From Reuters, No-Till Farmer Staff Reports
President Donald Trump on Monday touted a new free trade deal with Canada and Mexico as a win for U.S. workers while investors breathed a sigh of relief that the key pillars of NAFTA had survived his hardball strategy to reshape global commerce.
Washington and Ottawa reached an agreement on Sunday after weeks of tense bilateral talks to update the 1994 North American Free Trade Agreement. The United States forged a separate trade deal with Mexico, the third member of NAFTA, in August.
The new agreement, called the United States-Mexico-Canada Agreement (USMCA), is aimed at bringing more jobs into the United States, with Canada and Mexico accepting more restrictive commerce with the United States, their main export partner.
“These measures will support many — hundreds of thousands — American jobs,” Trump said at the White House, describing the trade deal as “the most important” the United States had ever made.
“It means far more American jobs, and these are high-quality jobs.” Trump has repeatedly described NAFTA as a terrible deal for the United States.
Speaking in Ottawa, Canadian Prime Minister Justin Trudeau said the pact removed uncertainty though he conceded Canada had made some difficult compromises. Canada’s dairy industry criticized him for giving more market access to U.S. imports.
“We had to make compromises, and some were more difficult than others,” Trudeau said in a press conference. “We never believed that it would be easy, and it wasn’t, but today is a good day for Canada.”
Initial U.S. reaction was effusive, with auto workers, dairy farmers and wheat producers saying the deal would likely create job opportunities and open up agricultural markets.
Here are some reactions to the news today from agriculture groups:
National Corn Growers Assn: “Farmers across the country have been closely following NAFTA negotiations and reminding the administration of its promise to ‘do no harm’ to agriculture,” says president Lynn Chrisp. “NAFTA has been an unequivocal success story for American agriculture, opening markets that since enactment have become vitally important to U.S. corn farmers, and providing certainty to farmers and the rural economy.
“We applaud USTR for reaching a new agreement and look forward to thoroughly evaluating it to determine if it continues to benefit American agriculture.”
Last year the U.S. exported $3.2 billion of corn and corn products to Mexico and Canada, supporting 25,000 rural jobs, the Association says.
American Soybean Assn. (ASA): ASA president and soybean grower from Keota, Iowa, John Heisdorffer said, “Our soybean harvest this year is large, and we are facing great uncertainty in China, so a modernized NAFTA is timely and beneficial for our farmers and rural communities.”
Under NAFTA, U.S. soy exports to Canada and Mexico were almost $3 billion in 2017, and U.S. soy exports to Mexico have grown four-fold under the agreement, ASA says. Mexico is now the second largest export market for U.S. soybeans and meal. Additionally, roughly $43 billion of agriculture products are exported to Canada and Mexico every year.
Canola Council of Canada (CCC): “We are pleased that an agreement for continued stable trade with two of our four largest markets has been reached,” says Jim Everson, president of the CCC. “At first glance, we’re pleased that open trade for canola will continue and that we’ll now be able to export further processed products like margarine without tariffs being applied.”
Text of the agreement that has been released shows that canola seed, oil and meal will remain free of tariffs, while further processed products like margarine can now trade freely between Canada and the U.S. because of modernized rules of origin, CCC says.
Manufacturing processes have changed since the original North American Free Trade Agreement (NAFTA) was negotiated, and the USMCA has been updated so that margarine produced in Canada can meet the rules of origin required for tariff free access, the organization says.
“This modernized agreement removes the tariff on canola-based margarine going to the U.S.,” says Everson, noting this was one of the opportunities that the CCC encouraged negotiators to consider during NAFTA talks. “This update enables more value-added canola exports.”
Assn. of Equipment Manufacturers: “The United States-Mexico-Canada Agreement (USMCA) is a step in the right direction,” said Dennis Slater, President of AEM. “Trade agreements provide better access to customers across the globe and help us add to the 1.3 million jobs our industry supports in the United States. We urge this administration to continue working closely with the Canadian and Mexican governments to enact policies that promote continued economic growth for our industry.”
Nearly 30% of all equipment produced in the U.S. is intended for export and Canada and Mexico are the first and second-largest export markets for both U.S. construction and agricultural equipment. Since the creation of NAFTA two decades ago, the equipment manufacturing industry has benefited greatly from duty-free access to our industry’s largest two export markets, Canada and Mexico.
A NAFTA collapse could have caused U.S. farmers to lose access to agricultural markets in Canada and Mexico at the same time China has effectively halted purchases of U.S. soybeans and other commodities, helping to shore up a key Trump constituency.
In Mexico, negotiators took to Twitter and radio to celebrate having preserved a single North American trading zone as part of a trilateral pact. NAFTA underpinned $1.2 trillion in trade between the three countries.
U.S., Canadian and Mexican stocks jumped early on Monday before paring gains later in the trading session.
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