Politicians and trade officials have been working for decades to enhance trade with our closest neighbors and now the process is going through yet another cycle of review and negotiations.
Like previous revisions, it is likely to take a series of twists and turns before the next version is finalized. With so much potential income on the line, United States farm groups are keeping a close eye on how they might be impacted.
Some of you may remember that the U.S. and Canada signed a bilateral free trade deal in 1988 and two years later, President George H.W. Bush and Mexican President Carlos Salinas de Gortari endorsed a new, free trade pact between their respective countries. But that was just the start of a trilateral pact. Canada joined the talks in 1991, paving the way for three-way negotiations. But the free trade pact, then known as the North American Free Trade Agreement, didn’t go into effect until 1994 and it took another four years for most of the provisions to be implemented.
Fast forward to the presidential campaign of 2016 and Republican nominee Donald Trump, made it clear that he wanted to make big changes in NAFTA, often referring to it as the “worst trade deal ever made.” His team went to work on those revisions over the next four years and President Trump eventually signed the new U.S.-Mexico-Canada Agreement in 2020. Now, he wants to make even more changes during his second term.
The current free trade agreement has a built-in review mechanism that directs the three parties to review the deal after six years and decide whether to extend, reform or scrap it after 2036. The administration planned to hear stakeholder views on the USMCA. A comment period on the deal that closed earlier this month received more than 1,500 comments, including responses from more than 100 ag groups and more than 90 individual farmers and ranchers.
While the deal enjoys widespread support among many ag industries, plenty of respondents also made recommendations for improving the deal.
Some farmers and ranchers are appealing to the Trump administration to use the upcoming review of the North American free-trade deal to address longstanding trade issues with Mexico and Canada and step-up efforts to protect growers from lower-priced imports and tighten enforcement.
However, a coalition of more than 100 industry groups has filed a joint comment with the Office of the U.S. Trade Representative favoring a full 16-year renewal of the U.S.-Mexico-Canada Agreement and cautioning against overhauling the agreement.
Among the signatories were groups representing soybean, corn, fertilizer, pork, dairy, rice, sorghum, and fruit producers, among others.
“Any adjustment should be carefully considered in order to avoid negative impacts on agriculture, especially any measure that weakens the agreement and thereby lessens the strength and value of U.S. agricultural exports, at a time when U.S. farmers and ranchers are at risk of losing other export markets,” the coalition wrote.
Farm groups weigh in before formal review
A joint review of the deal is officially slated for next July, when participants can decide to extend it for another 16-year term or meet annually for negotiations until the end of the current agreement’s term in 2036. All three countries have launched internal processes for collecting feedback from domestic industries.
A portion of the farmers and ranchers who filed written comments were acting at the request of Farm Action, an advocacy group.
Farm Action wants the Trump administration to reinstate mandatory country of origin labeling for beef and pork products and sees the USMCA review as an opportunity to quash Canada’s and Mexico’s opposition. Both countries challenged the U.S. policy at the World Trade Organization, prompting Congress to repeal the measure in 2015 to avert further trade disputes.
The cattle industry, however, is not aligned on whether MCOOL would be a net positive for U.S. ranchers. The National Cattlemen’s Beef Association has long questioned the benefits of the policy, arguing that consumers pay little attention to labeling and that the move would incur significant costs to implement.
Another chunk of the submissions came from ranchers in the southwestern U.S. calling for the administration to use USMCA to press Mexico on its failure to live up to its obligations under a 1944 water treaty.
Under the terms of the deal, Mexico is expected to deliver 1.75 million acre-feet of Rio Grande water to the U.S. over a five-year period. But when the most recent five-year cycle ended on Oct. 25, it had only delivered around half of that. The treaty lets Mexico repay its debt with surplus purchases in the next cycle, but the lag in deliveries has been hard on Texan producers, who have been forced to cut back on irrigated acreage in recent years.
Incorporating the treaty’s obligations into USMCA would allow the U.S. to use the agreement’s dispute resolution framework to penalize Mexico for missed deliveries, a submission from Hidalgo County Farm Bureau reads.
Focus on eliminating loopholes
Several groups identified areas where Mexico and Canada had failed to live up to the terms, or spirit, of the original agreement, and urged the administration to step up enforcement and take steps to eliminate loopholes.
U.S. dairy producers, including the National Milk Producers Federation, repeated their call to press Canada to reform its tariff-rate quota allocation to meet its original market access commitments for U.S. dairy products.
Respondents from across the fresh produce sector raised concerns around Mexican imports that, if the administration chooses to prioritize them, could become a fresh thorn in the U.S.-Mexico trade relationship.
Avocado, onion and blueberry producers, among others, complained that Mexican products are increasingly eating into their domestic market share.
“[F]oreign fruits and vegetables flood the U.S. market, often at same time U.S. crops are reaching their peak in-season period, with imports priced at or below the cost of production,” the Georgia Fruit and Vegetable Growers Association complained in a submission. “These import dynamics contribute to a growing U.S. agricultural trade deficit and raise concerns about the long-term viability of domestic fruit and vegetable production.”
The group urged the administration to use any trade tools at its disposal to protect U.S. fruit and vegetable growers.
There is also support in Democratic circles for using the review to address imports undercutting U.S. producers. A group of more than 100 Democrats, including Agriculture Committee ranking member Angie Craig of Minnesota, are calling on the administration to undertake a “significant renegotiation” of the deal.
“Under the 2020 USMCA, big agriculture corporations have raked in enormous profits while family farmers and working people in rural communities suffered,” the lawmakers write. Accordingly, they argue the agreement needs retooling to protect farmers and prevent imports from undercutting U.S. producers.
Editor’s note: Sara Wyant is publisher of Agri-Pulse Communications, Inc., www.Agri-Pulse.com.
