July 21, 2017 (San Diego) Relations between the United States and Mexico are frigid. In Mexico there is a definite feel that the US is turning away from the good neighbor policy of two generations. There is also a protectionist wall rising, apart of the physical wall the Donald Trump administration wants to build between the two countries.
Mexico is well on its way to joining the trade organization of Southern American States, CONASUR for its Spanish acronym. The first step are increased commercial relations with Argentina. This includes agricultural goods and vehicles.
Regarding this the Economista reports that the Mexican Undersecretary of Foreign Commerce Juan Carlos Baker. He said, “it is possible that we will have an agreement at the end of this year, or the beginnings of next.”
According to the US News and World Report:
“Overall, NAFTA has been beneficial to Mexico, Canada and the U.S. alike. Since it was signed in 1994, foreign direct investments (FDI) in Mexico have averaged 2.6 percent of GDP (compared to 1 percent for two decades before NAFTA). At present, annual bilateral trade between the U.S. and Mexico is running at US$580 ”
Adding: “In 2016, Mexico imported US$17.9 billion in American agricultural products: US$2.6 billion in corn, US$1.5 billion in soybeans, US$1.3 billion in pork and US$1.2 billion in dairy products.”
“Around 98 percent of the corn that forms a staple of the Mexican diet comes from the U.S. Mexico also buys 7.8 percent of all U.S. pork production.”
This shift in the Mexican market from US imports to South American will impact midwestern corn farmers in important ways. The fear is very real in agricultural states. For example, the Des Moines Register Iowans are worried about this tit for tat that is only increasing between the two countries.
“Iowa State University agricultural economist Chad Hart said such trade barriers would hurt Iowa farmers, who are already suffering through stubbornly low commodity prices. International markets have helped improve prices and move record crops of corn, soybeans and pork.”
“Mexico is Iowa’s top corn export market; China is its top soybean market.”
“It’s not just ag that would face the brunt of retaliation,” Hart said. “Every state in the union would feel some impact.”
This impact will be felt not just in Iowa, or the rest of the Midwest. The Central Valley is already having severe effects with labor due to migratory policies. According to the Los Angeles Times:
“Del Bosque is, as usual, worried about water.”
“But he’s also worried about immigration, and about President Trump’s vow to deport people who are here illegally. Del Bosque, and just about every grower he knows, depends on migrant labor for harvests.”
“We need a workforce,” he said. “We can’t have immigration come here and round everyone up and deport them. Coupled with building a wall, it will ruin us. It will ruin the whole fruit and vegetable industry.”
This new protectionist policies are already hurting farmers in the United States. Low commodity prices have hurt them, and losing markets is not going to help. In particular to the Central Valley, less workers mean produce that is spoiling in the fields. This will ultimately have an effect in the cost of food for the consumer. It also shows that other nations are moving on, and continuing global trade, while the United States continues to isolate itself.