US Senate passes revised NAFTA trade deal

By Aerin Einstein-Curtis contact

- Last updated on GMT

© GettyImages/CrailsheimStudio
© GettyImages/CrailsheimStudio

Related tags: Trade, trade agreement, Canada, Mexico

Following up on Wednesday’s trade agreement progress with China, the US Senate approved the revised trade agreement with Canada and Mexico (USMCA) on Thursday [January 16]. The development was welcomed the US feed sector.

The trade deal was signed​ by all three countries in 2018, but, in the US, it had to be ratified by both houses of Congress.

The agreement has been approved by Mexico’s legislature but has yet to pass through Canada’s Parliament. Once approved by the legislatures in all three countries, the deal is set to take effect after 90 days.

The trade agreement​ ​sought to update the provisions of the North American Free Trade Agreement (NAFTA).

US feed industry representatives have been calling for progress on the revised trade deal, and almost 1,000 agricultural industry organizations asked​ for Congress to ratify the agreement in June.

US food and agricultural exports to Canada and Mexico more than quadrupled under NAFTA – growing from $9bn in 1993 to nearly $40bn in 2018.

NAFTA, wrote those organizations, helped create a reliable, high-quality supply of food products for US consumers, while supporting more than 900,000 American jobs in food and agriculture and related sectors of the economy. "USMCA builds on the success of the NAFTA agreement, and will ultimately lead to freer markets and fairer trade." 

Tariffs

Feed, food and agricultural products that had no tariffs during NAFTA will continue to carry zero tariffs under the new agreement, the US Department of Agriculture (USDA) said.

The USMCA will create new market access opportunities for US exports to Canada of dairy, poultry, and eggs, and in exchange, the US will provide new access to Canada for some dairy, peanut, and a limited amount of sugar and sugar-containing products, reported the USDA. 

The agreement deals specifically with the use of agricultural biotechnology including technologies like gene editing, the department said. And it focuses on implementing “science-based measures”​ related to sanitary and phytosanitary concerns to improve trade flow.

Industry reaction 

The animal feed industry relies on free-trade access to its neighboring markets in Canada and Mexico, said the America Feed Industry Association (AFIA). Passing the new trade deal brings the industry opportunities.

Exports of feed ingredients and feeds have quadrupled since NAFTA was put in place – growing to about $3.2bn, the AFIA added.

“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 US 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,”​ said Constance Cullman, AFIA president and CEO.

The agreement also supports feed and feed ingredient companies that have developed integrated businesses with operations more than one country, she said. “The USMCA will facilitate growth across all their business units,”​ she added.

The National Grain and Feed Association (NGFA) echoed the AFIA in its support for the passage of the trade deal.

Randy Gordon, NGFA president and CEO, said: “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."

The American Soybean Association (ASA) has been among the organizations calling for passage of the trade deal through Congress given that Mexico is the second-largest export market for US soybeans and Canada is the fourth largest market for exported soybean meal, while the US National Chicken Council (NCC) said the deal was a positive development for poultry producers. 

In 2018, the last full year data is available, Mexico was a $517m market for US chicken exports, with Canada totaling $352m. 

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