Long-awaited USMCA is Here. Now What?

The U.S.-Mexico-Canada Agreement is fully implemented, taking the place of the North American Free Trade Agreement John Newton, Chief Economist at the American Farm Bureau Federation, says given all the challenges U.S. agriculture has faced in recent years, the USMCA couldn’t take effect at a better time.

“On the back of a struggling farm economy, on the back of the COVID-19 pandemic, this is welcome news, improving what’s been a long and successful agreement for U.S. agriculture. Farmers were excited about USMCA implementation. We have three wins on the trade front last year when you think about the Phase One agreement, about USMCA, and the Japan-U.S. agreement. So, farmers are very excited, especially the wheat producers, dairy producers, and poultry producers. They’re going to get better and more fair access into the Canadian market.”

Newton says the agreement gives U.S. farmers and ranchers access to two of America’s most important trading partners.

“Canada and Mexico were our top two trading partners in 2019, in terms of the total economy, and then when you look at agriculture in 2019, again, Canada and Mexico were our top two trading partners. So, NAFTA proved to be very good for U.S. producers and with the improvements we see in USMCA, it too will be a great agreement for U.S. agricultural producers.”

Thanks to the agreement, Newton says U.S. farmers and ranchers will be more competitive in trade moving forward.

“Not only does USMCA make trade with Canada more fair on the wheat front, dairy front, and poultry front, but we also update non-tariff and science-based parameters within USMCA; things like SPS, GIs, in terms of product names. So, there are a lot of improvements in this trade agreement that should make U.S. agriculture more competitive in our top markets.”
The chairman of the Senate Finance Committee that shepherded the deal to its final passage is hailing its benefits for agriculture.”

Chairman Chuck Grassley says USMCA will end 30 years of Canada blocking imports of U.S. wheat, dairy, and poultry, deal with Mexico’s trade barriers, and more.

“This new agreement will provide certainty to our farmers and ranchers, and update NAFTA in other important areas. And I’ve already mentioned the digital economy, but also, customs, sanitary and phytosanitary measures, and technical standards. And it even helps on intellectual property.”

One of the biggest agricultural sticking points between the U.S. and Canada was dairy. U.S. Trade Representative Robert Lighthizer said that he will ensure Canada will live up to its promise for dairy reforms.

That sentiment is backed by U.S. Dairy Export Council CEO and former Secretary of Agriculture Tom Vilsack.

“He needs to keep a close eye on the Canadians because what they have announced and what they intend to do with reference to these tariff quotas does not appear to us to be consistent with the spirit of the letter of the USMCA.”

The chair of the House Ag Committee says USMCA will also give the U.S. tools to deal with continuing trade problems. Minnesota Democrat Collin Peterson.

“There are some troubling signs out there of people using COVID as a reason to put up trade barriers. We see some ‘monkey business’ going on in Mexico. We continue to learn about the Canadians and what they’re up to with dairy policy. So, we need to be vigilant and we need to make sure that the agreement is enforced.”

Vilsack says by and large, there is an air of cautious optimism within the industry on USMCA.

“The bottom line here is that we’re excited about the implementation of USMCA,” he said. “We think that if it’s implemented as intended, it will result in additional market access. It’s important to keep an eye on our Canadian friends because they’ve done this before with other trade agreements where they’ve redefined the implementation stage in agreement which gives us less access than we thought.”