The signing of the U.S.-Mexico-Canada Agreement (USMCA) by leaders of three North American countries has been applauded by members of the U.S. dairy industry, but Canadian dairymen aren’t pleased with the deal.
On Nov. 30, U.S. President Donald Trump met with Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto to sign a revised version of the North American Free Trade Agreement (NAFTA), called USMCA. The agreement was agreed upon by the three countries on Sept. 30 with the backing of many in U.S. dairy. However, Canadian dairy organizations haven’t been as content with the deal since it was announced.
In a joint press release the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) praised the leadership of the Trump Administration to move the trade deal forward.
“The signing of the USMCA gives America’s dairy industry greater confidence as we head into 2019,” says Tom Vilsack, president and CEO of USDEC. “We trust that the administration will aggressively enforce both the letter and the spirit of the agreed upon text. Thus, it is imperative that the United States ensures that Canada implements its commitments in a manner consistent with the hard-fought transparency and market-reforming disciplines secured in this agreement.”
USMCA maintains much of the trading structure between the U.S. and Mexico that was established in NAFTA 24 years ago. Mexico is the largest export destination for U.S. dairy products with $1.2 billion in sales last year. The U.S. accounts for nearly three quarters of dairy imports into Mexico.
When it comes to Canada, USMCA has reforms that remove the controversial Class 7 dairy pricing policy while allowing greater access for U.S. products.
“We appreciate the Trump Administration for continually raising our issues of concern and fighting for a better agreement with Canada,” says Jim Mulhern, president and CEO of NMPF. “This year has been a challenging one for dairy producers, who are dealing with continuing low prices and the damaging effects of retaliatory tariffs that have already cost them about $1.5 billion. With today’s signing, we encourage the administration to take a fresh look at other tariffs that are hampering North American trade, including the steel and aluminum tariffs still imposed on Mexico, and to continue making progress in striking new free trade agreements and resolving ongoing trade conflicts.”
Support From U.S. Coops
U.S. dairy cooperatives were also supportive of the deal. FarmFirst Dairy Cooperative and Edge Dairy Farmer Cooperative both expressed their desire to see USMCA move forward.
“Given the importance of keeping a NAFTA-style agreement, we are thankful for the hard-fought progress the three countries have made. Mexico is the most important trading partner for our dairy community, and changes in the deal with Canada should provide benefits there also. At minimum, this gives hope to our dairy farmers who have been fighting to make it through a very difficult time. You can’t overstate the value of having certainty at times like this,” says Brody Stapel, president of Edge, who farms with his family in Cedar Grove, Wis.
A press release from FarmFirst Dairy Cooperative states, “In the end, it will be up to each country to determine how the new agreement will be implemented. U.S. dairy represents 75% of all the dairy products imported into Mexico, and the new agreement outlines greater market expansion for U.S. dairy into Canada as well as provisions to address any pricing structures to ensure fair trade practices. It will be imperative that the U.S. verifies that Canada maintains its commitments that is consistent to the agreement’s disciplines.”
Canadian Farmers Express Concerns
Canadian dairy farmers say that Prime Minister Trudeau has broken promises to producers by giving up the country’s sovereignty by not keeping Class 7 pricing and allowing for more U.S. dairy products to cross the border.
“In spite of assurances by the federal government to the dairy sector that U.S. oversight had not been negotiated and would not be in the final agreement, they gave it up nonetheless. It is truly disingenuous on the part of our federal government to now suggest that it has made gains in the way the oversight is captured in the agreement, when they had committed to us that this would not be a part of the agreement, period,” says a statement from Dairy Farmers of Canada.
The Canadian dairy organization sights recent trade deals like the Canada-European Union Comprehensive Economic and Trade Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and USMCA as giving up 20% of the country’s domestic market.
“The impact of this decision cannot be understated, and will have a lasting effect on our domestic dairy sector. This is nothing less than handing Canada’s sovereignty to the US. It is truly a dark day in the history of dairy farming in Canada,” Dairy Farmers of Canada says.
USMCA still needs to be ratified by all three countries, including a split U.S. Congress, before it is finalized.