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'A fairer exchange': New Trump trade agreement has an impact on North Dakota

President Donald Trump and Canadian Prime Minister Justin Trudeau shake hands during a joint press conference Feb. 13, 2017, in the East Room of the White House. (Official White House Photo by Shealah Craighead)

DICKINSON, N.D. — The Trump administration's last-second deal on Monday, Oct. 1, to establish a trilateral pact with Mexico and Canada is expected to have a significant impact locally, especially regarding the potential elimination of Canada's Class 7 dairy pricing program, which has restricted access to Canada's dairy market for years.

The new agreement replacing the North American Free Trade Agreement is the United States Mexico Canada Agreement (USMCA). The principal beneficiaries of the trade deal are labor unions, U.S. dairy farmers, U.S. drug manufacturers, and companies that provide automation for manufacturers, according to the Foundation for Economic Education.

"The devil is in the details," Doug Goehring, North Dakota agriculture commissioner, said. "The Class 6 and 7 milk system will be eliminated in Canada. There will be more access for our dairy products; in fact it takes it a step further in that cream, butter and fluid milk will have access to a market it hasn't before in certain provinces."

Goehring elaborated on the local impact the USMCA brings to North Dakota, saying that naysayers who dismiss the agreement as not applying to "us" are missing some of the indirect benefits.

"When milk from Pennsylvania, New York, Michigan, Illinois and Wisconsin couldn't make it into those markets they had been in previously, that milk got dumped back into the Midwest and displaced our milk in the system," Goehring said. "It had a ripple effect across the entire United States. The point is, the milk prices here got so depressed and caused a domino effect. This agreement is going to balance that out again."

Goehring also pointed to tremendous opportunities that the new pact will have on wheat in the state.

"Some great things are happening on an issue that I've been working on for years. There is going to be some equity in the quality standards for agricultural products, which ultimately means they are going to start to change how wheat and durum is graded in the Canadian system," Goehring said. "Before when we took our wheat into the Canadian system, they would grade it at feed weight, meaning no one is going to sell into that market if you're going to get $2.50 when it should be bringing $5.50. They are either going to change their system, or our products will automatically get a certain classification when it comes into their system. Either way, it's a fairer exchange and doesn't distort our market."

On Sunday, Sept. 30, President Trump announced the new agreement at a press conference, saying it was the pressure and threat of tariffs that brought Canadian Prime Minister Justin Trudeau to agree.

"The deal includes a substantial increase in our farmers' opportunities to export American wheat, poultry, eggs and dairy—including milk, butter, cheese, yogurt and ice cream," Trump said. "This agreement will govern nearly $1.2 trillion in trade, which makes it the biggest trade deal in United States history."

The North Dakota Farmers Union agrees that the pact is a net positive for farmers.

"We certainly see this negotiation of the USMCA as a step in the right direction," Kayla Pulvermacher, director of legislative and member advocacy with the union, said. "Farmers have really seen their income take a drastic nose dive in the last seven years, and the current trading situation with China has really only made that worse. While we definitely see this as a right direction, we also would call on the president to keep moving in this direction on behalf of farmers. We also would call on the president to get a meaningful farm bill passed, since that has now expired."

While Pulvermacher said this pact wouldn't solve all the problems troubling the dairy industry, she believes it's a great start.

"Canada has a system where they manage where the dairy is coming from and they try and use Canada's first before importing anything. So this would be a good thing for dairy farms in North Dakota by opening a market which has not traditionally been open to them," added Pulvermacher.

The agreement still has significant hurdles remaining before it becomes a "done deal", according to Pulvermacher. The pact would need to be signed by the leaders of the three participating nations, pass a partisan divided U.S. congress, and reach consensus in both legislative bodies of Canada and Mexico.