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USMCA turns three — It’s time we build on model trade deal

Michael Dykes

Michael Dykes, president and CEO of the International Dairy Foods Association, contributes this column bimonthly for Cheese Market News®.

The U.S.-Mexico-Canada Agreement (USMCA) entered into force three years ago this Saturday, and while the U.S. has yet to receive the full range of dairy access promised by Canada under the agreement, International Dairy Foods Association (IDFA) members have benefited tremendously from USMCA’s existence.

The United States is currently working to resolve a major dispute with Canada over its administration of dairy tariff-rate quotas, but that doesn’t minimize the value of USMCA; on the contrary, it demonstrates its value. Without the agreement we would have no recourse to fight Canada’s protectionist import barriers, no opportunity for any increased market access to Canada, and no science- and risk-based commitments that have been pointed to globally as the new gold standard.

The benefits of USMCA are also supported by the data. Annual U.S. dairy export volume to our North American trading partners has increased by 14% since USMCA was signed, and Mexico and Canada remain our top trading partners for dairy products. Mexico is our top cheese export market globally at $627.6 million in cheese exports in 2022, and Canada was our fifth-largest export market at $95.4 million in cheese exports — a number that has nearly doubled since 2018 and that IDFA hopes will continue to grow if the U.S. is successful in its dispute settlement case against Canada.

With such evidence, it is almost hard to believe that USMCA was the United States’ only full and comprehensive preferential trade agreement to be finalized in a decade. The data make it clear that free trade agreements (FTA) contribute to the growth of U.S. dairy exports — including and especially the growing cheese export category. We can only grow those exports if the U.S. looks to replicate FTAs like USMCA with more trading partners. Unfortunately, that’s proving to be a rather large “if.”

Congressional offices regularly tell IDFA that Trade Promotion Authority (TPA), the legislation needed to facilitate tariff-reducing trade negotiations, is not possible until the White House indicates its interest in advancing TPA and encouraging its passage. Unfortunately, the administration has thus far been unwilling to do either. Instead of attempting to fix imperfections in previous versions of TPA and in previous agreements, the conversation has stopped entirely.

How could this be? It was only a few short years ago when Congress approved USMCA in bipartisan fashion by a vote of 89 to 10 in the U.S. Senate and a vote of 385 to 41 in the U.S. House of Representatives, and very few, if any, U.S. stakeholders are protesting its existence. Together, the existence of such a strong and recent congressional vote on trade and the subsequent supporting trade data prove the art of the possible in Congress. We need to remind our policymakers just how popular and commonsense this type of trade agreement is and that TPA is, in fact, achievable.

Where does that leave dairy exporters? Today, as we prepare to celebrate USMCA’s anniversary, IDFA has the following message for the administration and Congress: Equitable trade policies that serve all must include tariff-reducing negotiations for U.S. dairy exporters, and these negotiations need to happen soon. Our largest dairy trade competitors are signing new deals with the fastest-growing regions of the world, giving preferential access to their exporters at the expense of the U.S. dairy industry.

If the U.S. is to become the world’s leading supplier of affordable and sustainable dairy nutrition, we need to use USMCA as a template for new trade agreements with more partners. Let’s restart the conversation on TPA and make sure we don’t re-enter another decade without a new free trade agreement.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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