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USMCA leaders take stock of trade agreement

ronniechua/Getty Images Canada, United States and Mexico flags
USMCA CELEBRATES ONE YEAR: Already calls for enforcement on Mexico's GMO corn policy and Canada's dairy implementation.
Actions urged on Canadian dairy provision implementation while U.S. grain outlook stable to Canada and Mexico.

During the first-ever U.S. Mexico Canada Agreement Free Trade Commission meeting May 18, U.S. Trade Representative Ambassador Katharine Tai met with her counterparts from Mexico and Canada as well as additional colleagues from USTR, Economía and Global Affairs Canada. They discussed a few pain points regarding Mexico’s trade barriers and Canada’s protections for the country’s dairy industry.

Tensions between the U.S. and Mexico have escalated the past few months over labor complaints on both sides, in addition to Mexican trade barriers that negatively impact American farmers.

During the virtual meeting, Tatiana Clouthier, Mexican Secretary of Economy, and Mary Ng, Canada Minister of Small Business, Export Promotion and International Trade, received updates about work already underway to advance cooperation under the agreement and discussed USMCA’s new labor and environmental obligations. The leaders also heard from 11 of the agreement’s committees.

Just two years ago, Tai noted she was helping to lead the USMCA negotiations in the United States Congress. “We proved that, together, we are capable of updating and remediating a 25-year-old agreement that faced significant criticism at its start.” She also added to maintain the high level of bipartisan support seen in the United States for initial passage, it is essential for the leaders to collaborate to implement, enforce, and fulfill the terms of the USMCA. 

“While we may respectfully disagree on some issues today and in the future, I know that we will work hard to renew our partnership, using the tools we have designed in this agreement, and deliver solutions for all the people we serve and represent,” Tai said in her opening remarks.

In a joint statement following the meeting, the leaders recommitted to fully implementing, enforcing and fulfilling the agreement’s terms and high standards throughout the life of the USMCA. The Committee on Small and Medium-Sized Enterprises (SMEs) Issues will convene the first-ever USMCA SME Dialogue on Oct. 13-14, in San Antonio, Texas.

Dairy provisions

Ahead of the meeting, dairy groups urged USTR to initiate a dispute settlement case to address Canadian tariff-rate quota administrations if the ongoing consultations failed to result in an immediate resolution. In a letter May 21 to Tai and Secretary of Agriculture Tom Vilsack, House members also expressed concern with implementation of the dairy provisions under USMCA.  

As noted in the 2020 Trade Policy Report, consultations were held with Canada on December 21, 2020; however, Canada has thus far not taken actions to alter its dairy TRQ measures to bring them into compliance with USMCA. “With the consultations now over five months old, we strongly urge you to move forward with further enforcement action against Canada, in line with the USMCA inconsistencies identified in USTR’s report,” the legislators note.

Leading this effort were Reps. Ron Kind, D-Wisc. Tom Reed, R-N.Y., along with Reps. Antonio Delgado, D-N.Y., Glenn ‘GT’ Thompson, R-Pa., Suzan DelBene , D-Wash., Dusty Johnson, R-S.D., Jim Costa, D-Calif., and David Valadao, R-Calif.

The U.S. Dairy Export Council and National Milk Producers Federation have closely monitored Canada’s actions regarding its USMCA commitments even prior to the agreement entering into force. The groups welcomed the bipartisan effort to encourage USTR action on the USMCA provisions.

“Canada has failed to take the necessary action to be in compliance with its obligations under USMCA by restricting access to the TRQs,” says Krysta Harden, president and CEO of USDEC.

NMPF President and CEO Jim Mulhern adds, “Canada’s failure to take action over the past six months to fix the administration of its TRQs limits the ability of American dairy farmers and workers to benefit from the access that was negotiated in the agreement.”

Outlook for grain strong

Following the USMCA trade meeting, the U.S. Grains Council says the outlook for grains under the agreement remains stable for now.

USGC President and CEO Ryan LeGrand notes, “USMCA, like NAFTA before it, is foundational to our global trade policy. Through USMCA, Mexico and Canada offer significant additional potential for growth.”  

USMCA entered into force on July 1, 2020, to improve agricultural market access and promote freer, fairer trade between the three countries. It also provides the framework needed to turn ongoing market development activities into realized sales by:

  • maintaining zero tariffs on U.S. coarse grains, co-products and ethanol;
  • providing the highest enforceable sanitary and phytosanitary standards in any trade agreement to date;
  • addressing regulatory equivalence, science and risk analysis, transparency and cooperative technical consultations;
  • creating a rapid-response mechanism to address trade disputes;
  • modernizing border procedures; and
  • adding an enforceable biotechnology chapter, the first ever in a U.S. trade agreement.

According to USDA export sales and shipment numbers as of May 13, Mexico was second only to China in both U.S. corn and sorghum export sales and shipments. The country had 10,222,300 MT in corn shipments (402.43 million bushels) for the 2020/2021 marketing year and 3,960,100 MT in corn sales (155.9 million bushels) for a total of 14,182,400 MT (558.33 million bushels). U.S. sorghum shipments to Mexico stand at 277,000 MT (10.9 million bushels) for the 2019/2020 marketing year. By commodity, in 2019/2020, Mexico was also the top buyer of U.S. distiller’s dried grains with solubles (DDGS) and barley/barley products, as well as the seventh-largest global market for U.S. ethanol.

Canada was the fourth-largest buyer of U.S. grains in all forms (GIAF) in the 2019/2020 marketing year with imports of more than 7.07 million metric tons (equivalent to 278.3 million bushels), valued at $3.08 billion. By commodity, Canada ranked as the largest buyer of U.S. ethanol, second-largest buyer of U.S. barley/barley products, sixth-largest buyer of U.S. corn and eighth-largest buyer of U.S. DDGS.

TAGS: Exports
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