New North American trade deal replaces NAFTA
By David B. Strickland
Poultry Times editor
dstrickland@poultrytimes.com
WASHINGTON — The U.S.-Mexico-Canada Agreement (USMCA) officially went into effect on July 1. This new trade deal among the North American nations replaces the 25-year-old North American Free Trade Agreement (NAFTA).
The agreement was signed into law by President Donald Trump on Jan. 29, after it also received the support of Congress.
Canada and Mexico are the first and second largest export markets for U.S. agriculture products, amounting to $39.7 billion worth of food and agricultural exports in 2018, which provide support to more than 325,000 U.S. jobs, USDA notes.
“USMCA creates more market access for farmers from across our nation to sell their wholesome and nutritious products to our closest neighbors,” U.S. Secretary of Agriculture Sonny Perdue wrote in an op-ed piece in the Fayetteville (N.C.) Observer. “This is a better deal for America that will grow our economy and put more money in the pockets of American families.”
“United States poultry and egg producers will also see expanded access to Canada’s market, directly benefiting American producers in states like Iowa, Georgia, Arkansas and California,” Perdue added. “It includes rules to address all agricultural biotechnology, include gene editing, in support of 21st century innovations in agriculture. The agreement also improves the flow of trade with new and enforceable rules to ensure that sanitary and phytosanitary measures to protect human, animal or plant life or health are science-based and transparent.”
“The implementation of this deal sends a strong signal to other important export markets such as the United Kingdom and the European Union that President Trump and Congress are serious about pursuing and enacting future agreements that create better economic opportunities for all parties involved,” Perdue wrote. “The United States is open for business, and our farmers are ready to export more of their wholesome and nutritious products to consumers around the world.”
On USMCA officially going into force, U.S. Trade Representative Robert Lighthizer said, “The USMCA contains significant improvements and modernized approaches that will deliver more jobs, stronger worker protections, expanded market access and greater opportunities to trade for companies large and small. We have worked closely with the governments of Mexico and Canada to ensure that the obligations and responsibilities of all three nations under the agreement have been met, and we will continue to do so to ensure the USMCA is enforced.”
“The recovery from the COVID-19 pandemic demonstrates that now, more than ever, the United States must stop the outsourcing of jobs and increase our manufacturing capacity and investment here at home,” Lighthizer added. “With the USMCA’s entry into force, we take another giant step forward in reaching this goal and advancing President Trump’s vision for pro-worker trade policies.”
The USMCA trade deal will, if not renewed by the three nations, expire in 16 years.
Industry reaction
National Chicken Council President Mike Brown said, “USMCA maintains and could improve market access for U.S. chicken in two or our most important markets in terms of value, Mexico and Canada. It will also positively impact both the U.S. agriculture sector and the broader national economy. On behalf of America’s chicken producers, I want to thank President Trump for his leadership and for the tireless work of the administration, including Agriculture Secretary Perdue and U.S. Trade Representative Lighthizer.”
NCC added that the, “USMCA preserves full market access for U.S. chicken product exports to Mexico, just as NAFTA had maintained. USMCA sets a flat Tariff Rate Quota (TRQ) of 57,000 metric tons by year 6 of the agreement, growing 1 percent per year for an additional 10 years. In contrast, NAFTA applied a floating TRQ of imports up to 7.2 percent of Canada’s previous-year domestic chicken production.
“Mexico and Canada are the two largest markets by dollar value for U.S. broiler meat exports, with a value of $604 million and $296 million in 2019, respectively.”
The U.S. feed industry is also heralding what the future holds with this new trade agreement. Mexico and Canada, respectively, represent the first and second largest export markets for U.S. feed, feed ingredients and pet food, totaling $3.3 billion, the American Feed Industry Association notes.
“We are entering into a new era of trade with Canada and Mexico — one that allows U.S. animal food producers to remain competitive, strengthens our regulatory engagement and commitments with our trading partners and lays the groundwork for innovation to meet the agriculture industry’s future needs,” said Constance Cullman, AFIA’s president and CEO. “I commend our countries’ national leaders, particularly the efforts of President Trump and his administration over the past three years, for making this much-needed agreement a reality.”
AFIA adds that since 1993, animal food exports to Canada and Mexico have nearly quadrupled from approximately $669 million then to $3.3 billion today.
The North American Renderers Association also noted how Canada and Mexico are vital markets for the U.S. rendering industry.
“Mexican purchases of U.S. rendered animal proteins and fats reached $290 million (438,000 metric tons) last years.” the NARA said. “Overall, 18 percent of total U.S. rendering production is exported (over 23 percent of animal proteins and 14 percent of animal fats)). In addition to Canada and Mexico, other major markets include countries in Asia and Europe.”
The agreement has been praised not just for poultry, but for beef and pork as well.
The North American Meat Institute notes that since 1994, beef exports to Canada expanded from $656 million to $1.75 billion in 2019; and pork exports grew from a value of $322 million to more than $2 billion. In regard to volume, Canada and Mexico imported approximately 22 percent of U.S. beef exports and 30 percent of pork exports last year.
“The U.S. meat and poultry industry exports $5.5 billion annually in products to Canada and Mexico,” said Julie Anna Potts, NAMI president and CEO. “This agreement is critical to meat and poultry processors and the millions of U.S. farmers, ranchers, allied manufacturers and transportation companies in the food supply chain.”
