Mexico and Canada are Nebraska’s two largest customers for agricultural goods and those relationships would continue under the new “U.S., Mexico, Canada Agreement” (USMCA) trade deal reached by the three countries in early October. The deal would replace the North American Free Trade Agreement (NAFTA), but maintain the positive market access for most of the major agricultural commodities produced in Nebraska.
“Any way you slice it, Mexico and Canada are critically important customers for Nebraska agriculture. We applaud the President for his work to get the U.S., Mexico, Canada Trade Agreement (USMCA) done,” Steve Nelson, Nebraska Farm Bureau president said Oct. 1.
Exports of Nebraska agricultural goods to Mexico and Canada exceeded $2.9 billion in 2016 and accounted for 45 percent of Nebraska’s total agricultural exports that year. Mexico and Canada are major customers for Nebraska beef and Mexico has been a top customer for Nebraska corn, and the second-largest customer for Nebraska soybeans and wheat. The two countries are also major importers of ethanol and dried distillers’ grains from Nebraska.
“Overall the USMCA deal retains much of NAFTA’s core agriculture provisions, meaning we shouldn’t expect to see much change in the relationship in terms of the sales of our products to these customers. However, USMCA did make some changes that will expand U.S. access to Canadian and Mexican markets when it comes to wheat, dairy, and poultry,” Jordan Dux, Nebraska Farm Bureau director of national affairs said.
With the changes, Mexico has agreed not to restrict market access for U.S. cheeses with certain names. In the dairy sector, Canada will eliminate milk price classes 6 and 7 used in its dairy support program, as well as increase tariff rate quotas for U.S. dairy products like milk and cheese. The deal would also allow new access for U.S. poultry and eggs. In exchange, the U.S. will allow new access for certain Canadian dairy products. As it relates to wheat, the deal provides that Canada would grade U.S. wheat no less favorably than Canadian wheat.
Under the new agreement the countries would also be required to review the USMCA every six years, with the deal set to expire in 16 years unless the countries opt to renew.
While all three countries have agreed to the trilateral trade deal, each country will still need to review and approve the deal before it can be enacted. That means Congress will have to develop and vote on legislation to implement the deal.
“Congress is unlikely to take up legislation before the end of the year which means it will come after the midterm elections. If Democrats take control of the House, Senate, or both, passage of the trade deal could become more of a hurdle. There’s no guarantee at this point that the USMCA deal negotiated would get Congressional approval under those scenarios,” said Dux.