USMCA produces certainty, modest agriculture gains, renewed focus on China
DENVER – The overhauled North American Free Trade Agreement, now named the United States-Mexico-Canada Agreement, or USMCA, which is expected to be ratified next year, will accomplish some important objectives for U.S. agriculture. However, what was not accomplished in the agreement is just as important according to a new report from CoBank’s Knowledge Exchange Division.
While having an agreement improves certainty, brings more market access and allows the White House to focus trade talks on fewer fronts, it does not provide a pathway to eliminate existing retaliatory tariffs – where industries such as dairy and pork have been hardest hit.
“Canada and Mexico are the first and third largest export markets for U.S. agriculture, accounting for more than a quarter of all U.S. agriculture exports,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange Division. “This agreement will advance the ball for some sectors, but for others, the deal represents a return to the status quo. Market access gains will be modest, but we expect the increased certainty to boost domestic and cross-border investment. However, Canada and Mexico still have tariffs in place that affect the U.S. dairy, pork and beef sectors. U.S. agriculture will have much more to celebrate when those barriers are removed.”
The report, “From NAFTA to USMCA: Implications of the New U.S.-Mexico-Canada Trade Agreement for American Agribusiness,” breaks down the impacts of the new agreement on U.S. agriculture by sector, and assesses the issues facing those sectors going forward.
To read the full report, go to https://www.cobank.com/knowledge-exchange/general/from-nafta-to-usmca.
For more information about CoBank, visit the bank’s website at cobank.com.