Agriculture secretary visits Midwest to tout benefits of North American trade agreement.

Jacqui Fatka, Policy editor

April 26, 2019

4 Min Read
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Congressional approval of the U.S.-Mexico-Canada Agreement (USMCA) is a priority for those in the agriculture industry, but with a divided Congress and the 2020 presidential campaign heating up, it is not a done deal, by any stretch.

Congress had said it would not take up USMCA without a U.S. International Trade Commission (ITC) study, which it now has in hand. The next step on the road to ratifying the agreement is for the Trump Administration to send Congress several legal documents, including the final text of the agreement, the implementing legislation and a statement of administrative action.

House Democrats appear to be slow to advance the deal. House Ways & Means Committee chairman Richard E. Neal (D., Mass.), trade subcommittee chairman Earl Blumenauer (D., Ore.) and committee Democrats recently sent a letter to U.S. Trade Representative Robert E. Lighthizer highlighting their concerns with the current enforcement provisions in the replacement for the North American Free Trade Agreement (NAFTA).

The lawmakers said their questioning is compounded by the fact that USMCA’s mechanism for resolving disputes “carries over NAFTA’s flawed procedures.” They said those procedures are “easily frustrated by a responding party that wishes, for whatever reason, not to be sued.”

Related:Secretary Perdue plans Iowa, North Dakota visit

In the letter to Lighthizer, they noted that in the first years of NAFTA, three state-to-state disputes were fully litigated between the parties. In the fourth instance -- a case that Mexico brought against the U.S. -- the U.S. managed to prevent the formation of the arbitral panel. That case was never able to proceed further, and no other case has ever been resolved through NAFTA’s state-to-state mechanism since then.

The letter states: “With the same procedures in place in the new agreement, what reason do we have to believe that any disputes over broken promises in the labor, environment or any other chapter in the agreement will lead to recourse or remedy?”

Agriculture Secretary Sonny Perdue plans to be in Iowa on Monday to visit Corteva and Vermeer Corp. to tout the importance of USMCA. In an announcement regarding the secretary’s schedule, USDA noted that USMCA secures greater access to the Mexican and Canadian markets and lowers barriers for many U.S. products.

“The deal eliminates Canada’s unfair Class 6 and Class 7 milk pricing schemes, opens additional access to U.S. dairy into Canada and imposes new disciplines on Canada’s supply management system. The agreement preserves and expands critical access for U.S. poultry and egg producers and addresses Canada’s discriminatory wheat grading process to help U.S. wheat growers along the border become more competitive. Additionally, the agreement specifically addresses agricultural biotechnology, including new technologies such as gene editing, to support innovation and reduce trade-distorting policies,” USDA said.

If Congress does not approve USMCA and the U.S. withdraws from NAFTA, tariffs in all three NAFTA countries would revert to most-favored nation status. According to a Purdue University study, the U.S. agricultural export loss in this case amounts to about $9.4 billion, the National Corn Growers Assn. stated in an action letter it is encouraging its members to send to Congress.

USGC-NAFTA-USMCA-Postcard-6x9-FINAL-BACK-01-09-19.jpgThe ITC report released April 18 concluded that USMCA would boost U.S. gross domestic product by $68.2 billion and add roughly 176,000 jobs. According to the analysis, the combined effect of all USMCA provisions would increase total U.S. agricultural and food exports by $2.2 billion when fully implemented.

“The ITC report shows how important USMCA will be to maintaining crucial market access for U.S. grain farmers and exporters to Mexico and Canada,” U.S. Grains Council (USGC) chairman Jim Stitzlein said. “We look forward to continuing to help expand markets with our long-term business partners and friends in both countries.”

Typically, ITC reports under the trade promotion authority process measure the economic impact of new trade agreements. Because USMCA maintains NAFTA's zero tariffs on U.S. feed grains, co-products and ethanol, the ITC report, by itself, could not completely capture the full economic benefit of USMCA. A similar analysis done before NAFTA went into effect also showed likely growth for feed grains, but at a much smaller order of magnitude than the combination of strong trade policy, robust market development and grain markets have created over the past 25 years.

USGC said beyond maintaining duty-free access to the Mexican and Canadian markets, USMCA also provides the highest enforceable sanitary and phytosanitary standards in any agreement to date, includes an enforceable biotechnology chapter -- the first ever in a U.S. trade agreement -- and creates a rapid response mechanism to address trade challenges. Furthermore, the agreement addresses regulatory equivalence, science and risk analysis, transparency and cooperative technical consultations.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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