US Senate OKs US-Mexico-Canada Agreement; Canada’s OK Still Needed

The US Senate on Thursday approved the US-Mexico-Canada Agreement (USMCA), and the agreement now heads to President Trump for his expected signature.

Mexico has already ratified the USMCA. Meanwhile, Canada’s Parliament doesn’t convene until Jan. 27, and implementing legislation still needs to be sent to Canada’s House and Senate, according to the International Dairy Foods Association (IDFA). If Canada passes the USMCA by spring, the earliest the deal could enter into force would be summer 2000.

Mexico and Canada are currently the two largest US dairy export markets on a value basis. In 2018, dairy exports to those two countries combined totaled over $2.0 billion, according to figures from USDA’s Foreign Agricultural Service (FAS).

The USCMA, which updates and modernizes the North American Free Trade Agreement (NAFTA), provides additional market access for US dairy products through new Canadian tariff-rate quotas (TRQs) exclusively for the US for products including cheese, fluid milk, cream, butter, skim milk powder and others, according to the US International Trade Commission.

On the import side, the US will grant additional access to Canada through new, country-specific dairy TRQs. Also, among other things, Canada has committed to eliminating Class 6 and Class 7 milk class prices within six months after the agreement enters into force.

“The new USMCA deal delivers peace of mind for our businesses, removing the handcuffs of uncertainty that have constrained business decisions over the past two years as the deal was negotiated,” said Michael Dykes, IDFA’s president and CEO. “The USMCA deal is a major win that levels the playing field with our largest trading partners.”

“USMCA makes important strides to break down trade barriers, opening the door to new opportunities and supporting the flow of high-quality American dairy products to two valuable export markets,” said Tom Vilsack, president and CEO of the US Dairy Export Council (USDEC). “The strong enforcement measures included in the final agreement give officials the tools necessary to hold our trade partners accountable and ensure the gains secured by USMCA are completely realized.”

“America’s dairy farmers are celebrating today’s bipartisan vote as a win,” Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF), said Thursday. “The US must now remain diligent and proactively work with Canada and Mexico to implement USMCA in both letter and spirit.

“Full compliance is essential to achieving more fair trade with Canada and protecting American-made cheeses in Mexico,” Mulhern added.

“Approval of this trade deal is a major victory for American dairy processors, as both Mexican and Canadian consumers are essential to the stability and growth of our industry,” said John Umhoefer, executive director of the Wisconsin Cheese Makers Association (WCMA). “Free-flowing trade with neighboring nations will provide a measure of security for dairy farmers and their processor partners that is sorely needed.”

Thursday’s Senate vote “showcases a strong bipartisan support for this modern trade agreement and ultimately strong support to get US dairy products to be exported to our neighbors to the north and south,” said John Rettler, a Wisconsin dairy farmer and president of FarmFirst Dairy Cooperative.

“This new trade agreement addresses the class 6 and 7 pricing distortion issues and expands market access for US dairy into Canada while also affirming our strong trade relationship with Mexico,” said Jeff Lyon, FarmFirst’s general manager. “There is still work to be done. We are grateful for the hard-fought details that are part of this agreement; however, we would be remiss to not monitor implementation of this agreement to ensure it is being enforced in full and that US dairy is reaping the full benefits.”

“This is another important step forward for dairy farmers throughout the US,” said Laurie Fischer, the American Dairy Coalition’s CEO. “After suffering severe economic losses over the last five years, the nation’s dairy farmers look forward to stability, certainty and growth of dairy products into the markets of Mexico and Canada.”

“For the past 25 years, NAFTA has given us productive and reliable markets for our dairy foods. Improvements under USMCA will take us to the next level,” said Brody Stapel, president of Edge Dairy Farmer Cooperative
.

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