Wheat and dairy groups were guarded in their assessments of the North American trade pact, while Agriculture Secretary Sonny Perdue asserted on Thursday the agreement “is locking up two of our top three markets for the future.” The administration says the agreement, which needs approval by Congress, will enable fairer trade in food and agriculture but has not suggested what additional trade flow to expect.
The United States-Mexico-Canada Agreement (USMCA) includes broader access for U.S. dairy products into the Canadian market and requires Canada to assign a more equitable grade to U.S. wheat that enters the country. One of the strongest points of the pact for U.S. farmers is the continuation of duty-free access for food and ag exports to Canada and Mexico, Perdue told reporters. “We’re locking up two of our top three markets for the future and the fact is, it is a better deal than NAFTA.”
During a speech to meat executives, Perdue advocated removal of U.S. tariffs on steel and aluminum imported from Mexico and Canada and, he said, “Our goal would be TPP plus” in upcoming trade talks with Japan. Tokyo has said it would offer the United States the same terms on food and ag trade as it granted in other trade agreements.
Canada and Mexico are the two largest markets for U.S. farm exports; they are forecast to buy more than $41 billion of total sales of $144.5 billion this fiscal year.
The USMCA assigns the United States a share of the Canadian dairy market. “It’s better because we don’t have to share it with other nations,” said Tom Vilsack, head of the U.S. Dairy Export Council. But, the quota is spread among a variety of products, which could affect the overall volume of sales, said Vilsack on AgriTalk.
“The reality is, I think, expectations were market access would be greater than it was. It certainly is better than TPP. We’re going to have to basically see how this all gets implemented to determine precisely how significant it is,” said Vilsack, who was agriculture secretary for President Obama. Overall, USMCA “protects markets that are incredibly important to all our producers,” said Vilsack, in assessing the value of the agreement to U.S. agriculture. Mexico is the No. 1 customer for U.S. dairy exports and No. 2 for U.S. wheat.
Canadian Prime Minister Justin Trudeau assured dairy farmers they will be compensated for losses under USMCA, reported Canada Press. The Canadian farmers stand to lose 3.59 percent of their market to U.S. imports under the trinational agreement.
U.S. wheat groups have complained for years of discriminatory grading standards in Canada that mark imported U.S. wheat as low-quality feed wheat. The USMCA would require Canada to grade U.S. wheat equitably. “We just want to be able to get the border open,” said Steve Mercer of export promoter U.S. Wheat Associates. There is no incentive at the moment for U.S. farmers to sell wheat into Canada, although 3 million tonnes, or 5 percent, of U.S. wheat is grown within 10 miles of a Canadian grain elevator.
“Farmers should understand that nothing has changed yet, but we are pleased to see that USTR has made progress on this issue, with Canada agreeing to grade imported wheat with the same requirements as Canadian wheat,” said a U.S. Wheat statement. “We will follow the implementation of this commitment closely to ensure U.S. farmers can finally have reciprocal access to the Canadian market.”
Once the grading issue is resolved, the next challenge for U.S. wheat growers may be whether their grain appears on Canada’s variety list.