The U.S.-Mexico-Canada trade agreement has been a boon for some U.S. farm exports, while others in the ag sector face existential threats from rising Mexican imports, according to testimony at the first day of a three-day hearing on the pact.
The U.S.-Mexico-Canada Agreement, signed during Trump’s first term, provided U.S. exporters with market certainty, representatives from the U.S. grain industry told officials from the Office of the U.S. Trade Representative and the Agriculture Department on Wednesday.
The U.S. exports more than $5 billion of corn to its southern neighbor, accounting for around 40% of total U.S. corn exports, Jed Bower, president at the National Corn Growers Association, said at the hearing, which is being held in preparation for the upcoming review of the agreement.
Meanwhile, Canada is a prominent ethanol importer, buying around a third of all U.S. ethanol exports.
“The strength of these export markets is all because United States-Mexico-Canada agreement,” Bower said.
Representatives from the three countries will meet in July to review the 2020 deal and consider whether to extend it beyond its 2036 expiration date. Earlier this year, President Donald Trump suggested he is open to considering alternate trade arrangements rather then preserving the deal.
On an economy-wide scale, USMCA has spurred U.S. agricultural trade. A group of lawmakers recently pointed out to senior U.S. trade officials that ag exports to Mexico and Canada since the deal went into effect has grown by $10.7 billion and $7.6 billion, respectively.
The USMCA has “provided stability in the marketplace,” American Soybean Association secretary and Iowa soybean farmer Dave Walton said. He attributed the deal in part for Mexico’s cementing its position as the second-largest soybean export destination.
“The USCMA has not only promoted economic partnership, has also built a foundation for North American food security,” Alejandra Castillo, president and CEO of the North American Export Grain Association.
A series of industries from distilled spirits to coffee production and dairy producers espoused their support for the agreement and emphasized the need for the administration to preserve the benefits of the deal in any review.
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But the officials also heard from representatives in the fresh fruit sector, who argued that the rising imports of Mexican produce under the deal is hollowing out U.S. industry.
Ken Melban, president of the California Avocado Commission, described how Mexican imports under the USMCA and its predecessor, the North American Free Trade Agreement, have contributed to a 55% decline in U.S. avocado growers, and a 46% drop off in U.S. production.
“Despite significantly higher costs, our market price has progressively eroded,” Melban argued. He appealed to officials to look into the threat imports pose to domestic industry and, at minimum, implement import quotas during the U.S. growing season.
“At this point, we need the government's help to manage this market,” he stressed.
Florida Fruit and Vegetable Association President Michael Joyner said a similar trend is playing out in Florida. He described “explosive growth” in U.S. fruit and vegetable imports prompting lost sales among Florida growers, lower prices, and lost jobs.
Domestic producers are struggling to keep market share in domestic blueberry, bell pepper, tomato, cucumber and other markets, he argued.
“Our growers find it impossible to understand why this country would allow them to be sacrificed under NAFTA and then would allow the problem to compound under USMC,” Joyner told the officials. Joyner also called for seasonal tariff-rate quotas to prevent further industry decline.
The suggestion of new tariff-rate quotas was met with resistance from other parts of the fresh produce industry, however. Soren Bjorn, CEO of Driscoll’s, a berry distributor and importer, argued that imported berries complemented, not undermined, U.S. production. Imports allow for year-round sales, he said, and have grown demand for products that used to only be occasionally available in grocery stores.
“USMCA has created a continuous, complementary market where American farmers can thrive, not just survive,” he said.
He also pointed to Mexico’s progress at strengthening labor rights under the deal and argued wages are rising across the country, closing the cost gap with the U.S.
Assistant USTR for Agricultural Affairs and Commodity Policy Julie Callahan also pressed Joyner on what measures other than a TRQ could be taken to benefit Florida growers.
“I wish I had other things,” Joyner said. “This is kind of a last step for us.”
Multiple groups also used the opportunity of face time with senior U.S. officials to highlight some of the areas the deal could be improved. The U.S. dairy industry reiterated concerns around Canada’s administration of its TRQs on dairy products.
Meanwhile, Farm Action made the case for mandatory country of origin labeling, echoing some of the written comments submitted as part of the information gathering process ahead of next summer’s review.
Castillo argued that USMCA committees, side letters and consultations could be used to reduce trade frictions at the border without reopening negotiations on the underlying text. She argued that some Mexican import restrictions do not align with international guidelines and import checks at the border frequently hold up grain rail cargoes to the country.
Callahan was particularly interested in Castillo’s comments on Mexican grain inspections, asking follow-up questions on the impacts and Mexico’s practices.
Dennis Nuxoll, vice president for federal affairs at Western Growers, also called for upgrades to the deal to strengthen food safety oversight and ensure imported products uphold U.S. safety standards.
“It's so much easier to implode existing trade agreements,” Castillo told Agri-Pulse after her panel. The question, she said, should be how to strengthen the deal, “how can we iron those things out? And how can we actually really use the mechanisms that are embedded in the treaty, because we haven't really used them to the full capacity.”
“I just don't see us being able to walk it back if we exit,” she added.
