CCA in DC following release of ITC report

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Source: Canadian Cattlemen’s Association

The CCA was in Washington, DC last week to discuss the Canada-U.S.-Mexico Agreement (CUSMA) and how best to streamline regulatory matters to improve efficiencies in the North American beef trade currently and into the future.

The visit with U.S. agriculture stakeholders followed the recent release of the U.S. Trade International Trade Commission’s (ITC) report analyzing the economic impact of the United States-Mexico-Canada Agreement (USMCA), as the deal is called in the U.S., on the American economy. The 379-page report found the agreement, which modernizes the North American Free Trade Agreement (NAFTA) and will replace it once ratified in all three countries, would be beneficial to all three economies. The Commission’s model estimates that when compared to NAFTA, USMCA would further raise U.S. real GDP by $68.2 billion (0.35 per cent) and U.S. employment by 176,000 jobs (0.12 per cent).

The importance of both NAFTA and USMCA to the agriculture economy was communicated by numerous American agriculture associations following the release of the ITC report.

The release of the ITC report is part of the U.S. domestic process towards eventual ratification and implementation of the trade pact. Each of the three countries will commence its respective legislative processes to ratify and implement the new agreement. The new agreement will come into force the first day of the third month of all countries completing their respective ratification process.

In Mexico, where the agreement is known as T-MEC, the process is straight forward. Ratification and implementation are a bit more complicated in the U.S. and Canada.

In the U.S., Congress needs to approve the agreement. It remains difficult for the new Democratic controlled House of Representatives under Speaker Nancy Pelosi to cooperate with the Trump Administration and therefore swift passage of legislation to implement USMCA will be a challenge. Meantime, CCA’s U.S. counterpart, the National Cattlemen’s Beef Association (NCBA) continues efforts to keep the existing NAFTA in place until conditions are right to implement the new agreement. CCA will be in Mexico later this week at the Confederacion Nacional de Organizaciones Ganaderas (CNOG) meeting and will continue the discussions there.

In Canada the ratification process is complicated by American duties remaining on Canadian steel and aluminum, which the federal government has signaled should be removed before moving the domestic ratification process forward on CUSMA. More recently, Foreign Affairs Minister Chrystia Freeland raised the possibility of imposing extra duties on the U.S. in response to those lingering American duties. The House of Commons is widely expected to recess in June and while there is potential to reconvene the House during the recess the timeline for ratification remains tight given the October election.

The ITC report estimates that USMCA would likely have a positive impact on U.S. trade, both with USMCA partners and with the rest of the world. The report projects that U.S. exports to Canada and Mexico would increase by $19.1 billion (5.9 per cent) and $14.2 billion (6.7 per cent), respectively. U.S. imports from Canada and Mexico would increase by $19.1 billion (4.8 per cent) and $12.4 billion (3.8 per cent), respectively. The model estimates that the agreement would likely have a positive impact on all broad industry sectors within the U.S. economy.

While obstacles and timeline pressures on the USMCA ratification processes remain so does the imperative of keeping free North American trade for farmers and ranchers. CCA will continue to communicate the importance of NAFTA and USMCA and will strive to reduce and harmonize regulations to continuously improve the competitiveness of the North American beef sector.

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