U.S. passage of the USMCA – the United States-Mexico-Canada Agreement – is a burst of sunlight at the end of what has been, for some, a dreary past year.
The USMCA was pushed through the Senate this month in a move applauded by Republicans and many Democrats. Essentially, it replaces the old North American Free Trade Agreement, which President Trump felt put the U.S. at an unfair disadvantage in trade with Canada and Mexico.
Sen. Kevin Cramer, R-N.D., called the USMCA passage a “huge win for our producers” and predicts it will “stimulate the economy, create new jobs and increase exports with two of North Dakota’s top trading partners.”
That’s optimistic. But if even some of Cramer’s predictions come true, the USMCA will be an economic boost in the region.
It’s been a long process. As a candidate, Trump vowed an end to NAFTA, promising a deal that would be a better agreement between the three nations and especially the U.S.. But as a deal languished, some – especially farmers and manufacturers – became alarmed. It was a worry compounded by other extenuating circumstances, ranging from the trade war with China to weather-related struggles in the U.S. agriculture industry.
The delay on USMCA came amid disagreements on sections regarding labor, climate and prescription drug provisions.
The National Farmers Union, which initially withheld endorsement of the pact, said that although “USMCA is not a perfect replacement, it does make some important changes to its predecessor. We are particularly encouraged by the inclusion of stronger labor standards, more robust enforcement mechanisms and better environmental protections.”
Here in the Dakotas and Minnesota, it’s a welcome development, considering the long relationships that exist with Mexico and, especially, Canada. U.S. food and ag exports to those neighbors surpassed $39 billion and supported more than 300,000 jobs.
Minnesota, South Dakota and North Dakota combine to export $12 billion annually to Canada and Mexico. North Dakota’s share of that commerce is approximately $5 billion; that’s why we were glad to see Gov. Doug Burgum last summer join a group of governors pushing for passage of the USMCA.
Among other changes, the USMCA eliminates Canadian downgrading of U.S. wheat into a feed category, creating a level playing field for the region’s wheat producers. Also, ag products that enjoyed zero-tariff status under NAFTA will continue to be tariff-free under USMCA.
When coupled with improved U.S.-China trade relations, 2020 is off to a good start.
Nothing can be done about the weather, and 2019’s weather was nothing short of miserable for the farm industry. That, in turn, casts a shadow on manufacturing, on retail and most everything else in an agricultural region like ours.
But while uncooperative weather is just something that has to be endured, trade wars compound the misery. American farmers need a place to sell their products. When those places close, uncertainty reigns; with those places open, the economy can grow.