The U.S-Mexico-Canada Agreement, signed by the three countries’ leaders on Friday, will preserve duty-free access for U.S. dairy exports to Mexico and rein in what the U.S. dairy industry views as Canada’s trade-distorting practices.
But dairy organizations, representing both farmers and processors, are urging the elimination of U.S. tariffs on imports of steel and aluminum from Mexico and Canada and retaliatory tariffs by those two countries on their imports of U.S. dairy products.
“Although we’re pleased that the three countries have taken the next step in moving the USMCA forward, the agreement is a hollow victory unless the Section 232 tariffs on steel and aluminum imports are lifted,” Michael Dykes, president and CEO of International Dairy Foods Association, said in a press release.
Mexico’s retaliatory tariffs on U.S. cheeses continue to have a negative impact on U.S. dairy exports, and access to the Mexican market remains at serious risk, he said.
“We’re increasingly concerned that the benefits won’t be realized as long as the tariffs on steel and aluminum remain in place,” he said.
IDFA will welcome the progress on USMCA once the tariffs are lifted, he said.
U.S. Dairy Export Council and National Milk Producers Federation said the tariffs have been sticking points in relations between the U.S. and Canada and Mexico and is calling for their removal.
“This year has been a challenging one for dairy producers, who are dealing with continuing low prices and the damaging effects of retaliatory tariffs,” Jim Mulhern, NMPF president and CEO said.
Those tariffs, which include retaliatory tariffs from China, have already cost dairy farmers about $1.5 billion, he said.
Aside from the tariff issue, the groups are pleased with what was accomplished with USMCA, they said.
“First and foremost, we preserved the duty-free market access to Mexico, our No. 1 market for U.S. exports accounting for 25 percent of our total dairy exports,” Dykes said.
Those exports amounted to $1.2 billion in 2017 and account for three-fourths of Mexico’s dairy imports, USDEC and NMPF said.
While the dairy industry sought deeper market expansion and stronger disciplines from Canada, the trade deal includes reforms to Canada’s controversial dairy pricing system and some additional market access, they said.
The agreement also breaks new ground by establishing a strong sanitary and phytosanitary chapter and new provisions for tackling the misuse of geographic indications for common food names, they said.
The ultimate impact of the agreement will depend on how it’s implemented, they said.
“We trust the administration will aggressively enforce both the letter and the spirit of the agreed-upon text,” Tom Vilsack, USDEC president and CEO, said.
It is imperative the U.S. ensures Canada implements its commitments consistent with the transparency and market-reforming disciplines secured in the agreement, he said.