NAFTA traded in for USMCA

On July 1 the United States-Mexico-Canada Agreement (USMCA) went into effect.

American Farm Bureau Federation (AFBF) President Zippy Duvall says, “The launch of the USMCA brings optimism to the country’s farmers and ranchers at a time they need it the most.” 

“On the back of a struggling farm economy and on the back of the COVID-19 pandemic, this is welcoming news – improving what has been a long and successful agreement for U.S. agriculture,” says AFBF Chief Economist John Newton.

Replacing the North American Free Trade Agreement (NAFTA), the USMCA will rebalance trade between the U.S., Canada and Mexico, according to the Office of the United States Trade Representative. 

Trading partners

“Canada and Mexico were our top two trading partners in terms of the total economy,” says Newton. 

According to AFBF, Mexico was the largest overall trading partner for the U.S. in 2019, followed by Canada. In terms of agricultural trade, Canada was the lead trading partner, directly followed by Mexico. 

U.S. Secretary of Agriculture Sonny Perdue says, “America is located in the greatest neighborhood on earth, with Canada and Mexico as some of our top trading partners.”

“In 2019, our nation exported more than $40 billion worth of agricultural products to Canada and Mexico, including billions of dollars worth of corn, soybeans, pork, beef and processed foods, as well as agricultural heavy equipment,” Perdue continues. 

USMCA benefits

The new trade agreement is expected to increase U.S. agriculture exports by $2 billion, which should result in a $65 billion increase to gross domestic product (GDP). 

Key achievements of the USMCA include expanded market access for American dairy, poultry and egg products, cooperation on ag biotechnology, fair treatment of grading wheat and classing milk across borders, as well as commitments to avoid trade-distorting policies and transparency. 

Per the agreement, Canada will provide new market access for U.S. dairy and poultry products and eliminate the program allowing U.S. dairy to be undersold. Canada also eliminated their tariffs on whey and margarine. 

“USMCA makes trade with Canada more fair on the wheat front, dairy front and poultry front,” Newton explains.

 Canada has also agreed to grade U.S. wheat imports more fairly, treating imported wheat as if it were domestic. 

There will remain no tariffs on agricultural products traded between the U.S. and Mexico.  The agreement also states Mexico and the U.S. will share non-discriminatory grading standards for ag products. 

The modernized trade agreement also contains science-based rules for sanitary and phytosanitary measures to protect the agricultural industry and other natural resources from animal or plant pests from trade. Further modernization includes sharing information related to agricultural biotechnology, such as gene editing. 

Comments on USMCA

Multiple groups praise the passage and initiation of the USMCA in favor of NAFTA, while others argue more could have been added for the benefit of American producers. 

“USMCA helps all of America’s diverse agricultural industries,” says Perdue. “This new and improved deal secures greater access to markets and lowers barriers for our agricultural products.”

“There are a lot of improvements in this trade agreement that could make U.S. agriculture more competitive in our top markets,” shares Newton. 

“As with all trade agreements, there are some areas that still need attention,” Duvall also shares. “We will continue to work with the administration to level the playing field for fruit and vegetable growers facing increased competition from Mexico.”

National Beef Cattlemen’s Association (NCBA) Chief Executive Officer (CEO) Colin Woodall shares, “USMCA gives us certainty of being able to maintain our relationships with Canada and Mexico, which are two of the top five markets for our product.” 

Woodall explains NAFTA was good for beef producers. 

Bill Bullard, CEO of R-CALF USA says, “The USMCA makes no changes at all for the largest sector of American agriculture, the U.S. cattle industry.” 

Averi Reynolds is the editor for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.