USMCA Would Provide Much Needed Stability

The U.S.-Mexico-Canada Agreement (USMCA) would be an overall win for the U.S. farm sector, but it would also allow for only “slight increases” in exports of some U.S. agricultural commodities, according to a 379-page analysis released last week by the U.S. International Trade Commission.

U.S. dairy, poultry and egg producers would get a direct bump in exports to Canada. Canadian dairy, sugar and sugar containing products also would benefit from increased access to U.S. importers.

In an ITC simulation considering only the market access provisions in the agreement, ag exports would increase by $435 million and imports would see an $80 million hike. Considering the agreement’s overall language—including provisions impacting things like intellectual property rights, labor, and investment provisions— ag exports would jump $2.2 billion annually, a 1.1 percent increase.

One of the biggest beneficiaries would be U.S. dairy. Canada agreed to increases for U.S. access to its domestic market through new tariff rate quotas for milk, cheese, cream, skim milk powder, butter, ice cream, whey and other dairy products. Canada also pledged to eliminate its Class 7 dairy pricing system, which U.S. producers say flooded the international market with skim milk powder.

According to organizations like the U.S. Chamber of Commerce and the National Corn Growers Association, it’s not fair to judge USMCA strictly on increased exports. The bottom line, says the umbrella group Farmers for Free Trade, is that USMCA is needed to keep tariffs at zero and keep exports flowing to Mexico and Canada, two of the largest and most dependable foreign markets.

“The true benefit that USMCA delivers for American farmers is certainty and stability,” said Brian Kuehl, one of the group’s executive directors. “Especially right now, American farmers need a victory. USMCA will guarantee that their most important export markets remain open for business and free from red tape.”

The ITC analysis did not take into consideration retaliatory tariffs imposed by both Mexico and Canada.

“We are eager to see the removal of U.S. metal tariffs that prompted Mexico’s 20 percent retaliatory tariffs nearly a year ago,” said Nick Giordano, a vice president for the National Pork Producers Council. “The value of U.S. pork exports to Mexico are down 32 percent this year due to punitive tariffs. Our farmers need zero-tariff trade restored to our largest export market.”

Source: Agri-Pulse.com