The U.S. International Trade Commission (ITC) released their much-anticipated analysis of U.S.-Mexico-Canada Agreement (USMCA) yesterday, and the upshot for U.S. food and agriculture was a clear win. In a time of uncertainty on the trade front, with tariffs prompting retaliatory tariffs from Mexico to China as the Administration maneuvers through its trade agenda, the ITC offered some sweet solace. More than anything, the report proved us all right in the food and ag space—we said USMCA would boost U.S. food and agricultural exports, and ITC confirmed that fact. And for the dairy industry, perhaps more clearly than any other segment of food and agriculture, the ITC report is indisputable—it’s a boon.
The economists at ITC determined that the USMCA "would likely have a positive impact on all broad industry sectors within the U.S. economy" and that the U.S. agricultural and food exports will increase by $2.2 billion. ITC expects exports of U.S. dairy products to increase by more than $277 million overall—$227.0 million to Canada and $50.6 million to Mexico, respectively.
Mexico is our number one market for all U.S. dairy products. Last year we shipped $1.4 billion of products from cheese to whey to ice cream to skim milk powder and everything in between. And Canada is right there in second place, buying more than $639 million of U.S. dairy products in 2018. In this context, passage and ratification of USMCA should happen yesterday not only to bring relief to the U.S. food and agriculture industry, but to ensure long-term growth for our businesses and producers who need free and fair trade to fuel their progress.
Overall, USMCA includes important improvements that will enable food and agriculture to trade more fairly and to expand exports of U.S. dairy products to our North American partners. During negotiations, I worked alongside the Administration on behalf of our dairy member companies to maintain dairy market access in Mexico, eliminate Canada’s trade-distortive Class 7 pricing program, improve market access into Canada, ensure strong provisions on sanitary and phytosanitary measures, and equally strong provisions on geographical indications.
Now, the report is no surprise to those on the Hill who required it with their authority through Trade Promotion Authority. Most have admitted publicly and privately that USMCA offers an improvement over the former North American Free Trade Agreement, or NAFTA, for most sectors of the U.S. economy. Again, the ITC report offered an unbiased assessment, estimating that USMCA would raise U.S. GDP by $68.2 billion, generating a higher growth rate than other free trade agreements in effect, and create about 176,000 new American jobs.
Although it’s still early, some members of Congress, instead of celebrating and embracing what their constituents need right now—more jobs and new markets that will drive wage growth—are choosing instead to quibble over the number of new jobs created for certain industries, missing the forest for the trees.
Here is what I see: Recently, Mexico imposed a 25% retaliatory tariff on U.S. cheese which has negatively impacted the industry. The European Union’s incessant barriers to imports of U.S. dairy products have led to an outsized trade deficit. Last year, the United States lost 40% of its cheese and whey exports to China compared to 2017 due to retaliatory tariffs. In Japan, our fifth largest market for dairy, U.S. dairy exports face exceedingly high tariffs and other barriers to trade. Individually and collectively, these are bottlenecks and pain points for an industry losing dairy farms and watching in disbelief as hard-won market share—which equals a job and wages for thousands supported by dairy exports—comes under threat. Last year, despite significant challenges, the dairy industry did its part for the U.S. economy, exporting $5.585 billion of dairy products from every state.
Many lawmakers have said they won’t make up their minds on how they will vote on the USMCA deal until they read the independent agency's report. Well, the results are now conclusive—USMCA will bolster U.S. food and agriculture exports. The next step is for Congress to swiftly take up the agreement and vote to pass the USMCA. Free trade agreements like the USMCA that open markets and lower trade barriers are crucial to continuing the trend of growing U.S. dairy exports, which leads to jobs and income for Americans.
Michael Dykes, D.V.M., is president and CEO of the International Dairy Foods Association