President Donald Trump signed the new U.S.-Mexico-Canada Agreement last week, leaving only Canada left to ratify the trade pact. The USMCA has already been approved by Mexico, but it won’t be implemented until ratified by the Canadian government.
Canada’s Parliament is expected to approve it by April. After that occurs, there’s more work to do as rules and regulations need to be finalized and agreed upon by the three nations to enable companies to conduct business according to the agreement.
The trade agreement is supposed to take effect 90 days after all three countries have approved it. So, it may be July or perhaps September for USMCA to be fully operational.
During the Jan. 29 signing ceremony at the White House, Trump was surrounded by business leaders wearing hard hats. A group of Iowans was there, led by U.S. Sens. Chuck Grassley and Joni Ernst, both Republicans from Iowa.
Trump said the USMCA is “a colossal victory for American farmers, manufacturers and workers. For the first time in U.S. history, we have replaced a disastrous trade deal that rewarded outsourcing, with a truly fair and reciprocal trade deal that will keep jobs, wealth and growth right here in America.”
Grassley: NAFTA needed update
USMCA replaces NAFTA: the North American Free Trade Agreement approved by Congress and signed into law in 1994. NAFTA basically eliminated tariffs on most products traded among the three countries.
“The USMCA is needed because it updates NAFTA. That’s why we pushed long and hard to get Congress to pass USMCA,” said Grassley, in an interview last week. “The new agreement guarantees U.S. farmers access to Canadian and Mexican markets, and puts new e-commerce rules in place.”
In addition, USMCA, which is supported by labor unions and business groups, includes provisions requiring a higher percentage of automobiles be made from parts made in North America. It has stronger provisions on labor, calls for higher wages and has rules for enforcement and regulation of pharmaceutical sales that Democrats in Congress sought as a condition of their approval of the agreement. As chair of the U.S. Senate Finance Committee, Grassley helped shepherd USMCA through the Senate.
Grassley, a Butler County farmer, adds: “This updated trade agreement, USMCA, opens up new market access for made-in-America products. That means thousands of new jobs and a level playing field for U.S. farmers and manufacturers. The digital provisions, in particular, will guide the future of U.S. trade policy in the 21st century. Ratification of USMCA strengthens the hand of the U.S. when negotiating further trade agreements with countries like China. All told, USMCA means more jobs, higher wages, a stronger economy and a brighter future for our country.”
Farmers will gain from USMCA
Iowa Secretary of Agriculture Mike Naig attended the White House ceremony. “Under the new USMCA, Iowa farmers will gain greater access to our two largest export markets — great news heading into the 2020 planting season,” Naig said. Iowa Secretary of State Paul Pate also attended and praised the new trade pact. Naig lists key benefits of USMCA:
- maintains zero tariffs on U.S. feed grains, products and ethanol
- sets new standards for intellectual property protection
- creates a rapid response mechanism to address trade challenges
- includes an enforceable biotechnology chapter, the first ever in a U.S. trade agreement
- opens new markets for U.S. ag exports in Canada, including dairy, poultry and wheat
Also present was Kevin Ross, a western Iowa farmer and current president of the National Corn Growers Association. He said, “Iowa is the nation’s top corn producer. This agreement should serve as a template for opening the door to new market opportunities for corn and other U.S. ag products. Farmers are grateful for the work of everyone who made the USMCA possible.”
Linda Upmeyer, former speaker of the Iowa House of Representatives, attended the signing. She is serving as national chair of the American Legislative Exchange Council, a conservative group that drafts model legislation for state lawmakers throughout the country. “This trade agreement is a major win for Iowa’s ag industry, farmers, small businesses, middle-class workers and our economy,” she said.
Iowa pork producer Dale Reicks attended, as one of eight board members representing the National Pork Producers Council. “With USMCA now signed into law, we’ll have increased opportunity to export more U.S. pork,” he said. “In 2018, Canada and Mexico took more than 40% of the pork exported from the U.S., and a similar volume is expected in 2019. Pork exports from the U.S. to Canada and Mexico support 16,000 American jobs.”
Iowa Gov. Kim Reynolds, a Republican, didn’t attend the ceremony but issued a statement supporting USMCA: “Years from now, USMCA will prove to be a major boost to Iowa’s economy, especially for families, farmers, manufacturers and small businesses.”
There weren’t any Democrats invited to the White House signing ceremony. But Iowa’s Democrat leaders — U.S. Reps. Cindy Axne, Abby Finkenauer and Dave Loebsack — had previously issued statements praising USMCA and called attention to the changes Democrats in Congress negotiated to include in the new trade pact’s provisions.
Putting deal to work
Gage Kent, CEO of Kent Corp. at Muscatine, was at the White House ceremony, a guest of Naig. Kent Feeds is a major U.S. manufacturer of livestock feed.
“Across the U.S. more than 43,000 companies employing 2 million Americans, export products to Canada and Mexico,” Kent said. “With the signing of USMCA, crop farmers along with meat, milk and egg producers and various manufacturers will see new opportunities for growth and prosperity. USMCA is a modern and balanced trade agreement. Constructive and forward-looking, it ensures America’s consumers, farmers, manufacturers, innovators and service providers will have a new economic platform upon which to build a better future.”
Iowa Farm Bureau President Craig Hill didn’t attend the signing but issued this press release: “We commend the administration and Congress for getting USMCA across the finish line in the U.S. to bring an expected $2 billion increase in ag exports. This agreement further levels the playing field with our neighbors, who have continued to be strong trading partners. USMCA will provide new market access for U.S. dairy and poultry products, while preserving the zero-tariff platform on all other ag products. We are optimistic the recent string of trade progress, including agreements with China and Japan, will set the stage for 2020 to begin a stronger decade for agricultural trade.”
Need time to see results
Lance Lillibridge, an Iowa Corn Growers Association director, farming in Benton County, said, “Mexico and Canada are so important to us. Mexico is the No. 1 customer for U.S. corn and distillers grain. Canada is our No. 1 customer for ethanol. Those are huge to me as a corn farmer.”
He said USMCA will provide much-needed certainty for U.S. farmers, but it will take some time before they see results. “Being patient with USMCA is going to pay off. It does get frustrating because we don’t know what’s going to happen over the next few months or years, but the certainty of having it done now and in place is a good feeling.”
USMCA is important to Lillibridge as a producer of corn, soybeans and cattle, he said. “Signing this agreement sends a strong signal the U.S. will aggressively pursue open markets and expanding markets for American farmers and companies. This new trade agreement will benefit Iowa and U.S. agriculture.”