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House advances USMCA in overwhelming vote

Positive trade updates seen in biotechnology, common food names and dairy market access.

On Thursday, the House of Representatives voted 385-41 to pass the U.S.-Mexico-Canada Agreement (USMCA). The agreement will now go to the Senate for a vote, which Senate majority leader Mitch McConnell (R., Ky.) said he would bring up once the Senate completes impeachment proceedings.

The passage received praise from agricultural groups and interests after waiting for House action for 14 months since the trilateral deal was reached between Canada, Mexico and the U.S. A week prior, House Democrats had reached an agreement with U.S. Trade Representative Robert Lighthizer and proceeded to get follow-up signatures with the Mexican and Canadian governments to address concerns over labor, the environment and pharmaceuticals.

“I’ve long said that support for USMCA crosses political parties, the bipartisan passage of the agreement today is proof of that,” Agriculture Secretary Sonny Perdue said in a statement following the vote. “I am pleased the House finally brought this agreement to a vote and encourage quick passage in the Senate. President [Donald] Trump delivered on his promise to replace NAFTA [the North American Free Trade Agreement], and USMCA is a huge success for America’s farmers and ranchers. This agreement will unleash the bounty of America’s agricultural harvest to two of our largest trading partners in the world, and it is critical to the success of rural America.”

Canada and Mexico are the first- and second-largest export markets for U.S. food and agricultural products, totaling more than $39.7 billion food and agricultural exports in 2018. These exports support more than 325,000 American jobs.

All food and agricultural products that have zero tariffs under NAFTA will remain at zero tariffs. Since the original NAFTA did not eliminate all tariffs on agricultural trade between the U.S. and Canada, USMCA will create new market access opportunities for U.S. exports to Canada of dairy, poultry and eggs, and in exchange, the U.S. will provide new access to Canada for some dairy, peanut and a limited amount of sugar and sugar-containing products.

Earlier this year, nearly 1,000 American food and agricultural associations and companies announced their support for USMCA, and the National Association of State Departments of Agriculture signed a letter to congressional leaders urging them to ratify USMCA. In September, all former U.S. secretaries of agriculture since President Ronald Reagan’s Administration announced support for USMCA.

The National Grain & Feed Assn. (NGFA) said USMCA would preserve or expand upon critical market access for U.S. agricultural products in the North American market. In addition to maintaining a tariff-free environment for most agricultural goods, USMCA also would address non-tariff barriers that are paramount among the current global challenges that distort and slow cross-border trade flows.

NGFA said among other benefits, USMCA would: facilitate cross-border trade flows through higher levels of regulatory coherence and cooperation; implement timelines and notifications for adverse import checks; reduce the likelihood of trade disruptions in products of agricultural biotechnology; apply technical consultations for sanitary and phytosanitary (SPS) disputes and create a mechanism for expeditiously resolve cross-border SPS issues on individual shipments, and require that SPS standards be grounded in science, based on proper risk assessments and implemented using prudent risk management techniques.

USMCA retains tariff-free access to imported U.S. wheat for those longtime flour milling customers in Mexico -- a crucial step toward rebuilding trust in the U.S. as a reliable supplier in this important neighboring market. In addition, USMCA makes important progress towards more open commerce for U.S. wheat farmers near the Canadian border by allowing U.S. varieties registered in Canada to receive reciprocal grading treatment.

“Mexico’s flour millers import more U.S. wheat than any other country, and they have been very anxious about the outcome of this trade agreement,” said U.S. Wheat Associates chairman Doug Goyings, a Paulding, Ohio, farmer. “At the end of a conference with those millers last June, we agreed to work together to get USMCA implemented. Our colleagues at [the North American Wheat Growers] have enthusiastically joined that effort on Capitol Hill, and we thank them for their support.”

America’s dairy farmers will have expanded market opportunities in Canada for a wide variety of dairy products. Canada agreed to eliminate the unfair Class 6 and 7 milk pricing programs that allowed their farmers to undersell U.S. producers. The U.S. Department of Agriculture said the agreement institutes a more rigorous process for establishing geographical indicators and lays out additional factors to be considered in determining whether a term is a common name, using a combination of approaches to protect the continued use of a number of generic cheese terms, such as parmesan and feta.

The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) praised the House for approving USMCA. “USMCA will bring tangible benefits to the U.S. dairy industry by upgrading trade rules, opening the Canadian market to U.S. dairy exports and preserving our valuable market access in Mexico,” USDEC president and chief executive officer Tom Vilsack said. “Today’s bipartisan vote is indicative of the need to immediately secure these benefits for dairy and all of agriculture.”

U.S. Meat Export Federation (USMEF) president and CEO Dan Halstrom said, “Ratification of USMCA is an important step in solidifying trade relations with Mexico and Canada, which are critical destinations for U.S. pork, beef and lamb. This agreement will bolster the United States' position as a reliable supplier to two leading markets that currently account for about one-third of all U.S. red meat exports. We look forward to the Senate taking up this legislation as soon as possible and completing the ratification process.”

“Today was a crucial win for all U.S. beef producers and a reassurance that U.S. beef will continue to have duty-free access to Canada and Mexico," National Cattlemen’s Beef Assn. president Jennifer Houston said.

American Farm Bureau Federation president Zippy Duvall said this trade agreement could not come at a more critical time for U.S. agriculture. “Farmers and ranchers have been hit with a perfect storm of low commodity prices, weather disasters, trade disruptions and a severe downturn in the farm economy. The USMCA will provide continuity in the growth of the North American market and will strengthen our trading relationships with Canada and Mexico, which are our number-one and number-two export markets, respectively,” Duvall said.

“We are hopeful that USMCA can be a model for future U.S. trade agreements, as these modernized rules will be a strong guide for addressing continuing issues. We urge the Senate to quickly approve the USMCA,” Duvall said.

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