Ag Policy Blog

President Donald Trump and his staff have characterized the dairy provisions of the trade agreement reached Sunday with Canada as a great accomplishment, but U.S. dairy groups on Monday reacted with caution.

In a joint statement, the National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC) and the International Dairy Foods Association (IDFA) thanked Trump administration negotiators “for fighting hard against Canada’s trade-distorting practices,” and said the agreement “includes the elimination of Canada’s Class 7 pricing system and creation of some additional market access, two important objectives of the U.S. dairy sector.”

They also noted that the new U.S.-Mexican-Canadian Agreement (USMCA) will maintain access to the Mexican dairy market.

Ag groups overall are hopeful on the new agreement.

American Farm Bureau Federation President Zippy Duvall called the agreement “welcome news,” and said “Farm Bureau will review the details of the new treaty as they become available, but the elimination of Canada’s Class 7 dairy pricing program is a clear victory for our farmers.

“We also now have access to an additional 3.6 percent of Canada’s dairy market, which is even better than what we would have achieved under TPP.

“Mexico, meanwhile, is still an $18 billion market for U.S. ag products. The USMCA includes new provisions to provide science-based trading standards, timely review of products produced through biotechnology and gene editing and new provisions on geographic indications.”

National Farmers Union President Roger Johnson said “While this agreement is certainly no cure-all, it is hopefully a start to repairing our trade relationships around the world, to restoring our reputation as a reliable trading partner, and to resolving longstanding issues with discrimination against U.S. wheat.

“Farmers Union supports the president’s goals to balance trade and restore sovereignty that has been lost as a result of past trade agreements. We have long been at the forefront of the fight for fair trade that puts family farmers and ranchers on an even playing field with corporations and the rest of the world.

“Yet a couple areas in this agreement appear to fall short of these goals. Progress was made on the dispute settlement mechanisms —provisions that place tremendous power in the hands of multinational corporations — but the ISDS framework remains. And country-of-origin labeling, which is supported by 90 percent of Americans, was unfortunately left out of the agreement.”

The National Association of State Departments of Agriculture said the nation’s elected and appointed state agriculture officials are “especially appreciative for the administration’s efforts to address market access challenges with Canada for dairy, wheat and wine” and that the deal “provides important momentum for future trade agreements.”

The National Cattlemen’s Beef Association and the National Pork Producers Council praised the new agreement.

NCBA President Kevin Kester, a California rancher, said “This new agreement is great news for American cattle producers, and another sign that President Trump’s overall trade strategy is working.

“Over the past quarter century, free and open trade between the United States, Mexico, and Canada has been tremendously successful for our producers, and we’re pleased that we’ll be able to maintain our existing market access while seeing other U.S. producers get a better deal than they’ve gotten in the past.

“Hopefully Congress will approve this new deal early next year and provide American producers with the certainty we need to continue selling our products to our partners to the north and south.”

But NPPC also noted that U.S. pork is currently on three trade retaliation lists that have placed 40 percent of total exports under punitive tariffs.

“NPPC continues to urge the administration to remove tariffs on Mexican steel and aluminum imports so that country will lift its 20% retaliatory tariff on U.S. pork,” the group said in a news release.

National Chicken Council President Mike Brown and USA Poultry & Egg Export Council President Jim Sumner said, “Canada has always been one of our key export markets.”

“We’re most pleased that the new agreement not only assures our continued access, but provides for growth in our exports as we move forward.

“It is a win-win for both the U.S. industry and Canadians, and we are very appreciative of the administration’s efforts during these negotiations,” the chicken and egg groups said.

The National Turkey Federation said the USMCA “will result in a 29 percent increase in U.S. exports to Canada. Robust export markets are vital in growing the turkey industry. There are many trade challenges that remain for the turkey industry, but this agreement is a very welcome development.”

U.S. Grains Council Chairman Jim Stitzlein said the group representing feed grain exporters was pleased that the United States, Mexico and Canada had reached agreement because “No trade agreement has had more impact on our sector than NAFTA which prompted explosive growth in our export sales to both countries as well as the development of a fully-integrated grains and livestock supply chain within North America.”

The National Grain and Feed Association (NGFA) and North American Export Grain Association (NAEGA) said it had been “extremely important to reach a trade agreement that included all three countries and looks forward "to working with all three governments as part of the review and ensuing implementation of the agreement.

