USMCA on Course for Ratification in 2020

James Politi and Jude Webber reported yesterday at The Financial Times Online that, “Congressional ratification of USMCA has been among the highest legislative priorities for Mr Trump, although its prospects were uncertain until this week. The move towards a green light on Capitol Hill will be touted as a big win for the White House heading into the 2020 presidential campaign, and evidence that Mr Trump’s disruptive approach to trade is delivering results at a time of heightened commercial tensions with China and the EU.”

Most importantly, it removes the threat that Mr Trump could withdraw the US from the exiting Nafta trade agreement, which had been hanging over North American business and its integrated supply chains ever since he took office in 2017.

Meanwhile, New York Times writers Emily Cochrane and Ana Swanson reported yesterday that, “The agreement came as a huge relief to industries that have grown up around NAFTA and rely on tariff-free trade across Canada, Mexico and the United States. The lack of movement in Congress, combined with Mr. Trump’s threats to walk away from the original NAFTA pact, had created crippling uncertainty among businesses.”

Reuters writers Sharay Angulo and Andrea Shalal reported yesterday that, “The U.S.-Mexico-Canada Agreement (USMCA) was signed more than a year ago to replace NAFTA, but Democrats controlling the U.S. House of Representatives insisted on major changes to labor and environmental enforcement before bringing it to a vote.

“The delay at times threatened to scuttle the deal, creating investment uncertainty in all three countries and worrying U.S. farmers already suffering tariffs stemming from Trump’s trade war with China.”

More narrowly with respect to agriculture, Jacob Bunge reported yesterday at The Wall Street Journal Online that,

The USMCA is expected to increase annual U.S. agricultural and food exports by $2.2 billion, or 1.1%, according to the U.S. International Trade Commission. That comes from small increases of U.S. dairy, poultry, wheat and alcohol exports to Canada. More sugar and products with sugar would come to the U.S. from Canada.

“For U.S. farmers, and agribusinesses such as Cargill Inc., Archer Daniels Midland Co. and Tyson Foods Inc., completing USMCA became more urgent as the U.S. trade battle with China deepened over the past year. Mexico and Canada in 2018 were the two biggest buyers of U.S. farm goods, representing $40 billion in sales, as shipments to China fell by more than half.”

Mr. Bunge noted that, “Nick Giordano, head of government affairs for the National Pork Producers Council, said completing the USMCA would help hog farmers recover after Mexico’s retaliatory tariffs trimmed an average of $12 from the price of each hog sold in the U.S. in 2018.

“Hog farmer Trent Thiele in 2018 delayed expanding his operation near Elma, Iowa, after Mexico levied tariffs on U.S. pork, in response to U.S. tariffs on Mexican steel and aluminum. After the three countries agreed to the USMCA later that year, Mr. Thiele moved ahead, investing about $1.5 million in new barns that will allow him to raise 12,000 more hogs.

“‘We can’t eat all of our pork domestically, so it’s a big deal to us to have these markets available and these trade agreements signed,’ Mr. Thiele said. ‘We need to at least get one of these taken care of.'”

Looking ahead, Bloomberg writer Erik Wasson reported yesterday that, “The timing will prove more difficult in the Republican-led Senate, according to Majority Leader Mitch McConnell. He told reporters Tuesday that the Senate won’t take up the USMCA until after it finishes with the impeachment trial next year.

“‘We will not be doing USMCA next week in the Senate,’ McConnell said Tuesday.

“White House Press Secretary Stephanie Grisham later said in a statement it is ‘long overdue for Congress to take up the USMCA.’ U.S. Trade Representative Robert Lighthizer also told senators earlier Tuesday that the Trump administration wants a vote by next week.”

The Bloomberg article stated that, “Pelosi later told reporters she hopes for a vote ‘before the end of the session,’ which would be before Congress recesses for the holidays on Dec. 20.”