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January 16, 2020 | Feed & Grain Staff
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Senate Approves USMCA Trade Deal

Industry weighs in on second trade deal news of the week

America’s agricultural industry received a second round of good news this week with Senate approval of the United States-Mexico-Canada Agreement (USMCA) on Thursday. 

At a time when farmers continue to face strong economic headwinds, the agreement is expected to increase US agriculture exports by $2 billion.

“This trade agreement comes at a critical time, increasing optimism that we’ll turn the corner in 2020,” says American Farm Bureau President Zippy Duvall. “USMCA is an important step toward restoring the competitiveness of America’s farmers and ranchers, strengthening our trade relationships in North America and setting an example for agreements with other important trading partners.”

The USMCA is expected to result in a $65 billion increase in gross domestic product. Canada will increase quotas on US dairy products, benefitting American dairy farmers by $242 million. 

Canada will also treat wheat imports the same as domestic wheat for grading and pricing.

“Mexico continues to be our top importing country,” says U.S. Wheat Associates (USW) Chairman and Paulding, OH, farmer Doug Goyings. “Wheat farmers are relieved to see the agreement moving on to the President, and I think the Mexican millers who want our wheat are relieved too.”

USMCA retains tariff-free access to imported US wheat for those long-time flour milling customers in Mexico, a crucial step toward rebuilding trust in the US as a reliable supplier in this important, neighboring market.

In addition, the USMCA makes important progress toward more open commerce for US wheat farmers near the Canadian border by allowing US varieties registered in Canada to receive reciprocal grading treatment.  

Other measures that benefit the industry include the agreement’s language around agricultural biotechnology which supports 21st Century innovations in agriculture and new language to strengthen disciplines for science-based SPS measures. 

“Having a sound and competitive free trade agreement with Mexico and Canada is critical to continued economic growth and job creation in the United States and the North American region," says NGFA President and CEO Randy Gordon. ""The USMCA preserves or expands upon critical market access for US agricultural products in the North American market, improves the process for resolving non-technical barriers to trade, and provides a 21st century blueprint for future trade agreements."

In addition to maintaining a tariff-free environment for most agricultural goods, USMCA also will help address non-tariff barriers, which are paramount among the current global challenges that distort and slow cross-border trade flows.

Constance Cullman, American Feed Industry Association's (AFIA) president and CEO is excited for the opportunities that will come from the implementation of USMCA.

"The USMCA not only builds on the success of NAFTA by facilitating greater market access, regulatory transparency and accountability among the three trading partners, but it also sends a message to our other trading partners that the United States is serious about enhancing trading relationships, supporting US businesses and exports and setting a new standard for how trade agreements with the United States are expected to look," she says. "In addition, many AFIA members have integrated businesses -– where they have operations in the United States, Mexico and Canada and the USMCA will facilitate growth across all their business units.”

President Trump is expected to sign the USMCA soon, the final step to enacting the agreement.

"USMCA, the China trade agreement, the recently enacted US-Japan Trade Agreement, and the US-South Korea Rice Agreement are moving us toward rebalancing the scales of international trade," says Duvall with the American Farm Bureau. "It's important this trend continues as the US negotiates agreements with other international trading partners. We’re making great strides in giving farmers and ranchers fair access to the global market again.”

Additional trade agreements worthy of attention include the US-European Union negotiations, as well as an agreement with the United Kingdom as it leaves the European Union.

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