U.S. lawmakers and farm groups are cheering the Wednesday implementation of the U.S.-Mexico-Canada Agreement, but many remain wary because of complications that are already manifesting.
“The launch of the USMCA brings optimism to the country’s farmers and ranchers at a time they need it the most,” said American Farm Bureau Federation President Zippy Duvall, but also stressed that Mexico and Canada need to “uphold their end of the deal, so the agreement provides a stabilizing force amid the unpredictability of a pandemic in all three countries.”
At its core, USMCA ensures that agricultural trade flows virtually tariff-free through all three countries, so the mere fact that it is going into force is a relief after President Donald Trump threatened several times to simply scrap the North American Free Trade Agreement, which proceeded the USMCA.
But Mexico and Canada are already raising alarms, prompting some U.S. lawmakers and farm groups to say the U.S. may have to use the dispute settlement process in the pact much earlier than anticipated.
“I want to point out a problem we are already aware of with Mexico,” Senate Finance Committee Chairman Chuck Grassley told reporters Tuesday. “That country has quit approving biotech traits for U.S. companies and (Mexico) has offered no satisfactory explanation for the lack of approvals.”
USMCA has been widely lauded for its biotech chapter, but the fact that Mexico hasn’t approved a new ag trait since May of 2018 is deeply troubling to the U.S. farm and biotech seed sectors.
There are 18 biotech traits in the queue for Mexican approval, many of which have been waiting for more than two years, and that has not gone unnoticed by the Trump administration. U.S. Trade Representative Robert Lighthizer and USDA Chief Sonny Perdue are working with their counterparts south of the border to get Mexico’s approval process back on line, Chief Agricultural Negotiator Gregg Doud told Agri-Pulse in a recent interview.
As to Canada, U.S. dairy industry representatives are already pushing the USTR to consider launching a dispute. As part of USMCA, Canada agreed to set up a tariff rate quota to buy U.S. dairy, but according to one U.S. industry source, the “Canadians are already playing games” to limit the benefit to U.S. exporters.
Ambassador Gregg Doud, USTR
Essentially, Canada is setting up the TRQ to give 85% of it to Canadian processors so they can buy products that don’t compete with Canadian products, sources tell Agri-pulse.
That means the U.S. won’t be able to export what it really wants to, like butter, according to the International Dairy Foods Association.
Interested in more coverage and insights? Receive a free month of Agri-Pulse or Agri-Pulse West by clicking here.
“Per our earlier conversation, I am formally registering our organization’s deep concerns regarding Canada’s non-compliance with the clear terms of the Agriculture Chapter of the Agreement,” IDFA President and CEO Michael Dykes said in a letter he sent to Doud on Tuesday. “To that end, please let me know how we can work with you and your colleagues to ensure that Canada lives up to the commitments it made when it ratified the Agreement.”
Shawna Morris, vice president of trade policy for the U.S. Dairy Export Council, stressed that Canada has a history of avoiding commitments for TRQs.
“The dairy TRQ rules Canada published in June run counter to its USMCA obligations at the expense of US dairy exporters and farmers,” she said. “It’s essential that we seize the opportunity provided by USMCA’s implementation to hold Canada’s feet to the fire and get the full benefit of what we bargained for.”
Ryan Bernstein, a senior member of the Washington-based McGuire Woods Consulting, says the Trump administration isn’t likely to react very quickly to any immediate disputes.
As momentum for the November elections begins to heat up, “I don't think anybody wants to see a lot of rocking the boat right now,” Bernstein said.
But Rep. Ron Kind, D-Wisc., stressed Tuesday that he and other lawmakers will be “watching very closely” to make sure that Canada is living up to its USMCA commitments.
“It’s fun to be able to celebrate the implementation (of USMCA), but with the cold realization that a lot of the hard work is just beginning to make sure Canada and Mexico are living up to the terms of the agreement,” Kind said.
Sara Wyant contributed to this report.
For more news, go to www.Agri-Pulse.com
