President Donald Trump holds up the signed USMCA trade agreement at a ceremony Wednesday in this White House photo.
Written by David Castellon
Touting his campaign promise to scrap the North American Free Trade Agreement and negotiate a new trade deal with Mexico and Canada, President Donald Trump signed that new deal into law on Wednesday.
But how much better a deal the U.S.-Mexico-Canada Agreement is for this country compared to its 16-year old predecessor depends on whom you ask.
Here in the Central Valley, Mike Betts, president and CEO of Betts Co., a Fresno manufacturer of springs and other accessories for cars and trucks, was happy with the new trade agreement.
“It’s a really good thing for the United States, Mexico and Canada. It’s a more well balanced, free trade type of agreement, ” he said. Under the new agreement, he said U.S. goods will have more access and promotion in the other markets.
“That’s going to be a concerted effort by the [World] Trade Organization … to get more of our products into those two countries. It wasn’t like we were getting boycotted or anything, but we weren’t getting the level of support we’re getting now, and we are excited about that,” Betts said.
A big part of the USMCA involves agricultural goods.
“The President’s approval of the USMCA is a significant win for San Joaquin Valley agriculture,” stated California Sen. Andres Borgeas, R-Fresno. “This new agreement will benefit San Joaquin Valley farmers, farm workers, and the food industry for years to come.”
He noted that the U.S. International Trade Commission projected in April 2019 that the trade agreement would boost the nation’s economy by $68 billion and add 176,000 jobs in the years to come.
Manuel Cunha, president of the Nisei Farmers League in Fresno, said, “I think its great. I’m very excited for our farmers, our packers, including our [U.S.] farmers who are farming in Mexico and sending things outside or to the U.S.”
While some critics of the new trade deal say it’s not much different than NAFTA, Cunha — whose privately held group lobbies in support of Valley farms and farm operators — noted it includes more solid definitions of what inspections of incoming ag goods have to be done and the standards trucks from the foreign counties have to meet to enter the U.S. It also beefs up enforcement of these new rules.
The new agreement also addresses safety and treatment of the workers who produce the ag goods coming from Mexico and Canada, and one of the bigger provisions is the timing of when some ag goods can be sold to the neighboring countries, he said.
Specifically, USMCA allows for the setting of trade timelines so as to not interfere with sales of the same goods those countries produce and supply for their own markets, Cunha said. For example, Mexico would be restricted from shipping grapes when grapes grown here are in season, so the two don’t end up competing for sales on store shelves, he explained.
The new trade deal will have a lesser effect on California dairies, said Joaquin Contente, a Kings County dairy operator.
“It’s a step in the right direction, of course,” he said.
But he added that the White House has strongly hyped that the new deal will open Canadian markets to U.S. milk products, but despite its size, Canada’s entire population is about equal to California’s, so it’s not as big a market as some might believe.
“So demand wise, I don’t expect a huge increase of [U.S.] dairy going in that direction.”
One boon for dairies here is that Canada is eliminating its Class 7 — ultra filtered — milk category, which it reportedly had been selling on the world market below cost, putting American milk in that category at a cost disadvantage.
“We lost some sales to that country for awhile,” but USMCA puts the two countries back on even ground on that matter, Contente said.
Still, milk producers in Canada are better organized than those here, and while they have agreed to “open the door” to allow more U.S. dairy into their market, “they’re going to be cautious about opening the door completely,” the dairyman added.
Mexico is the biggest importer of U.S. milk products, largely because its own dairies can’t produce the amount of milk needed in the country, which Canada can do, “and I expect it to grow some” under the new trade agreement, Contente said.
Still, he added, “Dairy is one of those areas where there is going to be very little change.”
Contente accused the White House of dropping the ball by not pushing to include a provision in USMCA requiring country of origin labeling on meat products the U.S., Mexico and Canada export to each other.
“Dairy produces a lot of beef. Most of the hamburger in the United States come from dairy cows,” Contente said.
The new agreement would have been a way to restore the country of labeling requirement, which was dropped in the U.S. in April 2015, so bulk meat shipped from a foreign country can be shipped to a meat plant here, processed and get a “Product of USA” label slapped on it when it’s put out in a store meat case, but the truth is it could have come from Australia, Brazil, Argentina or some other country, Contente said.
“That’s the law right now, and that’s what we have right now. It’s very deceiving … so that’s something I think is a fault of this agreement.”
Reporters at Wednesday’s signing of the trade agreement noted that congressional Democrats weren’t invited, even though they had input in putting together the final deal between the three countries.
In a press release, the National Farmers Union in Washington, D.C., noted that the organization opposed the free trade framework established by NAFTA, saying in a press release, “Since NAFTA set a precedent for unfettered free trade two-and-a-half decades ago, our nation’s trade deals have favored the interests of multinational corporations at the expense of family farmers and ranchers and rural economies.
“With the passage of USMCA, we are hopeful that this era is finally over and that some equity will be restored to international markets.”
The release goes on to state that the union initially withheld endorsement for USMCA when it was introduced more than a year ago.
“However, the NFU board of directors later voted to support it after the House Democrats made several notable improvements,” the press release continues.
“We are especially pleased to see significant improvements over earlier versions of this deal, including stronger labor, environmental, and enforcement provisions, as well as the elimination of giveaways to the pharmaceutical industry. These improvements are the direct result of many months of negotiations by [House] Speaker Pelosi and House Democrats, for which we commend them.
The USMCA isn’t set in stone yet.
Though the U.S. and Mexico have signed the revised agreement, Canadian lawmakers didn’t begin the process of ratifying it until Monday, and that process could take months, according to news reports.