Grainswest - Spring 2019

Spring 2019 Grains West 38 TRADE TALK HE UNITED STATES–MEXICO– Canada Agreement (USMCA) was signed in late November by Canadian PrimeMinister Justin Trudeau, American President Donald Trump and thenMexican President Enrique Peña Nieto. The three nations must ratify the agreement in upcomingmonths, but in the meantime, the NAFTA agreement remains in effect. Technically referred to as the Canada–United States–Mexico Agreement (CUSMA) in Canada and T-MEC inMexico, those in the agriculture sector of all three countries are now examining the impact of the agreement on their farmers. The agricultural trade provisions of the deal do differ from those of NAFTA, most notably with regard to the Canadian supply-managed sectors of dairy, eggs and poultry, but for grains, the beneficial terms of NAFTA have been maintained. Kevin Bender, former chair of the AlbertaWheat Commission (AWC), doesn’t expect a change in imports or exports with USMCA. Importantly, he noted, the new agreement secures continued access to the U.S., which is Canada’s largest wheat export market at 2.3 million tonnes annually and its second- largest barley market at 183,000 tonnes. Between them, the U.S. andMexico account for 15 per cent of total Canadian wheat exports. “About 90 per cent of American wheat imports are grown on Canadian farms, making Canada the dominant supplier,” said Bender. “Maintaining access through [USMCA] gives Canada a continued edge over our competitors, which is very good news.” Within the deal, Canada’s agreement to provide official grain grading to U.S.- grown Canadian varieties is a bit of a contentious issue, Bender added. But, he pointed out, the low value of the Canadian dollar doesn’t make U.S. wheat exports to Canada a financially viable option for Americans right now. According to Carlo Dade, director of the Trade and Investment Centre of the Canada West Foundation, negotiations stalled over the issue of grain grading. Under NAFTA, any variety of American grain coming into Canada is classified as feed grain, although U.S. farmers are free to negotiate a higher price if the grain meets milling specifications. Under the USMCA agreement, American wheat delivered to Canadian elevators will be eligible to receive a grade, but only if the variety is registered in Canada. “There was resentment and principled anger in the U.S,” said Dade. The Americans aren’t going to ship grain up here, but the Americans in the grain associations are upset on the principal that Canada remains a varietal system and discriminates against American grain.” Former Alberta Barley chair Jason Lenz said the barley industry is happy the agreement has been signed and is especially pleased about new access to Mexican markets. “There is potential for new barley exports into Mexico,” said Lenz. “Their demand seems to be growing, especially in the last few years. Mexico, like some of the Asian countries, is starting to demand higher quality beer and, in order to do that, you need high- quality barley.” He suggested this can be supplied by Alberta farmers. Lenz echoed Bender and Dade on market access. “We wanted to maintain tariff-free access to the U.S. and Mexico. With the political climate in the U.S., we wanted to make sure we maintained that competitive advantage. Logistically, it works out very well,” he said. Lenz said one wish Alberta Barley wasn’t granted was agreement between Canada's Pest Management Regulatory Agency and the U.S. Environmental Protection Agency on crop inputs. “We asked for regulatory alignment … for crop inputs that the U.S. has access to that we don’t here,” said Lenz. While that wasn’t achieved, he was hopeful it may still happen. Dade also said given the current political upheaval in the United States administration caused by the president’s often unpredictable decision making, the USMCA deal isn’t especially disadvantageous for Canada. “Generally, we held on to what we had. In ag, it’s generally a sigh of relief,” said Dade. “A good deal under the Trump administration is not losing your shirt.” However, when President Trump appeared at the American Farm Bureau closing general session in mid-January in NewOrleans, he characterized the wheat trade as a win for the U.S. “This landmark trade deal will increase exports of wheat fromMontana, dairy fromWisconsin, chicken fromGeorgia and products from farmers all across our country. As part of T USMCA conclusions Farmgroups examine the impact of NAFTA update BY ALLISON FINNAMORE • PHOTO COURTESY OF THE UNITED STATES DEPARTMENT OF STATE