During a ceremony at the White House Wednesday morning for the U.S.-Mexico-Canada Agreement (USMCA), which updates the North American Free Trade Agreement (NAFTA), President Donald Trump said, “Today, we’re finally ending the NAFTA nightmare,” and called it a "momentous" and "historic" day for U.S. trade policy.
During his comments, Trump praised inclusion of specific agricultural provisions in USMCA that will improve market access for U.S. wheat, dairy, poultry and egg producers. He noted that dairy exports are anticipated to rise by $315 million and poultry exports by at least 50%, while egg exports to Canada could increase by 500%.
Canada and Mexico are the first- and second-largest export markets for U.S. food and agricultural products, totaling more than $39.7 billion in 2018. These exports support more than 325,000 American jobs. All food and agricultural products that had zero tariffs under NAFTA will remain at zero tariffs under USMCA. The deal is expected to increase agricultural exports from the U.S. by $2 billion and result in an overall increase of $65 billion in gross domestic product.
National Pork Producers Council (NPPC) president David Herring attended the signing ceremony with seven other NPPC board members, including Dale Reicks from Iowa. In 2018, Canada and Mexico took more than 40% of the pork that was exported from the U.S., and a similar volume is expected in 2019. U.S. pork exports to Canada and Mexico support 16,000 U.S. jobs.
In a phone interview following the ceremony, Reicks said the deal “seals a long-term relationship” among the three countries. “We don’t want to have a dispute with our border people,” he said, explaining that the hog business was hurt significantly when Mexico enacted retaliatory tariffs in response to Trump's Section 232 actions. “It was not good,” Reicks recalled.
Bill Gordon, American Soybean Assn. president and grower from Worthington, Minn., joined leaders from agricultural groups attending the ceremony. “This final step by President Trump ensures soybean growers will maintain access to two of their top markets, and it will also support the poultry and dairy industries that are important to soy,” Gordon said.
Mexico is the number-two market for whole soybeans, meal and oil, and Canada is the number-four buyer of meal and number-seven buyer of oil for U.S. soybean farmers, making the trade agreement essential to sustaining the growth realized in those two countries during the course of NAFTA. Under NAFTA, U.S. soybean sales to Mexico quadrupled and to Canada doubled.
National Corn Growers Assn. president Kevin Ross attended the event with several state corn grower association presidents. Mexico and Canada are the U.S. corn industry’s largest, most reliable market; 21.4 million metric tons of corn and corn co-products, valued at $4.56 billion, were exported to Mexico and Canada in 2018.
“This agreement should serve as a template for opening the door to new market opportunities for U.S. corn,” Ross said in a statement following the event.
USMCA retains tariff-free access for U.S. wheat for 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 toward 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.
“Wheat farmers and Mexico’s wheat buyers are very glad to see the cloud of uncertainty lifted from our trade relationship,” said U.S. Wheat Associates chairman and Paulding, Ohio, wheat farmer Doug Goyings. “Replacing NAFTA without harm to the wheat trade relationship was a priority for all of us. Mission accomplished.”
The American Feed Industry Assn. welcomed the signing, with president and chief executive officer Constance Cullman, saying, “We have advocated for a revised agreement that preserves our duty-free market access, addresses modern issues such as sanitary and phytosanitary issues and implements science-based regulations and regulatory cooperation and coherence. These issues are of vital importance to our members and paramount to maintaining and enhancing the trade relationship our industry has with its two largest trading partners. We look forward to Canada ratifying the agreement in the near future and stand ready to participate in its implementation.”
The American Farm Bureau Federation (AFBF) said the signing boosts optimism. “There is definitely increased optimism on farms and ranches across America, and we’re grateful for the advances, but we’re also realists eager to see results, especially for our dairy and wheat producers,” AFBF president Zippy Duvall said. “We know it will take time for the new deals to go into effect and translate into increased sales. We’re eager to get back into full swing supplying safe, high-quality food and agricultural products around the world.”
National Farmers Union president Roger Johnson noted, “Though USMCA is a big step forward, it should be a floor for future trade deals, not a ceiling; when negotiating with other trading partners, we encourage the Trump Administration and Congress to build on this momentum to establish fair trade agreements that protect rural jobs, ensure fair prices for farmers and restore sovereignty to the United States.”
Senate Finance Committee chairman Chuck Grassley (R., Iowa), who was praised by the President during the ceremony for his persistent efforts to advance the trade pact, said in a statement that the next step is for Canada to ratify USMCA. In comments made earlier this week, Canada's Prime Minister Justin Trudeau and Deputy Prime Minister Chrystia Freeland urged opposition parties to work together to pass legislation to implement USMCA as quickly as possible.
“I support Prime Minister Trudeau’s objective to ratify USMCA ‘as quickly as possible.’ Once Canada has ratified the agreement, the Trump Administration will work with Canada and Mexico to ensure all parties will be able to carry out their USMCA obligations so the agreement can enter into force,” Grassley said.
Mexico has already acted on USMCA, and Canada’s Parliament is expected to follow the U.S. and approve the deal in the coming weeks, with ratification by April. The deal is expected to take effect later this year after additional procedural steps. The agreement will take effect 90 days after all countries have approved it.