New USMCA Trade Agreement Good for South Dakota
Observing trade negotiations is not for those weak in spirit. For months, South Dakota farmers waited patiently for signs of progress from the Trump Administration on a new trade deal with Canada and Mexico. Admittedly, the talks to revise the North American Free Trade Agreement, in the shadow of a dismal farm economy, tested our wills.
Our consistent message to the administration was to do no harm to this trade relationship. Our ask was for the administration to work to lock in the progress that NAFTA created. After it was implemented in 1994, agricultural exports from the U.S. to Canada and Mexico increased from $8.9 billion in 1993 to $38 billion in 2016.
The path taken by these negotiations was rocky. There were good signs and bad, including tough talk from the Administration about scrapping the agreement altogether.
In late September, our patience paid off when U.S. trade negotiators announced they had reached an agreement with Canada to join with the United States and Mexico for a rebranded United States, Mexico, Canada Trade Agreement (USMCA).
This new agreement preserves the trading relationship we have enjoyed with our North American neighbors, and other key provisions will help provide a measure of hope against the economic storm our farmers are facing. We do not yet know the full benefit of this agreement, but we do plan to have a thoughtfully analyzed estimate in the coming weeks.
There is no doubt that the agreement will provide new market access for South Dakota dairy, poultry and wheat farmers, and it maintains a zero-tariff platform on all other ag products sold among the three nations.
This measure eliminates aspects of Canada’s dairy program (Classes 6 and 7) that had been used to undercut U.S. sales of dried milk products. We must remain vigilant to ensure this pledge holds up to the spirit of reform. Under the agreement, U.S. dairy products also gain access to an additional 3.6 percent of Canada’s dairy market.
Canada also agreed to grade wheat imports from the U.S. in a manner no less favorable than their own. This is a big change, as Canada had been using its grading system to discount the value of U.S. wheat crossing the border. On a related provision, the U.S. and Mexico agreed that all grading standards for ag products will be non-discriminatory.
Provisions related to Mexico also include important marketing reforms to remove restrictions related to some geographic indication standards – food products such as cheese, including Gouda, Emmental and Pecorino, that carry now-common names indicative of a style of processing. This will help ensure that U.S. products do not face restrictions due to the mere use of common names.
USMCA also includes, for the first time, measures that address cooperation, transparency, information sharing, agricultural biotechnology and gene editing and science-based trading standards to prevent trade barriers.
Overall, this was a hard-fought win and we commend the administration for all the efforts to solidify the trading relationships we have with our North American neighbors. We applaud the administration for a job well done.
South Dakota Farm Bureau