WYOBRASKA – The United States Mexico Canada Trade Agreement went into effect on July 1, replacing the 25 year old North American Free Trade Agreement.
USMCA maintains much of the previous agreement and offers some unprecedented access for several industries.
“With the implementation of the U.S.-Mexico-Canada Agreement, U.S. farmers and ranchers are eager to realize the more than $2 billion in additional farm exports and $65 billion in gross domestic product the pact is expected to provide,” according to the American Farm Bureau.
According to a fact sheet from the Office of the United States Trade Representative website, “All food and agricultural products that have zero tariffs under the North American Free Trade Agreement will remain at zero tariffs. Since the original NAFTA did not eliminate all tariffs on agricultural trade between the United States and Canada, the USMCA will create new market access opportunities for United States exports to Canada of dairy, poultry, and eggs, and in exchange the United States will provide new access to Canada for dairy, peanuts, processed peanut products, and a limited amount of sugar and sugar containing products”.
Dairy was a major benefactor of the USMCA agreement.
“Canada will provide new tariff rate quotas exclusively for the United States,” as stated by the Trade Representative fact sheet. This will include fluid milk, cheese, skim milk powder, concentrated and condensed milk, ice cream and ice cream mixes, and margarine amongst other dairy products.
The USTR fact sheet also highlights the elimination of Canada’s milk class pricing system.
Many of the changes in the USMCA may not have a direct effect in the immediate area, however, these are positive changes.
“Dairies are big consumers of alfalfa and other feed stuff,” said Brent Young, Regional Extension Specialist in Agriculture and Business Management for Colorado State University. “If the dairy industry is doing well typically that ripples through”.
New tariff rate quotas for poultry and egg products have also been introduced. This includes chicken, egg and egg products, turkey, and broiler hatching eggs.
According the AFB, “Mexico and the United States have also agreed that all grading standards for ag products will be non-discriminatory”. This includes the grading system for meat, livestock, and wheat.
According to a press release from the North American Meat Institute, “Mexico and Canada are among the top four destinations for U.S. beef and pork. Since NAFTA’s entry into force in 1994, U.S. beef exports to Canada and Mexico grew from $656 million to more than $1.75 billion in 2019, while pork exports increased in value from $322 million to more than $2 billion during that same time period. In terms of volume, Canada and Mexico imported nearly 22 percent of total U.S. beef exports and 30 percent of all U.S. pork exports in 2019”.
According to the documents from the USTR, “Canada has agreed to grade imports of United States wheat in a manner no less favorable than it accords Canadian wheat, and to not require a country of origin statement on its quality grade or inspection certificate. Canada and the United States also agreed to discuss issues related to seed regulatory systems.”
Other industries that had changes were small businesses, manufacturing, digital trade, and other parts of agriculture. To find out more, visit https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets.