U.S. Dairy Industry Likes New NAFTA Deal; Canada's Doesn't

North American Free Trade Agreement will be renamed USMCA, for U.S., Mexico and Canada. ( Farm Journal, Inc. )

U.S. dairy organizations all offered positive reviews of the new NAFTA deal, announced by the United State, Canada and Mexico last night. The Canadian dairy industry’s reaction is far less positive.

For starters, the three-country agreement will no longer be known as the North American Free Trade Agreement (NAFTA), but will now be named the USMAC. The deal would open up the Canadian dairy market by 3.59%. That’s a bit better than the 3.25% that had been negotiated by the Obama Administration in the Trans Pacific Partnership but which had been abandoned by President Trump.

As importantly, Canada has agreed to eliminate its Class 7 program which had made U.S. exports of milk protein concentrates uncompetitive. The program was also taking share in other markets, upsetting U.S., European and New Zealand exporting companies.

Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF), notes that even with the new agreement, Canada’s dairy industry will remain largely protected and self-contained. “[But] this agreement, when implemented, should give us additional marketing opportunities that will allow us to provide high-quality American dairy products to Canada, which means we’ve made incremental progress,” he says. “We appreciate that the Trump Administration continually raised the profile of our issues at the negotiating table.”

Canada dairy farmer reaction was less than positive. “This has happened, despite assurances that our government would not sign a bad deal for Canadians,” Pierre Lampron, president of Dairy Farmers Canada, says in a statement. “We fail to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood.” Read more Canadian reaction in the Edmonton Journal. Note that the Canadian government is assuring its dairy farmers they will be offered compensation if they are harmed by the new agreement.

The U.S. dairy groups say that the ultimate benefit of the new USMCA will depend on how it is implemented. The agreement must still be voted on by all three countries, and some some of the key provisions of the agreement might not go into effect until 2020.

“Maintaining dairy market access in Mexico and improving market access into Canada were IDFA’s top priorities during the talks to modernize NAFTA,” adds Michael Dykes, president and CEO of the International Dairy Foods Association (IDFA). “This new agreement will preserve our vital partnership with both countries and allow the U.S. dairy industry to seek more export opportunities.”

“The outlines of the NAFTA pact remain intact, which will allow the U.S. agricultural sector to continue developing new international markets for our farmers,” says Tom Vilsack, president and CEO of USDEC. “We also need to pursue new free trade agreements with other nations and resolve our trade conflicts with China. It is imperative that the United States remains an integral player in driving the global trade agenda.”