WASHINGTON, D.C., U.S. — The U.S.-Mexico-Canada Agreement (USMCA), formerly known as NAFTA, would bring about several significant advancements in facilitating the trade of grains, oilseeds and their derived products in the North American marketplace, said Randy Gordon, president and chief executive officer of the National Grain and Feed Association (NGFA). Gordon’s comments came as part of testimony on Nov. 15 before the U.S. International Trade Commission (ITC).
Gordon testified on behalf of the NGFA and the North American Export Grain Association (NAEGA) during the commission’s public hearing conducted as part of its investigation into the impact of the USMCA on the U.S. economy, selected industry sectors and consumer interests. As required by law, the U.S. Trade Representative (USTR) requested a report on the investigation, which is due to the president and Congress 105 days after the president enters into the agreement.
“The NGFA and NAEGA are pleased USMCA maintains and expands current agricultural market access and preserves the dispute-settlement process for antidumping and countervailing duty cases, while modernizing the agreement to address the challenges of 21st century global trade,” Gordon said, noting that the NGFA and NAEGA recommended throughout the negotiation process that the USTR preserve and build upon current market access and tariff concessions achieved for U.S. food and agriculture under the North American Free Trade Agreement (NAFTA).
Gordon highlighted several provisions of USMCA that will benefit the future competitiveness and economic growth of the U.S. grain, feed and oilseed sectors. He said the new trade deal preserves and expands upon current agricultural market access; maintains the dispute-settlement process for antidumping and countervailing duty cases; and makes significant improvements to reduce non-tariff trade barriers.
Gordon cited several “significant improvements” in USMCA that would reduce non-tariff trade barriers that can result when export shipments are detained by customs officials at the border. For instance, the accord includes a rapid-response mechanism recommended by the NGFA and NAEGA that would require a party that prohibits or restricts importation of an agricultural product to notify and explain the reasoning within five calendar days. USMCA also establishes dispute-settlement rules to resolve sanitary and phytosanitary disputes in a timely and transparent manner, the NGFA and NAEGA noted.
“NGFA and NAEGA believe USMCA will help facilitate cross-border trade flows by addressing significant non-tariff trade barriers through higher levels of regulatory coherence and cooperation, the implementation of timelines and notifications for adverse import checks, the inclusion of steps to reduce the likelihood of trade disruptions involving products derived from agricultural biotechnology, the use of technical consultations to resolve sanitary and phytosanitary (SPS) issues, and by requiring that SPS standards be grounded in science, based upon appropriate risk assessments and implemented using accepted risk-management procedures,” Gordon said.
As for shortcomings, the NGFA and NAEGA said they are disappointed USMCA does not provide access to investor-state dispute-settlement procedures that can be used in the event a party provides less favorable treatment for foreign versus domestic investors. While the USMCA preserves these protections for some industries, including oil and gas, power generation, telecom, transportation and infrastructure, U.S. companies investing in food and agriculture would be denied such protection beginning three years after NAFTA's termination.
On balance, Gordon said, the NGFA and NAEGA believe USMCA represents a “significant advancement in facilitating the trade of grains and oilseeds and their derived products within North America, and in many respects can serve as a model for future state-of-the-art trade agreements.”
The NGFA and NAEGA also submitted to the commission a written statement, which is available here.
On Oct. 1, Canada agreed to join the United States and Mexico in the USMCA deal that will replace NAFTA. The U.S. Congress is expected to ratify the deal in the next several weeks.
Signed in 1994, NAFTA fundamentally reshaped North American economic relations, driving an unprecedented integration between Canada and the United States’ developed economies and Mexico, a developing country.
NAFTA has been a significant factor behind the success of U.S. agriculture. Since NAFTA was implemented 24 years ago, U.S. farmers have quadrupled exports to Canada and Mexico and the two nations rank second and third, after China, as markets for U.S. farm goods.