Roundtable discussion features plea from former agriculture secretary Tom Vilsack to advance North American trade pact.

September 24, 2019

5 Min Read
Michgan USMCA rally.jpeg
Speakers at a USMCA rally held at Michigan Farm Bureau headquarters Sept. 23 included: (l-r) Ken Nobis, senior policy advisor for Michigan Milk Producers Assn., Osceola County Farm Bureau member and former speakers of the House, Rick Johnson; former USDA Secretary and current U.S. Dairy Export Council CEO, Tom Vilsack; president and CEO of Michigan Manufacturers Assn., Chuck Hadden; Former Lieutenant Governor and now president of the Small Business Assn. of Michigan, Brian Calley; and, Michigan Farm Bureau president, Carl Bednarski.Photo: Steve Paradiso | Michigan Farm Bureau

A diverse lineup of speakers representing Michigan agriculture, small business and the state’s manufacturing and automotive sector joined forces on Monday at the Michigan Farm Bureau’s headquarters in Lansing, Mich., to call on Congress to move quickly on approving the pending U.S.-Mexico-Canada Agreement (USMCA).

Tom Vilsack, president and chief executive officer of the U.S. Dairy Export Council (USDEC), led a roundtable discussion Sept. 23 hosted by the Michigan Farm Bureau to rally support for USMCA. Vilsack was joined by leaders from across the political spectrum and the agriculture, small business and manufacturing industries.

“The significance of USMCA extends far beyond the farm: It will make a positive difference for millions of America’s farmers, workers and consumers,” Vilsack said. “USMCA will modernize NAFTA [the North American Free Trade Agreement], improving the rules governing trade with Canada and Mexico and securing valuable export opportunities for high-quality dairy products and other made-in-Michigan goods. It’s time for Washington to act quickly to deliver on USMCA and revitalize our trade relationships with our North American neighbors."

Emphasizing that 30% of all U.S. agricultural production is exported, Vilsack said 20% of all farm income is directly related to U.S. farm exports, and anything that helps expand global trade opportunities is good for American agriculture.

Related:Ag secretaries push for USMCA passage

“This particular agreement we know will expand opportunities for a number of commodities and protect existing opportunities in our number-one and number-two export markets,” Vilsack said. “It’s not just about farm income; it’s also about the jobs connected to those exports. In Michigan, that’s 17,000 jobs that exist as a result of those agricultural exports.”

Exports play a key role in Michigan’s economy, making the passage of USMCA vitally important to the state. Michigan exported $37.4 billion in goods to Canada and Mexico in 2017. USDEC estimates that dairy exports from Michigan’s approximately 1,500 dairy farms and 50 dairy plants create more than 6,000 jobs in Michigan and have an economic impact of $636 million.

Ultimately, the dairy sector stands to gain more than $314 million in expanded sales to Canada, Mexico and other global markets as a result of USMCA, according to estimates from the U.S. International Trade Commission.

Former Lt. Gov. Brian Calley, now president of the Small Business Assn. of Michigan, and Chuck Hadden, president and CEO of the Michigan Manufacturers Assn., echoed Vilsack’s emphasis on the number of Michigan jobs affected by USMCA.

Related:Optimism exists for USMCA passage in next month

Congressional holdup

While acknowledging that labor and environmental concerns are warranted, Vilsack contended that USMCA addresses many of those concerns. The bigger question from Congress, he said, comes down to one of enforcement in making sure all parties live up to new USMCA provisions, including newly proposed biotech standards.

“A number of members of Congress have gone down to Mexico and visited with the Mexican government to see that the law recently passed on labor would, in fact, be supported with adequate resources from a budget perspective,” Vilsack said. “The Administration is providing a way in which they can reassure members of Congress that the U.S. government will keep an eye on these agreements and will make sure that they're enforced.”

Michigan Farm Bureau president Carl Bednarski said Michigan farmers are counting on Congress for swift passage of USMCA to provide certainty, adding that Michigan agricultural exports totaled $902 million to Canada and $174 million to Mexico. This represented roughly 54% of Michigan’s total agricultural trade output in 2018.

“Farmers are used to uncertainty caused by Mother Nature, but passing the USMCA is a policy decision clearly within the hands of our lawmakers,” Bednarski said. “Completing USMCA cannot come at a more critical time as agriculture has experienced six years of depressed commodity prices — the longest stretch of low prices since the Great Depression.”

According to Bednarski, USMCA makes several key updates from NAFTA, including food safety standards and biotechnology, which have both evolved considerably since the 1990s, when NAFTA was written. “The time for Congress to act on USMCA is now,” Bednarski said. “Michigan farmers need this agreement passed in a continued effort to open and grow our agricultural export markets.”

According to Vilsack, USMCA needs to be approved this fall before getting mired down even further in the politics of the 2020 election year. “We don't want it bleeding over into an election year, because anything can happen,” Vilsack said. “Folks can start demagoguing trade one way or the other. It will be much easier to get it done now than later.”

Although Mexico has already approved USMCA, Canada is taking a wait-and-see approach to see whether Congress ultimately approves USMCA, Vilsack said, noting that Canadian politicians aren’t going to take a potential bullet from Canada’s dairy producers unless they’re assured USMCA will get the nod from Congress.

“Obviously, if our Congress fails to take action, there's no reason for Canadian politicians to put themselves in a position where they have to take a tough vote against their own dairy industry,” he said.  “This agreement does indeed restrict exports of Canadian dairy products; it does indeed remove Class 7, which has been a benefit to the Canadian dairy industry. So, why take it to a vote unless you know for a fact that the U.S. is going to go ahead with it?”

Bigger trade picture

Beyond maintaining and expanding North American trade and economies, Vilsack warned that failure to approve USMCA would lead to a substantial domino effect globally, starting with Japan and China.

“It sends a very interesting message to the rest of the world about how reliable we are as a trading negotiator and a trading partner,” Vilsack said. “If we fail to negotiate an agreement that's clearly better than the previous agreement, I think those who are negotiating with us now will wonder whether or not their agreement can get ratified."

He added, “If you don't think what you're negotiating is going to happen, chances are you're not going to put much on the table, because you're gonna think, ‘Well, there's no reason for me to get serious about this because it's not going to happen.’ So, I think it sends a message. It sends the message that America can't be trusted in trade negotiations.”

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