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USMC replaces NAFTA

By Staff | Oct 12, 2018




The North Atlantic Free Trade Agreement not only has a new name, but also new provisions for agriculture.

Now called the U.S.-Mexico-Canada Agreement (USMCA), President Donald Trump’s administration described it as the “most modern, up-to-date and balanced trade agreement in the history of our country.”

U.S. Trade Representative Robert Lighthizer described the agreement as “substantially better than the TPP (Trans-Pacific Partnership).”

U.S. Department of Agriculture Secretary Sonny Perdue said the deal eliminates Canada’s “unfair Class 7 milk pricing scheme, cracks open additional access to U.S. dairy into Canada preserves and expands critical access for U.S. poultry and egg producers and addresses Canada’s discriminatory wheat grading process to help U.S. wheat growers along the border become more competitive.”

It also established a free trade agreement that preserves zero-tariff access for U.S. pork to Mexico and Canada.

Members of the National Pork Producers Council were thrilled.

“The three-way pact with Mexico and Canada, our largest and fourth-largest export markets, respectively, and the recently signed agreement with Korea represent welcome momentum during what has been a challenging year,” said Jim Heimerly, president of the NPPC and a pork producer from Ohio.

U.S. pork is currently on three trade retaliation lists that have placed 40 percent of total exports under punitive tariffs.

Dan Halstrom, U.S. Meat Export Federation president and chief executive officer pointed out that the retaliatory duties imposed by Mexico on U.S. pork and Canada by U.S. prepared/cooked beef products remain in place.

“These duties were imposed in response to U.S. Section 232 tariffs on imports of steel and aluminum from Mexico and Canada, and these tariffs also remain in place,” Halstrom said. “USMEF hopes to see this issue resolved soon, so that all U.S. red meat exports will once again have duty-free access to Mexico and Canada.”

Iowa Farm Bureau Federation President Craig Hill described the USMCA as a “positive step forward” for trade.

“With the exception of dairy, USMCA brings relatively few changes to ag trade, compared to the previous North American Free Trade Agreement,” he said. “Thanks to this new agreement, Mexico will remain a solid importer of Iowa corn, soybean products, pork, beef and turkey. While Iowa isn’t a huge dairy exporter, the new agreement can still bring a moderate impact to the industry because it has more favorable tariffs for the nation’s big dairy industries, primarily located in Wisconsin, Idaho and New York state.”

Hill added that, in Iowa, the agreement is “a positive step forward for our hog farmers.”

“That’s because Iowa and Canada are part of the same supply networks,” he said. “We get substantial amounts of feeder pigs out of Canada and add value to them with Iowa corn, labor and our slaughtering capacity. We then ship pork back to Ontario and Quebec, which are essential markets for our Iowa hog farmers.”

But he also said challenges still remain in the hog market.

“But it is key that all three countries engaged in the USMCA didn’t make the negotiation a food fight,” Hill said. “Ag trade remained consistent while all details of the agreement were underway, which is in sharp contrast to how China has negotiated trade issues.”

Iowa Secretary of Agriculture Mike Naig described the new agreement as “tremendously good news.”

“Not only did we maintain the zero-tariff treatment we had across those two borders, but it looks like there may be an upside for additional U.S. exports into Canada for dairy, poultry and eggs,” he said.

Each of the three countries involved in this agreement must renew USMCA every six years. If it is not renewed, the agreement will expire after 16 years. NAFTA was in place for 24 years.

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