I can’t imagine what your first impression was when you got the news. Mine was relief, followed quickly by confusion.
Is this all there is? Other than the whipping laid on the supply management sector, USMCA looks much like NAFTA.
Of course that is a good thing. NAFTA served livestock industries and all of agriculture well in Canada, the U.S. and Mexico.
We’ve had a taste of what it’s like to be shut out of the U.S. market a few times in our history and it never goes well.
So from my viewpoint, a NAFTA look-alike seemed like a victory for the PM and his team who deserve considerable credit for holding onto much of what we started with, including the old Chapter 19 rules of established expert bi-national panels to resolve disputes when countervailing and dumping duties are applied.
Better yet, it gave President Trump something he could claim as a victory, which I’m beginning to think is all he really needs to get out of each of these hell-and-fire negotiations he’s set in motion around the world.
One can hope he will now move on to other matters. With USMCA on the books Europe and Japan are up next. The U.S. Trade Representative has already had trilateral discussions with trade officials from the EU and Japan, and consultations with ASEAN block of nations.
Europe currently has a $15 billion agriculture trade deficit with the U.S. and that gives you some of idea of how those negotiations will go.
Reaction to the modernized version of NAFTA was as expected.
The Canadian Cattlemen’s Association was happy to have a deal that secured the duty-free access upon which the Canadian beef cattle industry has been built over the past 25 years. The two new chapters on regulatory practices and competition also offer hope of clearing some red tape that has slowed down the free flow of cattle and beef over the border in recent years. So that’s a plus for USMCA.
The Canadian Beef Breeds Council was excited, as you would expect. Over 80 per cent of our exports of semen, embryos and breeding cattle are sold to the U.S.
The Canadian Agri-Food Trade Alliance was delighted that tariff-free traffic for agriculture products would be maintained, but took the opportunity to urge the Liberal government to push for passage of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and other trade diversification effort in Asia. “ The consequences of relying on the U.S. market have been made clear,” said CAFTA.
Of course, the beef industry has been aware of this danger for decades now, but the numbers never change to any significant degree. Up to July this year a little under 75 per cent of our exported beef went to the U.S., about seven per cent more than last year. And virtually all of the exported cattle go the same route. There is no getting around it. The U.S. will always be our first-choice market, so while we will want greater access to those other high-priced markets, we absolutely must have that open border with the Americans.
Fortunately for us, the Americans feel the same way. Kevin Kester, the California rancher and president of the National Cattlemen’s Beef Association, termed the agreement great news for American cattle producers. There were some Americans who were disappointed when country-of-origin labelling was pointedly left out of this agreement. But for the vast majority of cattle producers that was another point for USMCA.
Unfortunately, Kester went on to say that this agreement is a sign that President Trump’s overall trade strategy is working, and I have a little trouble with that statement.
Putting an economic gun to the head of your closest neighbours and trade partners and telling them to sign or else, is not really a sound strategy for long-term relations.
The U.S. has the economic strength to dictate terms to most of its trading partners and has done so with quiet diplomacy and rational argument for decades now. The reality is we needed this agreement more than the Americans did but there was something to gain from it for both sides, so the gun wasn’t really necessary. The aftertaste of this negotiation will, I suspect, linger for some time with Canadians and Mexicans, but I imagine we’ll get over it soon enough. I don’t expect that we will forget it though.
Certainly the dairy producers won’t. I can’t pretend I’m a fan of supply management, but you have to admit their transition to life under the USMCA will be much harsher than the rest of the livestock industry. When all the bits of the domestic market offered up in new trade agreements with Europe, Asia and the U.S. are added up Dairy Farmers of Canada puts the total loss at 18 per cent or $1.3 billion less at the farm gate.
Now we have to wait to see if a new Congress elected in November will approve this new NAFTA. I can’t help but think about what the Democrats said about the old NAFTA in 2016.
Surely we wouldn’t be subjected to around round of tinkering in 2019, would we?