WASHINGTON — In what is being viewed as a generally positive development for North American grain producers, Canada has agreed to join the United States and Mexico in a trade deal that will replace the North American Free Trade Agreement (NAFTA).
Although the finer details of the new agreement, renamed the United States-Mexico-Canada Agreement (USMCA), were still being examined, the initial reaction from the agricultural sectors affected by the deal was favorable.
“Under NAFTA, US meat and poultry exports to Mexico and Canada have thrived as import duties were removed and non-scientific barriers to trade have been significantly reduced,” said Julie Anna Potts, president and CEO of the North American Meat Institute (NAMI). “The North American market for the meat and poultry industry is nearly completely integrated and is essential to its long-term viability. The agreement submitted today to Congress safeguards the core tenets of NAFTA that have strengthened the US meat sector and overall economy.”
NAMI pointed out that since 1994, beef exports from the US to Canada and Mexico grew from $656 million to over $1.7 billion in 2017. Meanwhile, pork export values jumped from $322 million to more than $2.3 billion. US beef and pork exports to Canada and Mexico accounted for 30 percent and 40 percent respectively of all US exports in the two categories.
“We urge Congress to ratify expeditiously the US-Mexico-Canada trade agreement, and we look forward to working with both ddministration officials and members of Congress to ensure its implementation.”
“No trade agreement has had more impact on our sector than NAFTA, which prompted explosive growth in our export sales to both countries as well as the development of a fully-integrated grains and livestock supply chain within North America,” said Jim Stitzlein, chairman of the US Grains Council. “Over the past two decades, this agreement has proven beneficial for the producers, agricultural sectors and economies of all three countries.
“We appreciate the dedicated, hard work of our negotiating team to achieve this outcome with our neighbors and customers and look forward to fully examining the new text as the process of approving the new agreement begins a new phase.”
Steve Mercer, vice president of communications for the US Wheat Associates, said: “US Wheat Associates is pleased that the administration has put in such a strong effort to complete negotiations on a new agreement that, fortunately, includes Canada. Mexico has imported more US wheat the past two marketing years than any other country and over the long term is one of our top buyers consistently. The NAFTA agreement underpins that trading relationship and we hope the new agreement maintains that opportunity. There is a lot to review in the new agreement and we look forward to digging into the details to better understand its potential impact.”
John Bode, president and CEO of the Corn Refiners Association, commented: “This is a milestone. Mexican and Canadian markets are very important to American farmers, ranchers, and agribusiness. We commend President Trump for his efforts to conclude this trilateral agreement. We look forward to reviewing the agreement text released today.”
Signed in 1994, NAFTA fundamentally reshaped North American economic relations, driving an unprecedented integration between Canada and the United States’ developed economies and Mexico, a developing country.
NAFTA has been a big winner for US agriculture. Since NAFTA was implemented 24 years ago, US farmers have quadrupled their exports to Canada and Mexico and the two nations rank second and third, after China, as markets for US farm goods.
Canada also has benefited as its total agricultural exports to Mexico and the United States have tripled.
Meanwhile, Mexico’s results have been mixed, as some economists have blamed NAFTA for exposing Mexican farmers, especially corn producers, to competition from heavily subsidized US agriculture. A study from the Center for Economic Policy and Research found that NAFTA put nearly 2 million small-scale Mexican farmers out of work.
Trump said shortly after his election in 2016 that the United States would withdraw from NAFTA if its terms were not renegotiated.
US and Mexican negotiators on Aug. 27 reached what the Office of the US Trade Representative termed “a preliminary agreement in principle” on a new bilateral accord to supplant NAFTA.
In Monday morning tweets, Trump hailed the new agreement as “a historic transaction.”
“It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our farmers and manufacturers, reduce trade barriers to the US and will bring all three great nations closer together in competition with the rest of the world,” Trump said.
Canadian Prime Minister Justin Trudeau, said of the deal on Twitter: “A good day for Canada and our closest trading partners.”
As part of the new deal, Canada will offer the United States greater access to its dairy market than the United States would have achieved through the Trans-Pacific Partnership, a trade treaty that Trump withdrew from last year.