With all the negative news facing the state’s farmers this year, Michigan Farm Bureau President Carl Bednarski, a Tuscola County farmer, said July 1, 2020, marks a day of significantly positive economic news for U.S. agriculture.
The new U.S.-Mexico-Canada Agreement trade package officially takes effect, replacing its 26-year old predecessor, North American Free Trade Agreement, which took effect in 1994 and desperately needed an update.
“It’s been a long road to get here,” Bednarksi said regarding the USMCA negotiation and approval process. “But, given all the challenges U.S. agriculture has faced in recent years, and especially this year due to COVID-19, USMCA couldn’t take effect at a better time.”
During a tour through Michigan on June 30, USDA Ag Secretary Sonny Perdue said the implementation of a “very fair deal” will benefit Michigan’s agricultural and manufacturing sectors, particularly the automotive industry. “We’re excited about USMCA implementation, and I think the U.S. is prepared to hold Canada and Mexico to the agreement as written,” he added.
According to American Farm Bureau Federation figures, Michigan agricultural exports to Canada totaled $902 million and another $174 million to Mexico in 2018, supporting 17,000 jobs both on and off-farm in production, processing and transportation activities.
Bednarski said while NAFTA proved to be a long and successful agreement for U.S. agriculture, updates to technology advancements such as biotech and phytosanitary standards were needed.
“USMCA also addressed a number of hotly debated dairy trade provisions, particularly with Canada, that will finally provide a level playing field for Michigan dairy farmers as well,” Bednarski said. “So, Michigan farmers are very excited, especially dairy, wheat and poultry producers with better access into the Canadian market.”
John Newton, AFBF chief economist, echoed those comments, saying USMCA gives U.S. farmers improved access to two of America’s most important trading partners.
“Canada and Mexico were our top two trading partners in 2019, in terms of the total economy, and then when you look at agriculture in 2019, again, Canada and Mexico were our top two trading partners,” Newton said.
“NAFTA proved to be very good for U.S. producers, and with the improvements we see in USMCA, it too will be a great agreement for U.S. agricultural producers,” Newton added.
Ultimately, Newton predicts USMCA will allow U.S. farmers to be more competitive in global trade moving forward, noting the trade agreement will serve as the model for additional trade agreements currently being negotiated elsewhere, including the European Union.
“Not only does USMCA make trade with Canada fairer on the wheat front, dairy front, and poultry front, but we also updated non-tariff and science-based parameters within USMCA,” Newton said. “So, there are a lot of improvements in this trade agreement that should make U.S. agriculture more competitive worldwide in our top markets.”