The Biden administration elevated a long-simmering dispute over Canadian dairy quotas on Tuesday by calling for a three-judge panel to decide the matter under USMCA rules. It was the first time that a dispute settlement panel was invoked under the trade agreement that took effect last July 1.
Trade ministers from Canada, Mexico and the United States are scheduled to confer digitally on Monday and Tuesday in the first meeting of the USMCA's Fair Trade Commission, with dairy expected to be the hot topic. U.S. dairy groups called on Sunday for the Biden administration to escalate an ongoing complaint against Canadian dairy quotas unless this week's meeting produces results.
U.S. farm exports are forecast by the USDA to hit a record $157 billion this year, aided by a weaker dollar against many foreign currencies. Agricultural lender CoBank says the impact will be somewhat uneven, with meat and dairy products benefiting the most.
The Trump administration said it was challenging Canadian quotas on dairy imports as unfair to U.S. milk producers. The challenge, announced on Wednesday, was the first under the United States-Mexico-Canada free trade agreement.
President Trump led a 37-minute celebration of the new NAFTA on Wednesday, signing the United States-Mexico-Canada Agreement on the White House lawn during a ceremony packed with laudatory descriptions of the “very, very special” tri-national free trade agreement.
U.S. farm groups celebrated anew on Monday Japan’s agreement to reduce or eliminate tariffs on $7.2 billion worth of American goods, including beef, pork, poultry, wheat, cheese, wine, and ethanol. President Trump used the ceremonial signing of the pact at the White House to urge congressional approval of the United States-Mexico-Canada Agreement.
To speed approval of the successor to NAFTA, President Trump should remove tariffs on steel imported from Canada and Mexico, said Senate Finance Committee chairman Chuck Grassley on Monday.
Although President Trump declared the United States-Mexico-Canada Agreement a big win for U.S. farmers, a study released on Wednesday says U.S. farm exports will fall by $1.8 billion due to retaliatory tariffs by Mexico and Canada. That would be four times larger than the gains the trade pact would produce.
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.
Agriculture Secretary Sonny Perdue described a potential tri-national agreement on a new NAFTA as the start of a domino effect in rewriting U.S. relations with trading partners around world. "I would love to have a deal today with Canada to put NAFTA back together," said Perdue during a C-SPAN interview in which he called for reform of Canada's supply-management system."