Ag Groups Tout USMCA Benefits04/24/2019
A range of farm groups have called on Congress to approve the U.S.-Mexico-Canada Agreement even though a report from the International Trade Commission did not detail the full benefits for U.S. agriculture under the trade deal.
The ITC report would modestly boost the overall U.S. economy. The commission estimates that annual U.S. real gross domestic product would increase by 0.35%, or $68.5 billion, on an annual basis compared to a North American Free Trade Agreement baseline, and would add 176,000 U.S. jobs, while raising U.S. exports.
Brian Kuehl, co-executive director of Farmers for Free Trade, the bipartisan coalition supported by American ag commodity groups, said the USMCA provides farmers with certainty and stability. “Especially right now, American farmers need a victory. USMCA will guarantee that their most important export markets remain open for business and free from red tape,” Kuehl said.
“While the ITC report is an important step in the process of considering trade agreements, the benefits of North American trade are already well understood, particularly by farmers and ranchers. Under NAFTA, ag exports to Canada and Mexico, grew from $8 billion in 1993 to $40 billion last year,” Kuehl added.
The American Soybean Association said the ITC is a good report, “yet it does not account for valuable non-tariff provisions in the ‘new NAFTA’ — or look back historically on the myriad benefits to agriculture since NAFTA’s inception.”
ASA President Davie Stephens, a soy grower from Clinton, Kentucky, said, USMCA builds upon the export base set by the original NAFTA. U.S. agricultural exports have risen to roughly $43 billion a year to Canada and Mexico. Soybean exports to Mexico quadrupled under NAFTA, making Mexico the second-largest market for U.S. soybeans, meal and oil. Soybean exports to Canada also doubled.
Stephens also pointed out that USMCA modernizes stronger, enforceable sanitary and phytosanitary (SPS) standards. The agreement also includes an enforceable biotechnology chapter and has a rapid response mechanism to address trade challenges.
“These provisions not only serve to update the North American agreement but set a paradigm for future free trade agreements,” Stephens said.
National Corn Growers Association (NCGA) President Lynn Chrisp said the release of the ITC report is an important step in moving USMCA toward congressional action. But NCGA also pointed out the ITC report “doesn’t fully capture the economic benefits of trade with Canada and Mexico.”
“NAFTA has been a resounding success for agriculture. In 2016 alone, American corn growers exported $3.2 billion in corn and corn coproducts to Mexico and Canada,” Chrisp said. “USMCA secures and builds upon this important partnership, which is why ratifying USMCA is so important for agriculture.”
National Pork Producers Council Vice President Nick Giordano said, NPPC supports ratification of USMCA, an agreement that preserves zero-tariff access to markets that represent more than 30% of total U.S. pork exports. Giordano said retaliatory tariffs by Mexico have brought down U.S. pork exports 32% over the past year.
“We are eager to see the removal of U.S. metal tariffs that prompted Mexico’s 20% retaliatory tariffs nearly a year ago. Members of Congress have said that ratification of USMCA will be delayed and the benefits of the agreement diluted as long as this trade dispute goes unresolved,” Giordano said.
NPPC has designated USMCA ratification as a “key vote,” and will closely monitor support of the agreement among members of Congress. U.S. pork exports to Mexico and Canada support 16,000 U.S. jobs, the group said.
National Association of Wheat Growers President Ben Scholz, a farmer from Lavon, Texas, said, “It is critical for Congress to understand how substantial USMCA is for agriculture, especially the undervalued wheat market.”
Scholz said U.S. wheat exports to Mexico rose to an annual average of almost 3 million metric tons (more than 100 million bushels) under NAFTA. This made Mexico the largest U.S. wheat importer in the world in the 2016-17 marketing year
“Additionally, USMCA captures the original intentions of NAFTA while improving some of the provisions for wheat growers,” Scholz said. “It retains tariff-free access to imported U.S. wheat for our long-time flour milling customers in Mexico. Furthermore, the USMCA makes important progress towards more open commerce for U.S. wheat farmers near the border with Canada by working to fix the broken grain grading system and making trade more reciprocal along the U.S.-Canadian border.”
U.S. Dairy Export Council President and CEO Tom Vilsack pointed to the importance of Mexico, saying the dairy industry shipped $1.4 billion in dairy products to Mexico last year, which accounts for more than one-fourth of U.S. dairy exports.
“Without a trade treaty with Mexico in place, the dairy industry would be hard pressed to maintain and expand these sales as our competitors in Europe are expected to implement a lucrative new trade arrangement with Mexico by next year,” Vilsack said.
Moreover, without USMCA we lose out on the new rules this deal puts in place such as key reforms to Canada’s dairy system, Vilsack said. “Congress must pass USMCA to shore up our market in Mexico and harness the gains made in other areas through USMCA.”
In addition to increases in tariff-rate quota access for dairy products to the Canadian market, Canada will remove a controversial milk pricing scheme that disadvantaged American businesses, impose new disciplines on its dairy pricing programs and Mexico will update the way it treats imports of common-name food products like parmesan and Swiss cheeses that could face trade roadblocks, USDEC said.
Jerry Hagstrom can be reached at email@example.com
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Source: Jerry Hagstrom, DTN