By Gary Wertish
Farmers and agricultural organizations around the country breathed a sigh of relief when President Donald Trump announced that the United States, Mexico and Canada had agreed on a new trade deal — called NAFTA 2.0 by some — yet officially known as the United States-Mexico-Canada Agreement (USMCA).
We at Minnesota Farmers Union shared that relief, as the agreement is a positive first step in turning the U.S. back into a reliable trading partner.
However, the president’s hyperbolic assessment of USMCA as “greatly open[ing] markets to our farmers” isn’t exactly correct. What he called the “most important trade deal” in U.S. history would barely make a dent in the income losses farmers have been suffering for five years now, which have been exacerbated by this year’s trade war. And it did not address a couple significant issues Farmers Union has been calling for in trade agreements.
For one, USMCA does not reinstate country-of-origin-labeling (COOL). Most Americans support COOL, which would be a major benefit to our family farmers and rural communities. Negotiators missed an opportunity here. We also have concerns with the investor-state dispute settlement (ISDS) framework, which allows multinational companies to sue federal governments.
The agreement isn’t all bad news. We could see short-term gains in wheat, since, per the Congressional Research Service, Canada would treat U.S. wheat as “no less favorable than that it accords to like wheat of national origin.” Currently, Canadian wheat inspection certificates do not allow grades, which costs U.S. wheat producers the chance to get premium prices that come with higher grades.
The dairy provisions are what intrigue agriculturists most about USMCA. The U.S. would gain access to up to 3.59% of Canada’s dairy market. Canada agreed to allow the U.S. to increase its tariff-rate quota each year for importing milk to Canada, which decreases the risk of American milk hitting over-quota tariffs. Lastly, the agreement eliminates Canada’s Class 7 pricing for ultra-high-filtration milk.
At first look, this seems like it could help cut the oversupply of U.S. milk that’s driven dairy prices below farmers’ costs of production. But 3.59% of the Canadian market is peanuts compared with the amount of milk out there.
“Until there’s a solution to the global milk glut, the price won’t move much at all,” Zack Clark, National Farmers Union government relations director, told USA Today.
It’s worth mentioning that the deal will take years to implement, assuming Congress approves it. That won’t happen for a while, as Senate Majority Leader Mitch McConnell announced this year’s Congress won’t discuss the deal.
We still are losing family dairy farms, and this trade agreement won’t stop that loss quickly enough.
Before we’ll see any positive effects of USMCA, we also must resolve the remaining trade tensions the Trump administration has ignited — particularly with China. We still have the steel and aluminum tariffs in effect that started the trade war in the first place, which have driven up input costs for farmers in addition to provoking retaliatory tariffs.
Of course, it’s wonderful to hear of agreements in trade rather than more tariffs. However, without re-establishing trade relationships and opening new markets, we could lose the family agriculture we cherish in this country.
Wertish is a Renville, Minn., farmer and president of Minnesota Farmers Union.