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House To Start ‘New NAFTA’ On Its Way to Reality
The Democratic-controlled House is set to approve one of President Trump’s top priorities today — an updated North American trade pact — a day after impeaching him. The Senate is not expected to give final congressional approval to the United States-Mexico-Canada Agreement until early next year.
While U.S. agriculture would see just modest gains — a bit more than 1% in sales — with the USMCA, the pact would ensure continued duty-free access for most ag exports to Canada and Mexico, which account for one third of U.S. food and ag trade. Exports were disrupted for months when the U.S. neighbors retaliated against high duties on steel and aluminum imports from the two nations. The USMCA expands U.S. dairy access to Canada and requires more equitable grading of U.S. wheat by Canada.
“We can’t get this ratified by Congress fast enough,” said David Herring, president of the National Pork Producers Council. “We look forward to the president signing it into law next year.” The farm group estimates that producers lost $12 a head when Mexico’s tariffs were in effect. Japan, Mexico, and Canada are three of the four top markets for U.S. pork; Mexico is the leader in tonnage, while Japan is tops in dollar value, according to data compiled by the U.S. Meat Export Federation. In 2018, a combined $2 billion worth of U.S. pork was shipped to Mexico and Canada. Some $1.7 billion worth of U.S. beef was exported to Canada and Mexico as well.
“We’ll get it [USMCA] done, no doubt about it,” Senate Finance Chairman Charles Grassley told reporters early this week. Senate Majority Leader Mitch McConnell has said the trade pact will wait until after the impeachment trial of Trump, which is expected in January.
Seven first-term House Democrats said the Senate should make time this week to pass the USMCA before leaving for the year-end holidays. “The Senate cannot leave for recess until you pass the USMCA,” said the Democrats in a letter to McConnell. “We have completed the heavy lifting of negotiations and compromise and will send you a bipartisan trade agreement that the president himself supports.” Iowa Representative Cindy Axne told Politico that Senate inaction on the USMCA “is really a political stunt.”
The National Corn Growers Association said House passage of the USMCA would be a signal to “other important trading partners that the United States is open for business.” Canada and Mexico bought $4.56 billion worth of U.S. corn and corn products in 2018. “Corn farmers cannot afford to lose this North American market, which is why it is so important USMCA be ratified.”
Renegotiation of the 1994 North American Free Trade Agreement was a centerpiece in Trump’s campaign for president. He repeatedly threatened to withdraw from NAFTA once negotiations were underway and suggested a year ago that withdrawal would be a way to force Congress to vote on the USMCA. Agriculture Secretary Sonny Perdue is credited with dissuading Trump from scrapping NAFTA in 2017 by showing him a map of states that would be affected and reminding him that rural America was pivotal to his election.
“While this agreement is a step towards restoring our agricultural trade relationship with Mexico and Canada, make no mistake that this administration’s chaotic approach to trade has destroyed markets for farmers,” said Senator Debbie Stabenow in announcing her support of the USMCA on Wednesday. “Ultimately, the administration needs a consistent strategy to rebuild export markets for farmers.” Stabenow is the senior Democrat on the Senate Agriculture Committee.
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