TUESDAY TOPIC: Passage of USMCA won't solve trade problems for U.S. farmers
Aaron Lehman, Opinion, Sioux City Journal (IA)
Nov 26, 2019
Lehman, a farmer in Polk County, is president of the Iowa Farmers Union
Our farmers’ economic security is evaporating as President Donald Trump’s ongoing trade wars deepen difficulties caused by six years of falling agricultural prices. Estimated net U.S. farm income in 2018 was half that in 2013, with median farm income at -$1,548. Many farmers are struggling to stay afloat.
Despite claims from the administration, passing the revised North American Trade Agreement Trump announced last year won’t remedy these troubles. Nor will it stop or fix Trump’s erratic and unpredictable trade actions or their damage to farmers.
NAFTA already eliminated almost all tariffs on U.S. trade with Mexico and Canada. With zero tariff barriers for Iowa’s sales of soybeans, pork and corn to those countries, a new NAFTA cannot offer us new market access.
Trump’s new deal, which he calls the U.S.-Mexico-Canada Agreement (USMCA), continues NAFTA’s existing duty-free treatment with modest increased access for U.S. dairy, poultry, eggs and wine to Canada. (Canada would get new access here for dairy, peanuts and sugar and products containing them.)
The U.S. International Trade Commission projected only $450 million in new U.S. exports to Canada and a miniscule 1,700 new jobs in agriculture nationwide over the full period of USMCA implementation as possible gains. To put this in perspective, annual U.S. agricultural exports were $20 billion to Mexico and $24 billion to Canada in 2018.
Even assuming these favorable projections, the promised gains of USMCA wouldn’t make a dent in replacing the $15 billion lost in agriculture sales to China since Trump launched his twitter tirade and then tariffs in mid-2018 and China retaliated.
Nor would USMCA insure against harmful effects on farm country from future erratic Trump policies. A new NAFTA could be enacted today and tomorrow Trump could slap tariffs on Mexico and Canada.
Consider that Trump threatened to impose tariffs on all Mexican imports for immigration-related reasons only a few months after he signed the new NAFTA and the administration declared it would lock in a new era of certainty in North American trade.
Trump also could threaten to withdraw from the USMCA if it goes into effect, like he has threatened to dump NAFTA.
Notably, even without NAFTA almost all U.S. corn would enter Mexico tariff free as would a significant share of soybeans. Mexico agreed to those terms at the World Trade Organization (WTO). So, even without NAFTA, Mexico cannot raise tariffs on U.S. commodities without doing so on exports from the rest of the world.
Even if the USMCA offers no significant new markets for U.S. farmers, congressional Democrats should continue to negotiate with the administration to get NAFTA fixed...
... the administration must restore the country of origin meat labels that Canada and Mexico attacked at the WTO. The current USMCA text leaves U.S. producers without the ability to identify and differentiate their products...