- A new trade pact between the U.S., Canada and Mexico is winning praise from most U.S. farm and industry groups, according to The Wall Street Journal. The proposed United States-Mexico-Canada Agreement (USMCA) reached Sept. 30 would replace the 1994 North American Free Trade Agreement if ratified by lawmakers in each of the three countries.
- If approved, it could remove tariffs on products such as pork and cheese. It could also save billions of dollars in farm goods traded annually across borders, according to estimates from the U.S. Department of Agriculture. The new agreement could help companies like Cargill, Archer Daniels Midland and Tyson, as well as farm groups that have been impacted by the tariffs, the newspaper reported.
- Tom Stenzel, president and CEO of the United Fresh Produce Association, said in a statement emailed to Food Dive that the organization was encouraged by the news, and the pact "highlights the importance of our continued engagement on key policy issues by those in the produce industry."
Farm and food groups lauded the new deal after a period of concern. Among a host of provisions, the new trade pact eliminates Canadian tariffs on U.S. whey and margarine and opens their markets to U.S. dairy products. Canada will also give new access to U.S. chicken and eggs and improve access to U.S. turkey products.
If the deal is approved, tariffs on agricultural products traded between the U.S. and Mexico would be removed. In addition, barriers involving certain U.S. cheeses in Mexico and technical barriers to trade among the three countries involving wine and distilled spirits would be taken down.
U.S. farm and industry groups welcomed the deal because it provides more certainty regarding trade arrangements among the three countries going forward. It also eliminates tariffs that have been causing consternation for months in farm country. Even though the U.S. Department of Agriculture made a package of subsidy payments available this summer to corn, wheat and cotton growers and pork and dairy producers, many would prefer exports to resume.
The Grocery Manufacturers Association called the agreement "a victory for American consumers."
"U.S. consumers rely on the high-quality ingredients and affordable products made possible through trade with our closest neighbors," Geoff Freeman, GMA president and CEO, said in a statement emailed to Food Dive. "This trade has quadrupled since NAFTA went into effect more than two decades ago, totaling nearly $18 billion in 2017. Canada and Mexico buy about half of all U.S. processed product exports, and this agreement will expand that success."
There are some key differences between the USMCA and NAFTA, including Canada's agreement on U.S. dairy access, a 16-year sunset clause (NAFTA's was indefinite) and some specific rules of origin and wage level requirements that would primarily impact automobile production.
Secretary of Agriculture Sonny Perdue said in a statement the deal gets rid of Canada's "Class 7" milk pricing policies and addresses that country's "discriminatory wheat grading process" to help U.S. farmers along the border become more competitive.
"As we celebrate this breakthrough, it is worth noting that there were many detractors who said it couldn’t be done," Perdue said. He added the administration's trade negotiation strategy is working and could influence further trade deals with the European Union and China.
But not everyone is happy with the USMCA. While the Chicken Farmers of Canada said it was "relieved that over a year of uncertainty over the future of the agricultural landscape in Canada is over," the group also said it was "very disappointed" that Canada conceded unprecedented additional access to U.S. dairy products.
The Dairy Farmers of Canada were particularly critical of the deal, which the group said would have a dramatic impact on the entire sector. A statement said the group failed to see "how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood." Canadian egg producers took a similar view, saying the outcome "means more foreign eggs on grocery store shelves."
In the U.S., the National Farmers Union called the proposed trade deal encouraging given that farmers' incomes have plummeted during the past five years and trade disruptions have depressed farm prices even more. However, group president Roger Johnson said parts of the agreement appear to fall short on establishing an even playing field for family farmers and ranchers and corporations.
"Progress was made on the dispute settlement mechanisms — provisions that place tremendous power in the hands of multinational corporations — but the [investor-state dispute settlement] framework remains. And country-of-origin labeling, which is supported by 90% of Americans, was unfortunately left out of the agreement," Johnson said in a statement.
Since the proposed USMCA emerged about five weeks before the Nov. 6 midterm elections, the deal could be viewed as a bone thrown to heartland agricultural states where the administration needs voters to help maintain a Republican majority in Congress. It could also function as a template for future trade deals with the European Union and China, with whom the U.S. has been fighting tit-for-tat tariff wars.
The proposed deal isn't a slam dunk, though. According to Politico, while President Trump plans to sign the new agreement by the end of November with his Canadian and Mexican counterparts, a formal congressional vote won't be scheduled until after the first of the year because of procedural issues. When that happens, the makeup of the U.S. Senate and House of Representatives may be different than it is today.