UPDATED: No big changes anticipated with start of USMCA

05:06PM Jul 01, 2020
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The Packer's Tom Karst visited July 2 with Florida Agriculture Commissioner Nikki Fried about USMCA and the continuing effort by Florida growers to secure seasonal protection for perishable commodities against Mexican imports.
( The Packer )

The United States-Mexico-Canada Agreement became effective July 1, but it brings no sweeping changes to North American produce companies who have operated with the North American Free Trade Agreement for more than two decades.

Produce will generally move with no tariffs between the U.S., Mexico and Canada, as was the case under the NAFTA, which began in January 1994.

“For the produce sector, it doesn’t really change that much from that we had from NAFTA,” said Dennis Nuxoll, vice president of federal government affairs for Western Growers.

 

Big markets 

NAFTA saw the importance of Mexico and Canada grow as destinations for U.S. fruit and vegetable exporters, and the overall agriculture sector. Mexico and Canada accounted for 21% of all agricultural exports in 1993. By 2019, that share of exports increased to 29%, according to the U.S. Department Agriculture. Total agricultural exports to Canada and Mexico jumped from $9 billion to about $40 billion in that time period.

The U.S. shipped 55% of its fresh fruit and vegetable exports to Canada and Mexico in 1993, and that rose to 61% of total fresh produce exports in 2019. U.S. fresh produce exports to Mexico and Canada rose from $1.4 billion in 1993 to $4.2 billion in 2019, USDA statistics show.

U.S. imports of agricultural commodities from Canada and Mexico also rose in importance compared with the rest of the world during NAFTA. U.S. imports from Mexico and Canada accounted for 29% of all agricultural imports in 1993, rising to 40% of all agricultural imports by 2019. The value of agricultural imports from Mexico and Canada rose from $7.3 billion in 1993 to $52 billion in 2019.

For fresh fruits and vegetables, Mexico and Canada accounted for 44% of U.S. total fresh fruit and vegetable imports in 1993, rising to 65% of all fresh produce imports in 2019. The value of fresh produce imports from Mexico and Canada rose from $1.3 billion in 1993 to $15.6 billion in 2019, according to the USDA.

 

Small changes

 

The USMCA trade agreement does have a slightly different customs process for rules of origin, Nuxoll said. Exporters must attest to certain data to validate their product is of North American origin.

USMCA also strengthened some labor protections in Mexico, and Nuxoll said U.S. producers hope those provisions could help narrow the wage gap between Mexican and U.S. farm labor.

Mexico has committed to bolstering some of the country’s child labor laws. Together, the labor provisions may help to equalize some of the labor standards between the U.S. and Mexico, he said.

“Is it going to eliminate the spread? Clearly it won’t do that, but we hope there will be some improvement,” Nuxoll said.
In a column published in the North Carolina Fayetteville Observer, Agriculture Secretary Sonny Perdue said USMCA will support the use of biotechnology and will improve the flow of trade with rules that ensure sanitary and phytosanitary measures are transparent and based on science.

With nearly half a billion dollars in annual sales to Mexico and Canada each year, apple growers are relieved the USMCA is in place, Jim Bair, president and CEO of the U.S. Apple Association, said in a statement.

“With about 30% of the fresh apple crop exported each year and half of that destined for Mexico and Canada, maintaining duty-free access to these top two markets has been a top priority for U.S. Apple,” he said in the statement.


The USMCA also maintains important dispute resolution provisions, Bair said in the statement. U.S. apple exports to Mexico increased from $56 million in 1993 to $265 million in 2019, according to the USDA.

 

Taking exception

Florida Agriculture Commissioner Nikki Fried continues to be a harsh critic of USMCA. 

In a virtual press conference July 2, she released a new study called “Putting Florida’s Farmers First: Mexico’s Ag-Exports Impacts on Florida Agriculture,” conducted by the Florida Department of Agriculture and Consumer Services. Florida producers lost sales of up to 20% due to Mexico’s agricultural export expansion since 2000, according to the report.

“The decrease in market share for Florida farmers and the significant increase for the Mexican farmers really highlights why it’s important to buy locally, to make sure that you’re buying fresh Florida grown and domestically grown produce,” she said in an interview.

Some highlights of the report are:

  • Mexico has expanded its share of the U.S. domestic market by 217% since 2000, while Florida’s market share dropped by 40%;
  • Mexico’s seasonal crop imports have increased by 551% from 2000 to 2019;
  • An $11 billion gap exists between Mexican agricultural exports and Florida’s total agricultural market value.

 

Fried said U.S. Trade Representative Lighthizer has committed to releasing a plan to address unfair trade practices in the next 60 days.

“The concerns of Florida’s farmers with the USMCA remain the same as when NAFTA was being renegotiated two years ago — it lacks urgently needed protections against unfair trade practices that have devastated our growers’ ability to compete,” Fried said in the release. “ ... I look forward to working with Ambassador Lighthizer and our agriculture community to ensure seasonal producers get the enforcement tools they need to remain competitive.”

The USTR Office, USDA and Department of Commerce were scheduled to hear testimony from growers in Florida and Georgia in April, but the hearings were cancelled because of the COVID-19 pandemic.

“I do think that USTR will (uphold) their commitment to us,” Fried said. “They have said as much, but it’s important for us to continue to bring light to this issue.”


 

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Packer Interview Nikki Fried July 2