“Our industry is encouraged about reports that the final agreement takes steps to modify some existing impediments to agricultural trade, including dairy, and will preserve some form of the trilateral Chapter 19 tariff dispute-settlement mechanism contained in the North American Free Trade Agreement,” NGFA President and CEO Randy Gordon and NAEGA President and CEO Gary Martin said.

The grain groups also said they were particularly pleased by:

“The retention of zero tariffs on agricultural products traded between the United States and Mexico;

“The addition of 21st century language to enhance information exchange and cooperation on agricultural biotechnology trade-related matters;

“An agreement to strengthen disciplines for science-based sanitary and phytosanitary (SPS) measures to facilitate trade;

“And an agreement that grading standards and services on agricultural products, including grains and oilseeds, will operate independently from domestic registration systems for grain and oilseed varieties.

Concerning SPS measures, NGFA and NAEGA said they particularly were pleased by the inclusion of a provision — advocated by both groups — that would commit the three countries to provide notification of any adverse SPS import issues within five days, versus the seven days that had been agreed to under the Trans-Pacific Partnership Trade Agreement from which the United States withdrew.

National Corn Growers Association President Lynn Chrisp praised the Trump administration for reaching the agreement, but noted that his group’s members had been “reminding the administration of its promise to ‘do no harm’ to agriculture” and said it would thoroughly evaluate the agreement “to determine if it continues to benefit American agriculture.”

The National Association of Wheat Growers (NAWG) and U.S. Wheat Associates (USW), an export promotion group, welcomed the administration’s “decision to move ahead with an updated trade deal with Canada and Mexico” and said that it would review the language of the deal.

“We hope to see provisions that are positive for wheat farmers,” the groups said.

“The current North American Free Trade Agreement (NAFTA) is critically important for wheat farmers who depend on the enormous Mexican market that NAFTA built, but it did have room for improvements, particularly on grain trade with Canada.

“NAWG and USW called for a fix to the Canadian grain grading system which automatically designates U.S. wheat as the lowest grade simply because it is foreign. This means U.S. farmers producing the highest quality wheat arbitrarily get less value for their crop.

“Farmers should understand that nothing has changed yet, but we are pleased to see that USTR has made progress in resolving this issue, with Canada agreeing to grade imported wheat with the same requirements as Canadian wheat. We will follow the implementation of this commitment closely to ensure U.S. farmers can finally have reciprocal access to the Canadian market.”

Corn Refiners Association President and CEO John Bode said, “This is a milestone.”

“Mexican and Canadian markets are very important to American farmers, ranchers, and agribusiness,” Bode said. “We commend President Trump for his efforts to conclude this trilateral agreement. We look forward to reviewing the agreement text released today.”

National Cotton Council Chairman Ron Craft, a Plains, Texas, ginner, said, NCC is pleased that the agreement will ensure continued duty-free access for U.S. cotton to Mexico and Canada and “is pleased to see the addition of a textile and apparel chapter to the USMCA and inclusion of provisions to promote greater use of U.S. origin textile products, incentivize North American textile production, and strengthen customs enforcement in textile and apparel products.”

Wine Institute CEO Robert “Bobby” Koch said that Canada has agreed to resolve the ongoing dispute regarding grocery store access in British Columbia by ensuring the discriminatory policies are removed by November 1st of 2019.

“This agreement represents real progress towards improved market access for U.S. wines in Canada. In settling the U.S. WTO case, Canada has finally acknowledged that it must live up to its WTO obligations and that blatantly discriminatory policies cannot be tolerated. We still have much work to do in other areas of market access, but this is a significant accomplishment," Koch said.

Canada is already the No. 1 market for U.S. wine exports, 90 percent from California, which reached $1.53 billion in winery revenues and 380 million liters (42.2 million cases) in volume in 2017, the Wine Institute noted.

Angela Hofmann, deputy director of Farmers for Free Trade said “Farmers across the U.S. are relieved that a deal with their top trading partners has been achieved. The North American market is critical to the sustainability and economic prosperity of the U.S. agricultural industry as well as Main Street America. The true measure of success will be the day when our markets regain full trading status.

“That’s why we will continue to urge the immediate removal of tariffs that are taxing American ag exports and making farming more expensive, including the U.S. imposed steel and aluminum tariffs on Canada and Mexico.”

Jerry Hagstrom can be reached at jhagstrom@njdc.com

Follow him on Twitter @hagstromreport

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