‘A new NAFTA’ – Administration comes to agreements with Canada and Mexico | TSLN.com

‘A new NAFTA’ – Administration comes to agreements with Canada and Mexico

As cattlemen were working on their fall to-do lists, President Trump came to an agreement with Canada, completing a "new NAFTA," renamed USMCA. Photo by Lana Marie

Canada agreement eliminates Class 7 dairy, includes more market access

The United States reached an agreement Sept. 30 with Canada to include our northern neighbors in a new U.S.-Mexico-Canada trade agreement. While the agreement won't be enacted until ratified by Congress, it is a major step forward in implementing a new NAFTA, or USMCA as the administration calls it.

The new agreement essentially changes nothing from the NAFTA agreement regarding beef or cattle, tariffs and quotas for cattle and beef crossing the border remain at zero.

U.S. cattle groups, as expected, are split in their reaction to the announcement.

“It was actually pretty simple because in the old NAFTA agreement, we had zero tariffs, zero anything. We wanted to be sure the new agreement reflected zero tariffs, and that’s the way it turned out.” Kevin Kester, NCBA president

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The National Cattlemen's Beef Association President Kevin Kester from Monterrey County, California, said his group is pleased with the new agreement.

"It was actually pretty simple because in the old NAFTA agreement, we had zero tariffs, zero anything. We wanted to be sure the new agreement reflected zero tariffs, and that's the way it turned out."

Kester said the NCBA had asked the administration to "do no harm," or to make no changes as far as beef and cattle go, when negotiating a new agreement.

The cow-calf and stocker operator doesn't expect any major impacts to the cattle market with the announcement of the new agreement, but he thinks the USMCA will provide some certainty to market players.

"In the past year plus, the uncertainty of what may or may not be in the future for not only beef but other ag commodities was challenging. Now everyone knows rules going forward – that provides a lot of relief for us and everyone else."

Kester is a fifth generation operator on the central coast of California. In addition to his family's cow-calf operation, they often buy feeder calves from Mexico and graze them, when they have ample grass. Because of drought conditions, he hasn't bought Mexican calves for seven years now. Kester said the quality and price of the calves from south of the border are similar to his own home-grown Angus-based herd. The calves are weighed at the international border and have generally shrunk during transportation before arriving at the scale, giving him a price incentive to buy those cattle.

A member of the Ranchers-Cattlemen Action Legal Fund-United Stockgrowers of America has a different response to the USMCA agreement announcement.

"We were disappointed that the president did not re-instate COOL. He talks a lot about made in America, buy American. He's been great on American sovereignty on every other issue except this one," said Brett Kenzy, a rancher and backgrounder from Gregory, South Dakota.

Under current labeling laws, imported beef can be re-packaged in USDA-inspected plants and labeled with "product of the USA" labels. He believes that the implementation of country of origin labeling for a few years helped build demand and consumer awareness of USA beef, and that now more than ever, retailers have an incentive to mislabel beef. "It seems like when we repealed COOL, we took a branded product and made it generic.

"Nobody is taking U.S. beef to Mexico and labeling it Mexican beef. It's the other way around We have the safest, most trustworthy system here, and they are taking advantage of that."

"I understand supply and demand fundamentals but it's impossible to define supply when we have unrestricted, unmarked imports from 18 different countries."

He also points out that American consumers may not realize that taxpayer-funded USDA inspectors are overseeing the very mislabeling that misleads those consumers.

"America was built on individual strengths, individual rights. I look at it like the countries are dominoes – when we are mostly independent of one another and one fails, the others can help it up, but when we're all leaning on each other and one falls, we all fall."

Kenzy and his brother George Kenzy operate a cow-calf operation and a backgrounding lot where they feed their own home-raised and purchased calves along with custom backgrounding calves.

United States Cattlemen's Association president Kenny Graner from Mandan, North Dakota, said his organization had also asked President Trump to implement COOL via a new NAFTA agreement, and they now believe that there is "no pathway forward for USA beef labeling," within the USMCA.

