After two years of negotiating, debate, and threats of destruction, the renegotiated NAFTA deal has a clear path to a congressional ratification with the Democrats and the U.S. President agreeing to the required changes.
For agriculture, the USMCA — new NAFTA or CUSMA, whatever you want to call it — has always been about stability, and farmers and ranchers across Canada, Mexico, and the U.S. should find a sense of relief once this deal is finalized and ratified.
The USMCA has also been about protecting turf, so to speak. With the integration of value chains across crops and livestock in all three countries, free trade between us all is integral to limiting any potential damage caused by the protectionist agenda of the current White House.
Bank of Canada governor Steven Poloz has repeatedly talked about trade uncertainty weighing on the Canadian economy. This uncertainty puts stress on capital investors in part due to the unpredictability of U.S. President Donald Trump as he looks to win the 2020 election where he’ll have to fight hard to win in the Rust Belt, just like in 2016.
Carlo Dade, of the Canada West Foundation, says, “Canadians should not fall into a sense of false security due to the unilateral measures and other measures available to the U.S. president.” He continued, “even if the new NAFTA is ratified, Canada’s work is not complete.”
Most of the NAFTA talks were about auto issues and steel trade flows and not agriculture, but in the name of stability that might have been a good thing. U.S dairy farmers might be considered the winners for the market access gained in Canada, but even that is very limited in the big picture of the trade deal. Some have argued that Canadian dairy producers are losing much more than U.S. dairy farmers are gaining, but time will tell how much of an impact USMCA has on the dairy industry as a whole. For U.S. dairy, the ability to retain the stability of the Mexico market is a far bigger win than access to Canada.
A ratified USMCA is a victory for the status quo and added certainty for all sectors of agriculture. Let’s just hope that the path to ratification does not hit any further road bumps.