BUENOS AIRES, ARGENTINA— The leaders of the United States, Canada and Mexico on Nov. 30 signed a new trade agreement, a development that U.S. President Donald Trump called “a truly groundbreaking achievement.”
The USMCA pact is largely a modernization of the nearly 25-year-old North America Free Trade Agreement.
The signing of the trade agreement is largely ceremonial, because it will still need to be ratified by all three countries before it can formally take effect. It still must be approved by the U.S. Congress — a potential challenge for Trump because Democrats take control of the House in less than five weeks. Also, a new Mexican president takes over on Dec. 1 who might not honor the tentative deal struck by his predecessor.
Reaction to the agreement from the agricultural sector has been mostly positive.
Tom Sleight, president and chief executive officer of the U.S. Grains Council, issued a statement following the signing, calling it “an important step in the new pact’s final approval and the processing of modernizing the most important trade agreement to U.S. grain farmers and exporters.”
“In the latest marketing year, Mexico and Canada again proved to be top buyers of U.S. feed grains in all forms, and both countries still hold significant potential for market expansion given the right trade policy frameworks and the robust market development we intend to undertake there with our partners,” he said. “We applaud the many members of the Trump administration, as well as their Mexican and Canadian colleagues, who worked diligently to negotiate this agreement. We see its forward movement as a sign our countries will continue our robust relationship, as business partners and friends.”
U.S. Wheat Associates also issued a statement supporting the signing of the deal.
“This agreement includes important provisions for wheat farmers,” USW said. “Most notably, USMCA retains tariff-free access to imported U.S. wheat for our longtime flour milling customers in Mexico. That is a crucial step toward rebuilding trust in U.S. wheat as a reliable supplier in this important, neighboring market.
“In addition, the USMCA makes important progress toward more open commerce for U.S. wheat farmers near the border with Canada. Currently under Canadian law, wheat grown in the United States delivered to Canadian grain elevators is automatically designated as the lowest grade wheat. Canadian wheat delivered to U.S. elevators however may enter the system without penalty. This disincentive for U.S. farmers when they would otherwise see higher cash bids across the border is unfair. The updated USMCA agreement would enable U.S. varieties registered in Canada to be afforded reciprocal treatment. While there are remaining challenges, we applaud the administration for negotiating this critical provision in the USMCA and taking a big step toward reciprocal trade along the U.S.-Canadian border.”
Speaking before the U.S. International Trade Commission on Nov. 15, Randy Gordon, president and CEO of the National Grain and Feed Association (NGFA), said the agreement would bring about several significant advancements in facilitating the trade of grains, oilseeds and their derived products in the North American marketplace.
“The NGFA and NAEGA (North American Export Grain Association) 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,” said Gordon, who was speaking on behalf of both the NGFA and NAEGA.
While the Canadian dairy industry expressed displeasure with the deal that will increase its competition, the Canadian grain industry, including Cereals Canada, struck a positive tone.
Cam Dahl, president of Cereals Canada, said the USMCA will modernize the agreement in crucial areas, including new chapters on biotechnology and new plant breeding techniques, bringing the agreement up to date with modern technology.
“USMCA also sets the stage for equal treatment by the Canadian grading system for farmers on both side of the Canada/U.S. border,” he said. “Again, this is a modernization that addresses issues that did not exist when the original NAFTA was drafted.”