The U.S., Mexican and Canadian presidents signed off on the renegotiated North American Free Trade Agreement today, taking the three countries closer to preserving virtually tariff-free agriculture trade.
The overhaul of the 24-year-old pact is far from assured because the countries still need to ratify the re-named United States-Mexico-Canada Agreement (USMCA).
“Open markets have helped U.S. producers flourish and created billion-dollar markets for U.S. beef,” said National Cattlemen's Beef Association President Kevin Kester. “We look forward to working with Congress to get USMCA passed into law as quickly as possible.”
The fate of the pact is unclear when it comes to the U.S. Congress, where President Donald Trump’s Republican party will no longer control the House in January. While new labor provisions are generally supported by some Democrats, it’s unclear if there will be enough support to ratify the agreement.
The USMCA is also controversial in Canada and Mexico. While the U.S. dairy sector lauded hard-fought provisions to force Canada to end its Class 7 dairy pricing system and increase access to U.S. products, Canadian farmers and some lawmakers there don't like the agreement.
An analysis by Purdue University shows quotas and other measures built into the trade pact will boost U.S. exports, mainly of dairy and poultry, by about $450 million per year.
Ag and business leaders in all three countries are still vocal in their opposition to U.S. “Section 232” tariffs on steel and aluminum imports that the Trump administration levied on Mexico and Canada when trade talks broke down earlier this year.
“To ensure a stronger trading relationship, we hope to see a prompt resolution that removes Section 232 steel and aluminum tariffs and retaliatory tariffs between all three countries,” the Business Roundtable said in a statement.
The Purdue University report calculates Canadian and Mexican retaliatory tariffs alone will cause U.S. ag exports to decline by $1.8 billion per year.
But Trump was optimistic at the signing, which occurred in Buenos Aires on the sidelines of the G20 summit there.
“This new agreement will ensure a future of prosperity and innovation for Mexico, Canada, and the United States,” Trump said. “I look forward to working with members of Congress and the USMCA partners - and I have to say, it’s been so well reviewed, I don’t expect to have very much of a problem - to ensure the complete implementation of our agreement.”
Canadian Prime Minister Justin Trudeau’s comments at the signing were less effusive.
“The new agreement lifts the risk of serious economic uncertainty that lingers throughout a trade renegotiation process,” Trudeau said. “Uncertainty that would have only gotten worse and more damaging had we not reached a new NAFTA.”
And Trudeau stressed the importance of simply not losing the tariff-free trade baked into the original and current NAFTA pact.
“As a result, the tariff-free access that NAFTA guaranteed for more than 70 percent of Canada’s total exports is secure,” he said in Buenos Aires. “And that’s essential for businesses, families, jobs, entrepreneurs, and hardworking people in every corner of our country.”
The sentiment was echoed by National Corn Growers Association President Lynn Chrisp: “U.S. corn farmers are proud of the strong trading relationships NAFTA has enabled us to build with our North American trading partners, exporting more than $3 billion of corn and corn products to Mexico and Canada last year.”
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