A trade deal intended to replace the North American Free Trade Agreement (NAFTA) could grow U.S. agricultural and food production primarily by increasing market access for U.S. dairy and poultry products in Canada, according to a new report by the United States International Trade Commission.
The United States-Mexico-Canada Agreement (USMCA), which has not been ratified by the U.S. Congress, stands to increase exports of U.S. agricultural products by 1.1%, to a total of $2.2 billion, according to the April 2019 report. U.S. exports of dairy products, poultry and eggs to Canada would account for the bulk of this increase, though U.S. exports of wheat and alcoholic beverages may also rise. USMCA is not expected to affect agricultural trade between the U.S. and Mexico.
The trade agreement, sometimes called the “new NAFTA,” is expected to increase total U.S. dairy production by $227 million, and increase poultry production by $149.3 million. Egg production would increase by less than 1%, according to the report.
Boon to grain, feed industries
Growth in dairy and poultry should in turn benefit feed and grain producers, said Floyd Gaibler, director of trade policy for the U.S. Grains Council. With positive impacts slated for multiple industries, industry associations hope the report will encourage Congress to ratify the agreement.
The American Feed Industry Association (AFIA) “hopes the Commission’s report will help Congress see the value that the USMCA’s new provisions and commitments would have in supporting U.S. economic growth and employment, and urges Congress to quickly pass this agreement,” said Gina Tumbarello, AFIA’s director of international policy and trade, in a statement.
With respect to agricultural products, USMCA differs only slightly from NAFTA. The main changes, according to the International Trade Commission, involve Canadian tariff-rate quota (TRQ) volumes for U.S. dairy, poultry and eggs. Though the TRQs would remain in place, Canada has agreed to increase its quota volumes in exchange for an easing of U.S. restrictions on Canadian sugar.
The agreement also makes technical changes to NAFTA that the International Trade Commission anticipates will open Canadian markets to U.S. exports of grains, oilseeds, cheese and alcoholic beverages by decreasing the cost of trading these products. All three parties have also agreed to review new genetically modified crops in a more timely and transparent manner.
