After some big guarantees by President Donald Trump that his revised trade agreement between the U.S. and North America neighbors Canada and Mexico would be hailed as a win, early indicators from U.S.-based food and beverage organizations seem to support him.
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The rebranding of NAFTA (the North American Free Trade Agreement) to USMCA (U.S. Mexico-Canada Agreement), which still must be ratified by all three countries, has critics in many U.S. industries; however, the food and beverage industry doesn’t appear to be one of them.
If approved, tariffs on agricultural products traded between the U.S. and Mexico would be removed altogether.
Richard Owen, vice president of global membership and engagement for the Produce Marketing Association (PMA), says the organization sees the deal as positive and hopes to see it ratified by all three countries as soon as possible.
“We’re pleased to see the tariff rate commitments for fruits and vegetables are really the same from NAFTA 1.0, with very limited tariff rate quotas between products,” he says. “That’s an important aspect of both predictability and for keeping supply moving between the three countries.”
Furthermore, Owen notes the six-year review and 16-year duration of the agreement offers confidence for future investment to further build and expand trade among the countries in regards to fresh produce and floral products.
Geoff Freeman, president and CEO of the Grocery Manufacturers Association, released a statement on behalf of the organization praising the trilateral deal, calling it a victory for American consumers and an important step in building the world’s strongest trading partnership.
“The consumer packaged goods sector has consistently supported ambitious, comprehensive United States trade agreements,” he said. “U.S. consumers rely on the high-quality ingredients and affordable products made possible through trade with our closest neighbors. This trade has quadrupled since NAFTA went into effect more than two decades ago, totaling nearly $18 billion in 2017. Canada and Mexico buy about half of all U.S. processed product exports, and this agreement will expand that success.”
Tom Stenzel, president and CEO of the United Fresh Produce Association, also released a statement in support of the proposed agreement and noted United Fresh looks forward to working with Congress to achieve the swift approval of the deal.
“The strong relationships our members have established between these three countries have helped enable the growth of the fresh produce industry over the last quarter century,” he said. “Coming on the heels of United Fresh’s annual Washington Conference and the inaugural Global Trade Forum in which this issue was front and center and where attendees heard directly from key U.S. negotiators, the announcement of this revised agreement highlights the importance of our continued engagement on key policy issues by those in the produce industry.”
The USMCA is also expected to help the soy industry. The American Soybean Association (ASA) released figures that almost $3 billion in exports were made to Canada and Mexico last year, and the organization was looking for the new agreement to stabilize the U.S.’s two neighboring export markets for growers and keep the export numbers high.
“Our soybean harvest this year is large, and we are facing great uncertainty in China, so a modernized NAFTA is timely and beneficial for our farmers and rural communities,” John Heisdorffer, ASA’s president, said in a prepared statement.
The new agreement is not without its concerns. For instance, some PMA members had hoped for provisions on seasonal products such as tomatoes and peppers, and are hoping that this will still be considered before the final deal is signed.
And while the U.S. dairy industry is pleased with the increase of dairy exports to Canada from 3 percent to 3.59 percent, though once the threshold is reached, tariffs rise considerably, Canadian dairy farmers are very upset.
Pierre Lampron, president of Dairy Farmers of Canada, notes the deal could lead to hundreds of millions of dollars in lost revenue for the country’s dairy producers.
After meeting with Prime Minister Trudeau, Lampron released a statement about how “the absence of details on measures to mitigate the impact of the concessions made within the USMCA, as well as the absence of a vision for the future of our industry at this time, cannot appease the concerns of the dairy farmers.”
Furthermore, he fails to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood.
The U.S. National Farmers Union also wasn’t entirely thrilled by the deal, believing it doesn’t create an even playing field for family farmers and ranchers. Roger Johnson, president of the NFU, said while an agreement is welcome news to family farmers and ranchers who are bearing the brunt of retaliatory tariffs and trade disruptions, it should do more to institute a fair trade agreement framework that benefits family farmers and rural communities.
“We have long been at the forefront of the fight for fair trade that puts family farmers and ranchers on an even playing field with corporations and the rest of the world. Yet a couple areas in this agreement appear to fall short of these goals,” he said in a statement. “Progress was made on the dispute settlement mechanisms—provisions that place tremendous power in the hands of multinational corporations—but the ISDS (investor-state dispute settlement) framework remains. And country-of-origin labeling, which is supported by 90 percent of Americans, was unfortunately left out of the agreement.”