Professor of agricultural economics at Cornell University’s Dyson School of Applied Economics and Management, Andrew M. Novaković, PhD, told DairyReporter Mexico looking beyond the US for trade partners is not a surprising move.
“The part that is scary about Mexico is with all of this economic plus immigration rhetoric, Mexico is exploring alternative suppliers across the board and dairy is an important one for us,” Novaković said.
Since NAFTA became law in 1994, US dairy exports to Mexico have more than quadrupled to $1.2bn, making Mexico the US dairy industry's No. 1 export market, accounting for nearly one-fourth of all US dairy exports last year, according to USDEC.
“A lot of people will tell you that Mexico is already looking to diversify their sources of supply even though nothing has changed yet because they’re so worried about the rhetoric and they don’t want to find themselves caught short,” he said.
“In some ways that damage has already started to occur.”
Last month, US dairy leaders traveled to Mexico City to reaffirm the value they see in maintaining Mexico as a trade partner, while advising Mexico to be cautious in pursuing new trade deals with other nations.
"I believe Mexico needs to be smart about opening its market to other dairy suppliers that are more interested in spot sales than a long-term partnership," USDEC president and CEO, Tom Vilsack, told Mexican dairy leaders attending the National Dairy Forum in Mexico City.
Argentina reportedly next trade partner
However, Mexico has moved toward finalizing a trade deal with Argentina by the end of the year, Mexico’s deputy minister of foreign trade, Juan Carlos Baker, said during an interview with Reuters.
Argentina’s President Mauricio Macri also promised to open the Latin American country’s economy and trade to Mexico by the end of 2017.
"The potential is there," Baker said. "The Argentine exporters could find attractive conditions in Mexico."
Baker told Reuters Mexico would not go back to paying an export tax if exports to the US became restricted.