Herald editorial board
North Dakota exported $5.8 billion worth of goods to the world in 2017, and those exports supported an estimated 28,000 jobs. Of the $5.8 billion, the state exported $4.9 billion of goods to Canada in 2017. That's 84 percent of the state's total exported goods.
Minnesota's exports to Canada top $20 billion annually.
And as trade with China has dominated national headlines in recent months, trade with Canada traditionally has more impact in the U.S., since Canada is the top trade partner for 36 states - including North Dakota, Minnesota, South Dakota and nearly every other state north of Oklahoma.
Yet that important relationship was fractured with the death of the North American Free Trade Agreement, the commercial pact between the U.S., Canada and Mexico that took effect in 1994 and which eliminated tariffs and taxes on many goods that pass between those countries.
That's why it was good to wake up to news Monday that a new trade agreement tentatively was reached late Sunday evening, bringing the U.S., Canada and Mexico together again in a new three-way trading pact.
If signed, the U.S.-Mexico-Canada Agreement (shortened to USMCA) brings Canada back into the mix after President Trump threatened to keep our northern neighbors out of an agreement between the U.S. and Mexico.
The new deal focuses most notably on cars. Going forward, vehicles must have 75 percent of North American content to be imported without tariffs, compared to the current 62.5 percent. Also, at least 40 percent of a vehicle eligible for duty-free importing must have been built by workers earning at least $16 per hour. The latter rule keeps Mexico from overwhelming the car market with cheap labor.
The USMCA comes with a sunset clause, which means it will end in 16 years if it's not renewed or renegotiated. The U.S. also will have more access to the Canadian dairy market, which is laden with tariffs. This is good for American milk producers.
It all came just before the president's deadline for reaching a new deal, and just a few days after it appeared the divide between the countries was too great. Our fear was that the president would move forward only with an agreement with Mexico, excluding Canada from the deal.
That would have been bad news for northern states, which would have been victimized by retaliatory tariffs that inevitably would emerge without a three-country trade agreement.
Early this year, Greater North Dakota Chamber Board Chairman Bernie Dardis declared that "North Dakota needs NAFTA. Period."
In an op-ed sent to the state's newspapers, Dardis said "withdrawing from this trade agreement would deliver a crippling blow to our state's economy."
He also noted that the amount of goods exported from the state's largest cities - Fargo, Bismarck and Grand Forks - is $884 million. Most of it goes to Canada and Mexico.
States like North Dakota, Minnesota and South Dakota need the USMCA, and we're glad the president accommodated Canada as the clock approached midnight.