U.S. trade analysis expects little impact from new deal

The U.S. International Trade Commission expects U.S. dairy exports to Canada to rise by $227 million a year while imports of Canadian dairy products will increase by $162 million

An analysis by the United States International Trade Commission suggests the U.S.-Mexico-Canada Trade Agreement will have little impact on agricultural trade.

The 379-page report concludes that once fully implemented the provisions of the proposed trade pact will increase U.S. agriculture exports by 1.1 percent while imports will rise 1.3 percent.

The main impact will be on dairy, poultry and sugar products.

“Most trade in agricultural products between the United States, Canada and Mexico is already duty free under NAFTA and would continue to be duty free under USMCA,” stated the ITC report.

The ITC expects U.S. agriculture exports to Canada to increase by US$900 million per year or 3.7 percent while imports from Canada will rise by $1 billion or 3.4 percent.

“USMCA would lead to small increases in U.S. exports to Canada of dairy products, poultry meat, eggs and egg-containing products, as well as wheat and alcoholic beverages,” stated the report.

“At the same time, it would lead to a small increase in U.S. imports of sugar and sugar-containing products and dairy products from Canada.”

Dairy Farmers of Canada was livid when it found out that Canada had agreed to a deal that gave the U.S. 3.59 percent market access for dairy products.

“Today the message sent to our passionate, proud and quality-conscious farmers and all the people who work in the dairy sector is clear: they are nothing more than a bargaining chip to satisfy (U.S.) President (Donald) Trump,” DFC president Pierre Lampron said in a 2018 statement.

The organization is still upset despite an announcement in the 2019 budget from the federal government of $3.9 billion to compensate the dairy, poultry and egg sectors for the impact of concessions granted in the Comprehensive Economic and Trade Agreement (CETA) with Europe, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) between Canada and 10 Pacific Rim countries, and the USMCA between Canada, the U.S. and Mexico.

DFC said the concessions the U.S. secured from Canada in the USMCA won’t fix the problems confronting the U.S. dairy industry.

“Suggesting otherwise comes from the political realm rather than fact,” Lampron said in an emailed statement.

“Yet the impact these concessions have on our own domestic sector are real and the effects have been multiplied by agreeing to constrain our ability to export a number of dairy products beyond the countries that are signatories to the agreement.”

He said that amounts to a world cap for Canadian dairy exports.

“On one hand we are letting more foreign dairy come into Canada, on the other we limit our ability to export,” said Lampron.

According to the ITC study, U.S. dairy exports to Canada will increase by $227 million per year once fully implemented, driven by higher exports of cheese and other milk and cream products.

At the same time, U.S. imports of Canadian dairy products will increase by $162 million per year, due mostly to higher cheese imports.

The other big gain for the U.S. will be poultry meat imports, which would increase by $184 million, or nearly 50 percent, in year six of the agreement.

Refined sugar exports to the U.S. from Canada would increase by $16 million six years after implementation of the agreement, while U.S. sugar exports to Canada would rise by $21.1 million, according to the ITC.

The USMCA has yet to be ratified by the U.S., Mexico and Canada.

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