USMCA signed: The outlook for trade and dairy

Jan 31, 2020  | 3 min  | Ep4524

The United States, Mexico, and Canada Agreement, the sprawling trade deal known as USMCA, was formally signed by President Trump this week.
President Donald Trump: "This is a cutting edge, state of the art agreement that protects, defends and serves the great people of our country. Thanks to our pro-worker, pro-American economic policies, unemployment is at the lowest level in more than 50 years. It's great."

As Canada and Mexico are already the largest trading partners of the United States, trade experts believe the impact of the agreement will be modest.
The signing ends two years of bluster and tariffs that clouded the view of business leaders throughout North America, uncertainty that may have helped slow industrial production on the continent over the last 18 months. 
The renegotiation of NAFTA, the 1994 trade agreement that reduced trade barriers and created an industrial block between the three countries, was a campaign promise during President Trump’s 2016 run for the White House.  
NAFTA slashed tariffs and sparked a surge in trade between the three countries. Critics believe NAFTA encouraged industry to move jobs from high-wage Canada and the U.S. to relatively low-wage Mexico. 
The deal also gives American farmers more access to the Canadian dairy market. While USMCA leaves Canada’s managed dairy economy in place it will increase the market for U.S. dairy goods. While price continues to put the squeeze on the dairy sector, the size of the U.S. herd remains the same as the number of dairy farms declines.
Tom Vilsack, President and CEO U.S. Dairy Export Federation: “So a good outcome for the dairy industry. There are basically three very fundamental parts of this. One, the Canadian market becomes a bit more open than it has been. Quotas have been improved and increased. Secondly, the elimination of what is called class seven. It's a way in which the Canadians price a powder, which is allowed them to export their powder, uh, at a significant advantage over everyone else. That's going to end. 

And then third, uh, an opportunity for us to reopen, if not, not necessarily reopened, but an opportunity for us to preserve the Mexican market, which is our number one market, but to do so in a way that also protects our ability to sell cheeses that the European union is attempting to try to get a monopoly on the use of certain names of cheeses.

For Market to Market, I’m Peter Tubbs. Producer Contact: peter.tubbs@iowapbs.org

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