PARTNERS

By Craig W. Anderson

The new United States Mexico Canada Agreement (USMCA) went into effect on July 1 and San Joaquin County farmers and ranchers should benefit from better prospects in Mexico and Canada.

“Looking back, NAFTA needed to be revisited and ultimately replaced by the USMCA,” said SJFB President David Strecker. “This new agreement will enhance our working with Mexico and Canada on trade issues.” Canada is second in foreign customers for California farm products and Mexico is fifth.

USMCA arrival crucial

The American Farm Bureau Federation said in a statement that the agreement arrived at a crucial time “as the agricultural economy struggles with the impacts of the COVID-19 pandemic.”

“The USMCA streamlines trade without penalizing it,” said SJFB First Vice President Ken Vogel. “It has the potential to straighten things out. And it’s a good idea to remember that not all trade agreements are always clear and upfront regarding every detail.”

He said the United States is “a huge economic engine and Mexico and Canada realize that it’s better to be with us than against us.”

US ag exports, GDP to increase

According to the AFBF, the USMCA is expected to increase U.S. agricultural exports by $2 billion annually while at the same time increasing the gross domestic product by $65 billion overall.

Under the agreement, Canada agreed to increase quotas on U.S. dairy products thus benefitting dairy farmers by $242 million.

Huge decline avoided

This is all good news for farmers considering the USDA estimates that COVID-19 will have contributed to a $50 billion decline in commodity value alone for 2019, 2020 and 2021 production totals.

Phytos, issues revealed later

The agreement “provides understanding of new phytosanitary issues,” said Phil Brumley, grower and consultant. “They can’t be used as a political ploy in disputes or as an excuse to shut down trade. U.S. farmers will have improved access to some markets that we didn’t previously have.”

He said that some “finer points of the agreement won’t be revealed until issues about them come up” and “like it or not, the U.S. is operating in a global ag economy and that COVID has caused new regulations to be enacted which will raise costs of processing.”

Optimism returns

AFBF President Zippy Duvall said in a statement, “The launch of the USMCA brings optimism to the country’s farmers and ranchers at a time they need it most [and] we’re grateful to…build on the success of the North America Free Trade Agreement [NAFTA] and we’re eager to see the results on America’s farms.”

The agreement also enhances science-based trading standards among the three nations.

A fantastic agreement

SJFB Executive Director Bruce Blodgett called the USMCA pact “a fantastic agreement, much better than NAFTA. There were many problems with NAFTA and dairy was probably the most adversely affected by it,” he said. “The USMCA provides good things for dairy, so that’s good news. We will monitor this agreement to see how other commodities benefit.”

Mexico and Canada agree

Mexico has openly stated its agreement that all grading standards for agricultural products will be non-discriminatory and Canada will treat wheat imports the same as domestic wheat for grading purposes.

The USMCA elicited positive comments from SJFB Second Vice President Jake Samuel: “This is definitely a good thing with better provisions for agriculture. This agreement needed to be done as trade agreements need to be reviewed every few years.”

Significant markets await

Blodgett said the agreement should help “us open markets in Canada and Mexico in a significant way.”

However, a vital aspect of the agreement remains, according to Brumley: “Many factors are involved for the successful sale of our exports: buyers, ports, workers, markets open abroad and funds being available to purchase our products. And foreign markets buyers are needed by Mexico. We can’t rely on just the domestic markets to buy our products.”

Neighbors cooperation

Duvall explained that, “It’s important our neighbors uphold their end of the deal, so the agreement provides a stabilizing force amid the unpredictability of a pandemic in all three countries.”

Duvall also said, “As with all trade agreements, there are some areas that still need attention. We’ll continue to work with the administration to level the playing field for fruit and vegetable growers facing increased competition from Mexico.”

USMCA is flexible

Strecker said the USMCA isn’t set in stone “and this flexibility allows the administration to take a look and adjust it as needed, when needed.”

After the failed NAFTA effort and wars of words with Mexico and Canada, Brumley said, “USMCA is to our benefit. We need this program that’s mutually beneficial for us and our neighbors.”