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With $277 Million at Stake for Dairy, USMCA Progresses

May 13, 2019

The U.S.-Mexico-Canada Agreement (USMCA) cleared an important procedural step in recent weeks, moving it one step closer to possible ratification, as the U.S. International Trade Commission (ITC) released an economic impact study touting the pact’s financial benefits for the U.S. The 375-page ITC report found that, if fully implemented and enforced, USMCA would add more than $68 billion to the U.S. economy and 176,000 U.S. jobs by its sixth year. For dairy, ITC projected a positive impact of $277 million, with most gains coming from increased tariff-rate quota access to Canada.

USMCA’s importance for dairy extends well beyond the market access improvements with Canada that the ITC accounted for, as NMPF noted in our release welcoming the publication of the report. USMCA solidifies essential trading channels with Mexico – where the U.S. shipped $1.4 billion in dairy products last year – and tears down the controversial Class-7 milk pricing scheme, instituting new disciplines on Canadian dairy policies to keep their trade-distorting capacity in check. Moreover, the deal ushers in new rules on GIs and SPS issues to reduce the prospect of unjustified barriers to trade cropping up.

USTR touted those improvements in an agriculture-focused fact sheet released in early May that prominently featured dairy’s gains. The document’s heavy dairy focus illustrated the outsized benefits the agreement holds for it compared to other farm sectors, a result of NMPF’s strong investment in using USMCA as a vehicle for pursuing further upgrades to the existing NAFTA deal that’s boosted exports to Mexico.

“It’s important to keep the full picture in mind of what’s at stake when examining USMCA’s benefit to the economy,” said Jim Mulhern, president and CEO of National Milk Producers Federation. USDA recently reported that the U.S. lost more than seven dairy farms a day in 2018 due to poor economic conditions. NMPF is pushing back against this trend on multiple fronts. USMCA does that that by safeguarding our largest export market and instituting valuable new improvements to dairy trade in North America.

To continue to advocate for passing USMCA – and also the end of the Section 232 tariffs that curb U.S. cheese exports to Mexico – NMPF and its members participated in events taking place with members of Congress in the Midwest over last month’s Congressional recess. That included an event hosted by NMPF member Associated Milk Producers Inc. for Representative Jim Hagedorn (R-MN) from Minnesota and a roundtable with Rep. Ron Kind (D-WI) attended by Mulhern and Jeff Lyon, general manager of FarmFirst, an NMPF member cooperative.

Given the importance of NAFTA/USMCA to dairy and the urgent need to lift Mexican retaliatory tariffs levied in response to U.S. metal tariffs, NMPF will work closely with member co-ops and state dairy associations nationwide to build support for action by the government on both fronts.