OMAHA (DTN) -- One of the main obstacles standing in the way of finalizing the United States-Mexico-Canada, or USMCA, trade agreement has been removed. The Trump administration on Friday announced it will end U.S. tariffs on steel and aluminum imported from Canada and Mexico.
The U.S. will eliminate the tariffs within 48 hours, and in return, Canada and Mexico have agreed to terminate all retaliatory tariffs. All sides have also agreed to end all pending litigation before the World Trade Organization.
In addition, the agreement calls for the countries to implement measures to prevent the importation of steel and aluminum that is unfairly subsidized and/or sold at dumped prices.
The U.S., Canada and Mexico are expected to establish a process for monitoring steel and aluminum trade between them, monitoring for surges, and either country may treat products made with steel that is melted and poured in North America separately from products that are not.
On April 8, David MacNaughton, Canada's ambassador to the U.S., told members of the North American Agricultural Journalists at the group's annual meeting in Washington that the USMCA could not be finalized without the U.S. removing the tariffs.
Canada faces some time constraints on the USMCA, MacNaughton said, as the Canadian Parliament adjourns June 15 to campaign and will not reconvene until after elections in October.
In the U.S., Congress is unable to act on the USMCA until the White House sends the text of the agreement to Capitol Hill. The text must be sent to Congress at least 30 days before a bill is formally introduced.
When the actual bill is introduced, in the Senate Finance and House Ways and Means committees, it can take up to 45 days to bring the bill to the floor of their respective chambers. Ways and Means must report a bill after 45 days are up, or it becomes automatically discharged. The House would then have a maximum of 15 days to vote on the bill.
The Senate can take up to another 30 days to vote after the House, if senators use their full allotted time.
At this point, even if the Senate were to run lockstep with the House, the USMCA runs into the congressional August recess.
Agriculture interest groups lauded the work of the three countries as an important move.
U.S. dairy officials said in a news release on Friday they expect Mexico will drop retaliatory tariffs against U.S. dairy products, including duties as high as 25% on U.S. cheese exports to Mexico.
"This is an important development for the U.S. dairy industry, and we applaud the hard work of negotiators from all three countries that made it possible as well as the numerous members of Congress that have insisted upon the need to resolve the Section 232 metal tariffs dispute with our North American partners," said Tom Vilsack, president and CEO of the U.S. Dairy Export Council.
"If Mexico lifts its tariffs on U.S. dairy in response, it would be a welcome return to normalcy with our No. 1 export market. It would also build vital momentum for swiftly advancing USMCA towards passage."
Jim Mulhern, president and CEO of the National Milk Producers Federation, said, "America's struggling dairy farmers are in need of some good news, and today's announcement certainly helps."
Mexico is America's biggest dairy customer with $1.4 billion in sales in 2018. U.S. products accounted for 80% of Mexican dairy imports by value in 2018.
The National Pork Producers Council said in a statement that Mexico's retaliatory tariffs on U.S. pork has cost producers about $12 per animal.
"Removing the metal tariffs restores zero-tariff trade to U.S. pork's largest export market and allows NPPC to focus more resources on working toward ratification of the U.S.-Mexico-Canada Agreement, which preserves zero-tariff trade for U.S. pork in North America," said David Herring, a pork producer from Lillington, North Carolina, and president of the National Pork Producer Council.
Todd Neeley can be reached at email@example.com
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