Mexico became the first country in North America to ratify the proposed United States Mexico Canada Agreement (USMCA) on June 19. Mexican President Andres Manuel Lopez Obrador described the ratification as “very good news.”
“We celebrate the approval in the Senate of the [USMCA], to maintain our economic and commercial relations with the United States and Canada,” Obrador said. “It means foreign investment in Mexico, it means jobs in Mexico, it means guaranteeing trade of the merchandise that we produce in the United States.”
The Mexican government voted in favor of the newly devised trade agreement by a significant margin, prompting US President Donald Trump to urge lawmakers in the US to follow suit. “Congratulations to President Lopez Obrador – Mexico voted to ratify the USMCA today by a huge margin. Time for Congress to do the same here!” Trump tweeted.
However, proceedings for US ratification have been held up by various issues including border problems as well as the recent threat by Trump himself to impose increased tariffs on some Mexican fresh produce. Either way, it’s now up to Canada and the United States to work through their processes in order for the new trade agreement to be implemented. If approved by the two countries, USMCA would replace the North American Free Trade Agreement (NAFTA).
Most growers in favor of USMCA
With hundreds of billions of dollars’ worth of goods traded between the three countries, it is understood that the vast majority of businesses are in favor of the USMCA. A new trade agreement would remove any existing tariffs on many fruits and vegetables and also create some certainty in the market.
“The USMCA will provide new market access for dairy and poultry products and maintains the zero-tariff platform on most ag products,” said Zippy Duvall President of the American Farm Bureau Federation. “It includes provisions for improved health and safety standards that will reduce trade-distorting practices. It also contains measures that address cooperation, information sharing and other trade rules among the three nations related to agricultural biotechnology and gene editing. We still have work to do in some areas, such as addressing the timing of import surges from Mexico to ensure they do not harm our domestic fruit and vegetable sectors. However, we need to secure the gains that are in front of us today.”
“There will be confidence in making sales across the border and purchases across the border knowing that you will get that product to where you need it,” said California grower Tom Ikeda, adding, “It gives you the opportunity to buy different fruits and vegetables when they may be off-season here domestically, so it keeps a steady supply, which keeps the prices reasonable for the consumers.”
Protectionist barriers
One of the aspects of the USMCA will be how to deal with so-called ‘Protectionist barriers’. This is a divisive topic in any North American trade agreement, with some US growers wanting to ensure provision to protect US farmers in the event of countries like Mexico flooding the market with cheap produce when in season. Other groups disagree, saying that such measures will only serve to create barriers – something that an agreement like the USMCA seeks to inhibit.
“We applaud this bipartisan coalition for recognizing the value that our industry brings to this nation in terms of jobs and economic impact,” said FPAA President Lance Jungmeyer. “Inserting special trade law changes for seasonal produce in the trade agreement would invite our trading partners to revise protections for their industries, and it would result in decreased trade in agriculture across the board.”