There’s plenty for the U.S. agricultural sector to like in the U.S.-Mexico deal announced today, but the biggest win for farmers and ranchers is the agreement to continue the arrangement of zero tariffs on farm goods between the two neighboring countries.
“This is nothing short of a great victory for farmers and ranchers, because locking in our access to Mexican markets is critical to supporting farm income and strengthening rural communities,” USDA Secretary Sonny Perdue said in a statement. “Mexico has historically been a great customer and partner and we are happy to have this resolved for our agricultural producers.”
President Donald Trump "has achieved important improvements in the agreement to enable our agricultural producers to be treated more fairly," Perdue said.
The North American Free Trade Agreement and the pact’s reduction and elimination of tariffs is the primary reason Mexico has become such a major buyer of U.S. corn, soybeans, wheat, pork, beef, dairy and other commodities.
USDA export data shows just how important NAFTA is to the trade relationship between the U.S. and Mexico. The U.S. exported about $35 million worth of corn to Mexico in 1993, the year before the trade pact went into force. In 2016, long after Mexican tariffs fell to zero, the U.S. sold $2.6 billion worth of corn to Mexico.
Sen. Charles Grassley, R-Iowa, said he was "encouraged" by the announcement, but emphasized the importance of the Canadian market to U.S. producers.
“Mexico has been an important trading partner of the United States for decades, and farmers in Iowa have felt the sting of increased tariffs on products like pork and cheese," Grassley said. "While the details of a preliminary agreement haven’t yet been released and I reserve final judgment until there is a final agreement that includes Canada, I am encouraged by the progress announced today. The sooner we get a new agreement in place, the sooner farmers and businesspeople across the country can focus on exporting American products to Canada and Mexico without concern of tariffs."
The deal was lauded by the Illinois Soybean Growers.
“As soybean producers start to harvest their crop, we are encouraged by the news that the administration is looking to redevelop trade relationships with one of our strongest trading partners,” said Doug Schroeder, the group’s vice chairman. “Trade is vital to Illinois soybean growers and the livestock users who consume our protein-rich soybean meal.”
The Produce Coalition for NATFA, a group made up of "leading U.S. and Canadian fruit and vegetable companies that support efforts to modernize NAFTA," said in a news release that "a major focus for the U.S. food and agriculture industry in these negotiations is to 'do no harm' and build on our successful relationship with Mexico. This critically important step in the negotiations gives greater certainty to our agriculture producers by maintaining and enhancing our trade relationship with Mexico and reaffirming the commitment to open trade in agricultural products, including fresh produce.”
Mexico has been buying more corn than normal from Brazil as negotiations dragged on and fears grew that the U.S. would pull out of NAFTA.
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“NAFTA has been an unequivocal success story for American agriculture, dramatically expanding market access for all parties, integrating supply chains and providing economic opportunity to farmers and rural communities,” National Corn Growers Association President Kevin Skunes said. “Mexico is the largest export market for U.S. corn farmers and we are pleased the United States and Mexico are reaffirming mutual commitment to this important relationship.”
The U.S.-Mexico deal also contains a win for the U.S. dairy industry, which has grown increasingly concerned about the efforts of the European Union to persuade Mexico to agree to protection for the names of certain cheeses and other food.
Mexico and the EU are currently working through a list of about 300 food names – mostly cheeses – that the EU wants protected as Geographical Indications (GIs), but the USTR announced today that Mexico has agreed on provisions to limit the damage to U.S. producers and exporters.
If the EU had its way, Mexico would not accept U.S.-produced products with names like feta, gorgonzola, fontina, roquefort and asiago cheese.
“For the first time in NAFTA, the United States and Mexico have agreed to (GI) standards that: enhance transparency for opposition and cancellation proceedings for (GIs); establish a mechanism to consult on GIs pursuant to international agreements; and allow for additional factors that may be taken into account in determining whether a term is a common name instead of a GI,” the USTR said in a statement. “In addition, for the first time in a United States trade agreement, Mexico and the United States agreed to not restrict market access in Mexico for U.S. cheeses labeled with certain names.”
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