"There are no safeguards written into this agreement. President Trump has talked about imbalance in a lot of trade agreements. We pointed out the deficit with Canada and Mexico. We were requesting safeguards be put in because our commodity (cattle) is cyclical and perishable. At times we are harvesting a lot of our own cattle and production. We we asked that safeguards e put in to slow imported product until the domestic product can be harvested."

The safeguards were not included in the agreement.

The President has called U.S farmers and ranchers patriots regarding his trade strategy, and talked of their willingness to take a short term loss for a long term gain, said Graner. "But at the end of the day, one of those groups of patriots got left behind.

Graner, a cow-calf rancher and small grains farmer said one aspect of the trade agreement helps him and other U.S. wheat growers.

The USMCA agreement requires Canada to grade U.S. wheat the same as their domestic wheat. Currently, Graner said, U.S. wheat is labeled as "foreign wheat" and given the lowest possible grade.

The agreement includes the elimination of Canada's Class 7 dairy program, and also increases market access for U.S. dairy products in Canada, Trump administration officials told reporters in a briefing late Sunday.

Class 7 covered the ultrafiltered milk that U.S. dairy producers had been exporting to Canada before Canada's adoption of the Class 7 grade of dairy products. Class 7 was the biggest irritant to U.S.-Canadian dairy relations.

Canada has also agreed to change policies that led it to export disproportionately, the officials indicated

The agreement also includes increased access to the Canadian dairy market that is better than what the Obama administration negotiated in the Trans Pacific Partnership agreement, a senior administration official said.

The dairy provisions were not included in exchange for any other specific provisions in the agreement, according to an official.

The agreement will be called the U.S.-Mexico-Canada Agreement (USMCA) and those terms will replace the North American Free Trade Agreement (NAFTA), an official said.

The agreement, including the provisions with Mexico, are the "fulfillment" of one of President Donald Trump's most important goals and will constitute the template for other trade agreements that the administration hopes to sign.

The agreement does not include any changes to the tariffs that the United States has imposed on Canadian and Mexican steel and aluminum, an official said. That issue is proceeding on a separate track, with the Commerce Department in charge.

The officials said the trilateral agreement would be published today so that the three governments could sign the agreement by the end of November, when the current Mexican administration leaves office. But it will be up to the next Congress to approve the agreement, the officials said.

The U.S. imports more beef and cattle from Mexico and Canada than it exports. The U.S.'s 25-year cumulative NAFTA deficit is nearly $32 billion. In 2016 the U.S. imported $2.2 billion more beef and cattle than it exported to Canada and Mexico.

More on USMCA

The agreement includes the elimination of Canada’s Class 7 dairy program, and also increases market access for U.S. dairy products in Canada, Trump administration officials told reporters in a briefing late Sunday.

Class 7 covered the ultrafiltered milk that U.S. dairy producers had been exporting to Canada before Canada’s adoption of the Class 7 grade of dairy products. Class 7 was the biggest irritant to U.S.-Canadian dairy relations.

Canada has also agreed to change policies that led it to export disproportionately, the officials indicated

The agreement also includes increased access to the Canadian dairy market that is better than what the Obama administration negotiated in the Trans Pacific Partnership agreement, a senior administration official said.

The dairy provisions were not included in exchange for any other specific provisions in the agreement, according to an official.

The agreement will be called the U.S.-Mexico-Canada Agreement (USMCA) and those terms will replace the North American Free Trade Agreement (NAFTA), an official said.

The agreement, including the provisions with Mexico, are the “fulfillment” of one of President Donald Trump’s most important goals and will constitute the template for other trade agreements that the administration hopes to sign.

The agreement does not include any changes to the tariffs that the United States has imposed on Canadian and Mexican steel and aluminum, an official said. That issue is proceeding on a separate track, with the Commerce Department in charge.

The officials said the trilateral agreement would be published today so that the three governments could sign the agreement by the end of November, when the current Mexican administration leaves office. But it will be up to the next Congress to approve the agreement, the officials said.

–The Hagstrom Report