Outside Influences

Trade Deal Draws Cautious Praise From Farm Groups

The new accord with Canada and Mexico has some provisions that farmers like—but many of them were happy with NAFTA and were wary of a rewrite.

President Trump announces a revamped North American free-trade deal in the Rose Garden of the White House on Monday.
AP Photo/Pablo Martinez Monsivais
Oct. 2, 2018, 8 p.m.

On Monday, just after President Trump touted the new trade agreement with Canada and Mexico as “a very, very big deal for our farmers,” the North Dakota Republican Party sent reporters a note that the U.S.-Mexico-Canada Agreement to replace the North American Free Trade Agreement was “good trade news for North Dakota—bad campaign news for Heidi”—a reference to Democratic Sen. Heidi Heitkamp, who is in a tough reelection race against Republican Rep. Kevin Cramer.

The successful negotiation certainly didn’t hurt Trump’s standing in North Dakota, but the reaction of most national farm leaders to the USMCA, as Trump calls the successor to NAFTA, is so tepid that it doesn’t look like Republicans can count on it carrying their candidates across the finish line in tight races.

In his Rose Garden announcement, Trump noted that “the deal includes a substantial increase in our farmers' opportunities to export American wheat, poultry, eggs, and dairy, including milk, butter, cheese, yogurt, and ice cream, to name a few.”

Trump is accurate about those accomplishments, but farm leaders Monday expressed more relief that Trump did not withdraw from NAFTA than enthusiasm about the improvements.

The reason is that the gains under the new agreement are relatively small compared to what American farmers have already experienced with NAFTA over the past-quarter century.

As Senate Agriculture Committee Chairman Pat Roberts noted Monday: “Since 1994, when the original NAFTA went into force, the value of U.S. agricultural exports to Canada has increased by 271 percent and to Mexico by 305 percent. That is no small impact on rural America, as well as the American economy. This trade pact will provide our farmers and ranchers with much-needed export market certainty and will strengthen the relationship with two of our most important trading partners.”

Perhaps the biggest surprise Monday was the bland statement issued by the U.S. dairy groups whose issues were central to the negotiations. In a joint statement, the National Milk Producers Federation, the U.S. Dairy Export Council, and the International Dairy Foods Association thanked Trump administration negotiators “for fighting hard against Canada’s trade-distorting practices.” The groups noted that the agreement “includes the elimination of Canada’s Class 7 pricing system and creation of some additional market access, two important objectives of the U.S. dairy sector.”

But the dairy groups added that “the ultimate benefit of the new USMCA will depend on how it is implemented”—and they praised the agreement for maintaining the NAFTA access for U.S. dairy companies to Mexico, which has become their biggest export market.

The White House also highlighted Mexico’s agreement to consult with the United States on geographical indications—the European Union labeling system under which certain wines, meats, and cheeses may be labeled with a place name only if the product is made in that place. The U.S. dairy groups have campaigned vigorously against GIs on the grounds that U.S. producers have made the same cheeses for a century—but they didn’t even mention the USMCA provision in their statement. National Milk Producers Federation President and CEO Jim Mulhern said that the GI provision will make it more difficult for the EU to register new GIs that are common food names, but that the dairy groups were disappointed that Mexico and Canada have already agreed in their trade pacts with the EU to adopt restrictive labeling for many cheeses.

The National Cattlemen’s Beef Association, the National Pork Producers Council, the National Chicken Council, and the National Turkey Federation all praised the agreement.

But the NPPC also said it continues “to urge the administration to remove tariffs on Mexican steel and aluminum imports so that country will lift its 20 percent retaliatory tariff on U.S. pork.”

Grain groups were also cautious.

National Corn Growers Association President Lynn Chrisp noted that his group’s members had been “reminding the administration of its promise to ‘do no harm’ to agriculture” and said it would thoroughly evaluate the agreement “to determine if it continues to benefit American agriculture.”

The White House pointed out that Canada has agreed to grade imports of U.S. wheat “in a manner no less favorable than it accords Canadian wheat,” but the National Association of Wheat Growers and U.S. Wheat Associates declined to endorse the agreement until they “review the language of the deal.”

The American Soybean Association said, “a modernized NAFTA is timely and beneficial for our farmers and rural communities,” but added that it hopes “a negotiated solution to the China tariffs could be in sight.”

Heitkamp said that the agreement is probably good for wheat producers, but that potato growers and ranchers who hoped for country-of-origin labeling for meat would be disappointed. In a reminder of the uncertainty the NAFTA rewrite has wrought, Heitkamp noted she has been helping farmers “maintain their relationships with their buyers in Canada and Mexico.”

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