Free Trade Agreement—NAFTA—between the U.S., Mexico and Canada, South Dakota’s top two exporters in 2016, continues to benefit our farmers, ranchers and manufacturers.

Since taking office, President Trump has indicated that he has a desire to renegotiate our trade agreements, and in May of this year, he announced the administration would begin talks with Canada and Mexico to renegotiate NAFTA. I am supportive of him making the best possible deals for American producers, however simply withdrawing from NAFTA, without a similar structure in place, would harm South Dakota’s producers

Just last year, American producers sent $20.5 billion worth of exports to Canada and $17.8 billion worth of exports to Mexico, which is the largest market for U.S. corn and soymeal. Mexico is also the second largest market for U.S. soybeans and the third largest market for U.S. beef. American trade with our NAFTA partners has more than tripled since the agreement took effect, and has increased more rapidly than trade with the rest of the world. Between 1993 and 2016, according to trade data reported by the U.S. International Trade Commission, U.S. trade with Mexico increased by 544 percent and trade with Canada increased 158 percent.

Agriculture is South Dakota’s number one industry, and trade contributes to the overall health of the ag economy. The U.S. Department of Agriculture (USDA) concluded in a recent report that NAFTA has had a positive impact on North American agriculture over the past two decades. The value of U.S. agricultural trade with our NAFTA partners has increased from $8.7 billion in 1992—before the agreement was implemented—to $38.1 billion in 2016, while imports rose from $6.5 billion to $44.5 billion. The leading NAFTA-traded products are meat and dairy products, followed closely by grains. South Dakota is a top producer of these products.

I have encouraged the administration to maintain strong ties with our NAFTA partners as they continue their negotiations. I have repeatedly asked our U.S. Trade Representative, Robert Lighthizer, to stand up for the United States’ agricultural industry abroad, and work to open up new markets for American products. Earlier this year, the administration reached an agreement to allow for U.S. exports of beef into China. This was a win for South Dakota ranchers, who are now able to sell their top-quality beef in a lucrative market.

Canada and Mexico are essential trading partners for our state and nation, and I encourage the administration to continue working with their leaders to maintain an agreement for free and fair trade among our countries. At a time of economic downturn in our agricultural sector, continuing to increase trade with our North American neighbors and other global allies is of vital importance.

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