USMCA trade deal moves closer to ratification

The United States may approve the new North American free trade deal in seven to 10 days.

In a busy morning for international trade, Speaker Nancy Pelosi and Democrats announced their support for the United States Mexico Canada Agreement (USMCA) today. They didn’t commit to a date, but Pelosi said they would try to ratify the deal before Christmas.

Canada’s deputy prime minister, Chrystia Freeland, was in Mexico City today to sign the new deal, but the Pelosi announcement was the significant news because the U.S. Congress has yet to approve it.

Pelosi and the Democrats wanted a few tweaks to the deal, on labour and environmental issues, before signalling their support. The House Democrats and the Office of the U.S. Trade Representative hashed out the tweaks, which led to today’s announcement.

If the House ratifies the agreement, it should move quickly through the Republican-controlled. U.S. Senate.

Mexico had ratified an earlier version of USMCA in June. Canada’s Parliament will also need to ratify the deal.

U.S. farm groups, who strongly support the updated trade deal, heralded the announcement.

National Corn Growers Association president Kevin Ross today made the below statement following an announcement that the White House and Congress are moving forward with the necessary legislative steps to ratify the United States-Mexico-Canada Agreement (USMCA).

“The NCGA’s top legislative priority in 2019 has been passing USMCA,” National Corn Growers Association president Kevin Ross said following the announcement that the White House and Congress are moving forward with the necessary legislative steps to ratify the deal.

“Today’s announcement brings us one step closer to ratifying this important agreement and securing the future of our trading relationship with Mexico and Canada, the top export market for U.S. corn farmers.… It’s been a brutal year for many farmers who really need the certainty this would provide for agricultural trade. ”

The National Grain and Feed Association issued a similar release, praising lawmakers, trade negotiators, Canada and Mexico for reaching the deal.

The USMCA is critical for American farmers because Canada and Mexico are huge markets for a number of U.S. agricultural products, including corn, pork and beef.

Under the agreement, the U.S. will gain an additional 3.6 percent of Canada’s domestic dairy market. As well, the USMCA eliminated Canada’s Class 7 pricing system, which allowed Canadian milk proteins and skim milk to be sold to processors at world prices, lower than Canadian prices, and displacing a market that used to be filled by American dairies.

On the positive side, the USMCA should lessen non-tariff trade barriers on agricultural goods. It includes language around sanitary and phytosanitary (SPS) disputes and clarity on biotechnology.

“To reduce the likelihood of trade disruptions in products of agricultural biotechnology … and require that SPS standards be grounded in science and based on proper risk assessments and implemented using accepted risk management techniques,” the National Grain and Feed Association said.

Most Canadian farm groups, with the exception of the dairy, egg and chicken producers, have expressed support for the new deal.

In other trade news, the Appellate Body of the World Trade Organization likely ceased to function today. Three judges sit on the Appellate Body, which is the last court of appeal in WTO trade disputes. The term of two of the judges expired Dec. 10, so the panel doesn’t have enough judges to make decisions on appeal cases.

With no Appellate Body, dispute cases at the WTO will likely grind to a halt.

“The dispute settlement system of the World Trade Organization is key to providing the stability businesses need for rules-based international trade,” said Mary Ng, Canada’s minister of small business, export promotion and international trade.

“Canada will continue to work with all WTO members to resolve the Appellate Body impasse, to strengthen the dispute settlement system and to engage with other WTO members on interim appeal arbitration arrangements.

Contact robert.arnason@producer.com

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