Just when you may have thought it was over, the new U.S.-Mexico-Canada Agreement (USMCA) will be coming up again. Though all three countries have agreed to it, it is not a done deal for the United States. The same is true in Canada and Mexico.
The new agreement is a change from the 1994 agreement between the three countries, known as NAFTA—the North American Free Trade Agreement. In Canada, USMCA is called the “Canada-United States-Mexico agreement” or CUSMA. In French Canadian, it is called the “Accord Canada–Йtats-Unis–Mexique” (ACEUM) while in Mexico, they call the agreement “Tratado entre Mйxico, Estados Unidos y Canadб” (T-MEC).
Whatever you call it, USMCA/CUSMA is not yet the law of the lands. All three countries need to ratify the agreement. Because it was done through the United States’ “fast track” legal system, it may not be possible for any changes to be made even if all three countries want that.
Some Canadian officials feel that parts of it may change. Others state that Canada may enter a “sign or walk away” stage yet.
For example, Brian Masse, a New Democratic Party MP (Member of Parliament) in Windsor West, Ontario, is a vice-chair of the interparliamentary group who visited Washington in late November 2018 following the signing of the agreement. Masse feels that the agreement is a concession-based deal for Canada, and “now the U.S. Congress wants even more concessions.”
Canadian cattle pros, cons
From the Canadian standpoint, pros and cons of USMCA as it stands today revolve around cattle.
In terms of ranching, USMCA will have an impact on farmers and operations between all of the borders. The two biggest cattle-producing countries, Canada and the United States, will obviously see the largest impact.
On the positive side, for beef ranching in Canada, the USMCA is set to provide a beneficial and unchanged situation. The Canadian Meat Council’s Chairman of the Board, David Colwell, says “The North American meat industry is fully integrated, and having uninterrupted access across the three countries is critical. The ability of Canadian meat companies to compete on a global scale depends on their ability to also maintain and grow the North American market.”
Beef import and export will continue largely as it has before under the NAFTA agreement. This a major win because the supply chains for beef between the U.S. and Canada have become very integrated over time under the NAFTA terms. New conditions or tariffs could have had a devastating effect on ranchers and producers.
Figures from 2016 from the Canadian Cattlemen’s Association state that beef exports to the U.S. were worth $1.65 billion (Canadian dollars), which made up 73.5 percent of all Canadian beef exports for the year. If there were no agreements, Canada and the U.S. would likely be faced with using trade terms set out by the World Trade Organization. Beef imported under the WTO commitments would be subject to much higher tariffs than beef which was imported to the U.S. from Canada.
Multi-national slaughterhouses also use Canadian facilities for their beef. This means that businesses work together on both sides of the border. The existing terms are favorable under NAFTA for all parties and set to remain so. With USMCA, these terms are not set to change.
An area of concern for Canadians lies in the dairy sector. Under USMCA, U.S. dairy farmers are to be given greater access to the Canadian market. This is a big change in Canada where the supply management system is in place to ensure that there is no glut of dairy products on the market.
Rather than a government subsidy to dairy farmers as the United States provides, Canada has regulations on how many producers are allowed and how much they can produce so that milk stays at fair market value. If there is suddenly too much dairy and the price goes down, farmers in Canada will now receive an unspecified subsidy to help with the loss of profits.
Despite this, about 90 percent of the Canadian agricultural industry has found something to be happy about with the agreement, even if what they are happy about is the lack of change from NAFTA to USMCA. — Yvonne Dick, WLJ Canadian correspondent
