Food Industry Cheers NAFTA Replacement

Oct. 2, 2018
Farmers and food processors are relieved with the removal of the threat of trade wars with Canada and Mexico. Now they want that goodwill extended to China and elsewhere.

American food processors and farmers were mostly positive about the newly announced replacement to the North American Free Trade Agreement, with some hoping the Trump administration will go farther.

President Trump announced on Oct. 1 a tentative agreement with Canada and Mexico for a United States-Mexico-Canada Agreement (USMCA), intended to replace NAFTA, which Trump stridently criticized on the campaign trail. The new agreement, which must be ratified by all three nations, generally maintains American access to Canadian and Mexican markets.

That access had been threatened by retaliation against Trump’s tariffs against imported steel and aluminum. The USMCA agreement mostly preserves American rights to sell corn, soybeans, meat, dairy products and other goods and commodities to its neighbors.

USMCA goes beyond NAFTA in some respects, for instance by eliminating some Canadian tariffs on dairy. The agreement will allow the U.S to sell up to 50,000 metric tons of fluid milk to Canada duty-free by the sixth year of the deal—which has left some Canadian farmers and processors unhappy. The pact also specifies a “science-based framework” for food safety standards, which is seen as a way to get around restrictions on genetically modified organisms and other technology.

Agribusiness hopes the Trump administration will continue to pursue trade agreements with other nations and regions, undoing the damage that was caused by its steel tariff. The USDA estimates that exports to China will drop by almost 40% next year due to retaliatory Chinese tariffs.

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