Wednesday, December 6, 2023

Tariffs against Mexico halted, ratification sought on USMCA

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By Barbara Olejnik

Poultry Times staff

WASHINGTON — President Donald Trump suspended introducing tariffs on all Mexican products exported to the United States in return for Mexico’s aid in curbing illegal migration across the U.S. border.

Tariffs were set to be imposed at 5 percent on June 10, with increases of 10 percent on July 1, 15 percent on Aug. 1, 20 percent on Sept. 1 and 25 percent on Oct. 1.

However, the president stated that “if the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the tariffs will be removed.”

The U.S. imported $356.5 billion of goods from Mexico in 2018, which amounted to 13.6 percent of all U.S. imports for 2018.

In talks between U.S. and Mexican negotiators, the two countries reached an agreement on the migration issue and on June 7 Trump suspended imposition of the tariffs.

A joint declaration between the two countries reads in part:  “Mexico will take unprecedented steps to increase enforcement to curb irregular migration, to include the deployment of its National Guard throughout Mexico, giving priority to its southern border. Mexico is also taking decisive action to dismantle human smuggling and trafficking organizations as well as their illicit financial and transportation networks.”

The U.S. and Mexico will continue discussions over the next 90 days to see if the measures have actually slowed illegal migration.

If not, Trump has said tariffs would again be imposed on Mexican products.

The tariff threat came while the U.S. has been pushing for passage of the United States-Mexico-Canada Agreement (USMCA), which would update the 25-year-old North American Free Trade Agreement.

On May 30, U.S. Trade Representative Robert Lighthizer sent letters to congressional leaders announcing a procedural step by the Trump Administration allowing it to send the USMCA to Congress within the next 30 days.

Lighthizer’s letter stated that the USMCA “represents the gold standard in U.S. trade policy.”

In addition to “badly needed modernization provisions,” the agreement “represents a fundamental rebalancing of our trade relationship with Mexico and Canada in ways that will create a more level playing field for American businesses, workers and farmers,” Lighthizer said.

The letter was submitted to Congress along with a draft Statement of Administrative Action (SAA). The draft SSA is an outline of legal changes required to implement the trade agreement into existing U.S. law, the implementing bill.

After 30 days, which would be June 29, 2019, and the  text of the implementing bill is agreed to by Congress, the U.S. Trade Representative and the White House, the administration can then submit the final implementing legislation.

Both the House of Representatives and the Senate must ratify the implementing bill on a straight up or down vote and will not be able to amend the bill.

In order for the USMCA to take effect, all three countries must individually ratify the final text.

The U.S. recently removed tariffs on steel and aluminum coming from Mexico and Canada. These tariffs had stood in the way of Mexico and Canada approving the USMCA.

Lighthizer’s letter to Congress noted that “with these barriers removed, Canada and Mexico have formally initiated their ratification processes.”

U.S. ratification of the USMCA has been widely supported by the U.S. food and agricultural industry,

Recently, more than 950 groups representing the U.S. food and agriculture industry at national, state and local levels,  sent a letter to Congress stating that USMCA will benefit the industry while providing consumers a more abundant supply of high-quality, safe food at affordable prices.

“Canada and Mexico represent two of our most critical markets,” said North American Meat Institute President and CEO Julie Anna Potts. “Swift ratification of the USMCA would benefit American consumers and the meat and poultry industry while making a significant investment in our economy.”

American Farm Bureau Federation President Zippy Duvall said the Trump administration’s submitting the Statement of Administration Action on USMCA to Congress “is good news for U.S. farmers and ranchers. This notice means that we are one step closer to locking in vital market opportunities developed with our North American neighbors and expanding further on the gains we’ve made over the past three decades.

“The USMCA is a hard-fought win for agriculture and we commend the administration for its efforts to solidify two our most vital trade relationships. We now call on Congress to ratify the deal,” Duvall stated.

U.S. food and agricultural exports to Canada and Mexico under NAFTA jumped from $9 billion in 1993 to nearly $40 billion in 2018 and helped support more than 900,000 U.S. jobs. The USMCA is expected to boost the U.S. economy by an additional $2.2 billion.

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