Replacing the North American Free Trade Agreement came one step closer this morning as the U.S. Senate passed the U.S.-Mexico-Canada Agreement by a vote of 89-10, setting the table for President Donald Trump to sign the agreement which is expected to happen next week. In December, the U.S. House approved the measure with a strong bipartisan vote of 385-41.
Mexico has already ratified the USMCA, while the Canadian Parliament is expected to approve it later this month. It is likely that the new agreement will take force in late spring.
U.S. pork producers see the USMCA as providing much-needed certainty for the industry.
"Ratification of USMCA has been a top priority for the National Pork Producers Council, and we thank members of the Senate who supported this critical trade deal," says NPPC President David Herring, a hog farmer from Lillington, N.C. "USMCA provides U.S. pork producers with certainty in two of our largest export markets. It received strong support in both chambers of Congress, and we look forward to seeing President Trump sign it into law."
In 2018, Canada and Mexico took more than 40% of the pork that was exported from the United States and a similar volume is expected in 2019. U.S. pork exports to Canada and Mexico support 16,000 U.S. jobs.
According to an article on the Los Angeles Times website, Trump had long slammed NAFTA as a "disaster" for American industry and workers, sharing the disdain of many Democrats and labor groups toward NAFTA. As a candidate, Trump promised to either do away with or rewrite the quarter-century-old pact. Canada and Mexico are the United States’ top trading partners, with three-way trade in goods reaching about $1.3 trillion. The three countries began renegotiating NAFTA in the summer of 2017, and the parties concluded talks in September 2018.
"The U.S. meat and poultry industry exports $5.5 billion annually in products to Canada and Mexico," says North American Meat Institute President and CEO Julie Anna Potts. "This agreement is critical to meat and poultry processors and the millions of U.S. farmers, ranchers, allied manufacturers and transportation companies in the food supply chain."
Under NAFTA, U.S. meat and poultry exports to Mexico and Canada thrived as import duties were removed and non-scientific barriers to trade were significantly reduced. The North American market for the meat and poultry industry is nearly completely integrated, and this integration is essential to its long-term viability.
According to NAMI, Mexico and Canada are among the top four destinations for U.S. pork and beef. Since NAFTA's entry into force in 1994, U.S. beef exports to Canada and Mexico grew from $656 million to more than $1.7 billion in 2017, while pork exports increased in value from $322 million to more than $2.3 billion during that same time period. In terms of volume, Canada and Mexico imported nearly 30% of total U.S. beef exports and 40% of all U.S. pork exports in 2017 which was prior to retaliatory tariffs.
The Senate's passage of the USMCA comes a day after phase one of a trade agreement with China was signed in Washington, D.C.
"We also appreciate the administration's work to establish a phase-one trade agreement with China," adds Herring. "We urge China to eliminate all restrictions on U.S. pork exports at a time when they are struggling with food price inflation and need reliable, affordable sources of pork. Doing so would more than double annual U.S. pork sales, generate 184,000 new American jobs and reduce the overall trade deficit with China by nearly 6%, all within the next decade."