Search Site   
Current News Stories
Solar eclipse, new moon coming April 8
Mystery illness affecting dairy cattle in Texas Panhandle
Teach others to live sustainably
Gun safety begins early
Hard-cooked eggs recipes great for Easter, anytime
Michigan carrot producers to vote on program continuation
Suggestions to celebrate 50th wedding anniversary
USDA finalizes new ‘Product of the USA’ labeling rule 
U.S. weather outlooks currently favoring early planting season
Weaver Popcorn Hybrids expanding and moving to new facility
Role of women in agriculture changing Hoosier dairy farmer says
   
News Articles
Search News  
   
NAFTA replacement can still see changes before signing
 

By RACHEL LANE

WASHINGTON, D.C. — The new agreement involving U.S., Canada and Mexico is still under debate, but movement has been made on it.

The trade pact is expected to be ratified at the end of November, but few changes are expected from the U.S.-Mexico-Canada Agreement (USMCA) for the agriculture industry over the North American Free Trade Agreement (NAFTA). Many of the issues under consideration will modernize the NAFTA agreement in terms of technology: e-commerce, biotech, sanitary and phytosanitary issues.

USMCA is expected to fall into similar guidelines as the agreement Canada and Mexico have with other Pacific Rim nations, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP. The United States withdrew from that agreement – which used to be called just TPP – shortly after President Trump took office.

“I think there was a collective sigh of relief on October 1 when Canada and U.S. reached an agreement,” said Joe Glauber, senior research fellow at the International Food Policy Research Institute, during a recent Washington, D.C., Farm Foundation Forum focusing on NAFTA.

The agreement was announced late on Sept. 30.

Over the last 24 years of NAFTA, the three countries had begun to rely on one another in trade matters. Canada tends to import some crops from the U.S. during the summer months, then looks to Mexico for the same fruits and vegetables in later months. Mexican citizens trust U.S. agriculture products.

More than $40 billion in trade is done among the three countries now, Glauber said. Some products may cross borders multiple times before finally being consumed.

The past year has seen tension, however. Trump implemented tariffs on steel and aluminum that impacted Canada and Mexico. In retaliation, the governments of both countries added tariffs on agriculture products. It has caused U.S. products to increase in cost, reducing the likelihood that a consumer will purchase the product, Glauber explained.

It is not the only barrier to trade among the three countries. One of the biggest trade obstacles between the U.S. and Canada in recent years has involved dairy. The Canadians have agreed to stop using the Class 7 pricing system, but a replacement system hasn't been decided yet.

Glauber said he's not sure it was the right way to handle the issue. Since no means of calculating the costs was defined in the agreement, Canada can develop a new program that is similar to the Class 7 pricing and U.S. dairy farmers would have the same pricing issues again.

He thinks the Class 7 pricing issue would have been addressed by the World Trade Organization in the near future. It would have taken longer, but might have provided a long-term solution to the problem.

Some issues the United States demanded were rejected – and Glauber thinks that is better for the U.S. in the long run.

Specialty crop farmers in the southern part of the U.S. have a similar growing season as some areas of Mexico. As a result, U.S. farmers face competition in certain fruit and vegetable markets. The cheaper labor costs in Mexico make the price of its products more attractive.

Farmers asked U.S. negotiators to somehow limit the imports for the products the southern states grow. It was not added to the agreement. While it might have benefited southern farmers, Glauber said it would have opened the door to other crops and commodities that have limitations on imports.

The U.S. exports apples to Mexico, for instance. If the amount the U.S. could export was limited, Canada would be able to step into the market.

The dispute settlement process has a panel of three people, one representative of each country. The U.S. negotiators objected to the board and wanted to dissolve it in the new agreement. That was rejected, as well. As the board tends to rule more often for the U.S. than against it, Glauber was glad it will remain in place.

David Salmonsen with the American Farm Bureau Federation said the agreement can be changed until Trump, Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau sign the USMCA at the end of November.

After that, experts will begin formulating reports on how the different decisions will impact U.S. agriculture. After several months, the governmental bodies in each country will pass laws to make the new agreement effective.

One problem remains outstanding: The steel and aluminum tariffs. Salmonsen said many in the agriculture industry had hoped it would be addressed in the agreement, though the two products have never been addressed before.

The matter was discussed during negotiations, but the tariffs remain in place – and the retaliatory tariffs on U.S. agriculture products also remain in place.

11/14/2018