“Overall, it’s not a doom and gloom scenario, so to speak, in the short term,” Farm Credit Canada’s Chief Agricultural Economist J.P. Gervais said Wednesday during a panel at the Canadian Horticulture Council’s annual policy meeting.
“There wouldn’t be any significant disruptions to businesses in this industry.”
Gervais said financial markets would likely “overreact” to a NAFTA withdrawal but noted little market disruption is expected for agriculture products. While the Canadian dollar would likely fall and the trade uncertainty poses some “risk” to the current economic climate, the agriculture economist said those declines would likely work in the agriculture industry’s favour.
Canada, Mexico and the United States are currently in the midst of renegotiating the North American Free Trade Agreement. The eighth round of negotiations is expected to take place in Washington, D.C. starting April 8.
Agriculture has repeatedly been flagged by Canadian, American and Mexican officials as NAFTA success story. Agricultural trade between the three NAFTA countries has quadrupled since the pact was first implemented.
In 2016, Canada was the top agricultural export market for 29 U.S. states. Agricultural trade between Canada and the United States is valued at more than $47 billion.
Gervais’ analysis comes in distinct contrast to concerns raised by American farm groups who have warned a NAFTA withdrawal would send commodity markets tumbling and cost the sector thousands of jobs.
In a letter to U.S. Secretary of Commerce Wilbur Ross, a cohort of more than 80 farm groups said notice of an American exit from NAFTA would cause “immediate, substantial harm” to the U.S. food and agriculture sectors.
“We are sadly confident that issuance of a notice of withdrawal from NAFTA would trigger a substantial, immediate response in commodity markets as market-specific focus would turn to a scheduled return to trade-prohibitive tariff rates,” more than 80 farm groups told U.S. Commerce Secretary Wilbur Ross in their Oct. 25 letter.
“Contracts would be cancelled, sales would be lost, able competitors would rush to seize our export markets, and litigation would abound even before withdrawal would take effect,” the letter reads.
U.S. President Donald Trump has repeatedly threatened to “cancel NAFTA” if a satisfactory deal is not reached. In a phone call with Canadian Prime Minister Justin Trudeau this week, Trump urged the quick completion of the NAFTA renegotiation.