The speaker of the US House of Representatives, Nancy Pelosi, announced Tuesday [December 10] that an agreement was reached between the House and the Trump administration on a modified version of the US-Mexico-Canada Agreement (USMCA) that would allow the deal to move forward through Congress toward potential final ratification.
Work to develop a revised North American trade deal in conjunction with Canada and Mexico concluded in 2018, but the deal had not been approved by the US Congress – it has to be passed by the legislature in all three countries.
The revised trade deal is a “big win” for the US agriculture industry, economy and workers, said Sonny Perdue, US secretary of agriculture.
“The agreement improves virtually every component of the old NAFTA, and the agriculture industry stands to gain significantly,” he said in a statement about the announcement. “President [Donald] Trump and Ambassador [Robert] Lighthizer are laying the foundation for a stronger farm economy through USMCA.”
“While I am very encouraged by today’s breakthrough, we must not lose sight – the House and Senate need to work diligently to pass USMCA by Christmas,” he added.
The trade deal is expected to support and expand agricultural markets for US producers with neighboring Canada and Mexico, the USDA reported. The deal adds to existing trade relationships with both countries, which are the top two export markets for US agricultural products.
The situation where products that had zero tariffs during NAFTA will continue, the department said. The new deal also allows for increased assess to dairy, poultry and egg markets with Canada while Canada has better access to dairy, peanut and sugar markets in the US.
US dairy producers are set to have additional market opportunities in Canada for several dairy products and the country agreed to end certain milk pricing programs, the USDA said. The deal specifically addresses the use of agricultural biotechnology and seeks to improve science-based measures focused on sanitary and phytosanitary issues.
Feed industry perspectives
The National Grain and Feed Association (NGFA) said completing the approval of the revised trade agreement will sustain and expand market access for feed and agricultural products with Canada and Mexico. The trade deal includes no tariffs on most agricultural products and helps address some non-tariff barriers that can distort or reduce cross-border trade, it added.
“We particularly appreciate the dedication and persistence of US Trade Representative Robert Lighthizer and House leaders to overcome final hurdles on labor enforcement to reach this milestone,” said Randy Gordon, NGFA CEO. “We also commend the governments of two of our most important trading partners – Mexico and Canada – in working with the US to accommodate these concerns.”
The association also called upon members of the House to pass the trade agreement so that it can be ratified in the Senate this year.
The American Feed Industry Association (AFIA) echoed that statement, calling for quick ratification of the deal.
NAFTA had helped the feed industry in the previous 25 years, AFIA said. However, the new version of the multi-country deal adds new labor protections for US jobs and establishes new sanitary and phytosanitary standards, said the trade group.
“Now, with the ratification window quickly closing on 2019 and an election year looming, AFIA strongly urges Congress to bring the agreement to a vote,” said Constance Cullman, AFIA’s president. “Ratifying the agreement will allow US animal food producers to continue to remain competitive in the region while strengthening regulatory engagement and commitments among the three countries.”
Mexico and Canada are the two largest and most reliable markets for US corn, added the National Corn Growers Association (NCGA). Last year, there were more than $4.56bn in exports of corn and corn co-products.
“NCGA’s top legislative priority in 2019 has been passing USMCA,” said Kevin Ross, NCGA president. “Today’s announcement brings us one step closer to ratifying this important agreement and securing the future of our trading relationship with Mexico and Canada, the top export market for US corn farmers.”
“It’s been a brutal year for many farmers who really need the certainty this would provide for agricultural trade,” he added.