Council Chairman To ITC: USMCA Would Be Gold Standard FTA For Grains

U.S. Grains Council Chairman Jim Stitzlein testified Thursday before the U.S. International Trade Commission (ITC) on the United States-Mexico-Canada Agreement (USMCA), saying the newly-negotiated pact would remove remaining barriers to grains trade in the region and bolster continued growth in North American markets for commodity grains and value-added grain products like meat and ethanol.

“The Council believes expanding access to export markets will continue to drive the success of American agriculture for years to come,” Stitzlein said. “USMCA will provide gold-standard trade architecture that will further remove non-tariff barriers and increase the volume and value of unfettered trade between the three countries.”

When finalized, the USMCA would replace the North American Free Trade Agreement (NAFTA), which has been in force since 1994. In that time, NAFTA has provided a model trade framework, resulting in the most efficient and effective interregional grains and livestock value chain in the world. Stitzlein told ITC commissioners that the USMCA promises to keep business open between all parties and encourage continued strong sales between the partners.

“The U.S. feed grains industry has benefited substantially from NAFTA and the U.S. feed grains industry has the potential to realize gains from improved terms in a modernization of NAFTA,” Stitzlein said. “We believe both Mexico and Canada offer significant additional potential for growth. USMCA, like NAFTA before it, will be the foundation of that success.”

USMCA builds on text negotiated for the Trans-Pacific Partnership (TPP) and includes what will become a template for all future trade negotiating architectures. Its provisions would help to ensure goods move quickly across borders between the United States, Mexico and Canada with the help of transparent procedures and new provisions addressing non-tariff barriers.

Specifically, the new pact provides the highest enforceable sanitary and phytosanitary standards in any trade agreement to date and addresses regulatory equivalence, science and risk analysis, transparency, cooperative technical consultations and the creation of a rapid-response mechanism with tighter standards and deadlines for adverse import checks.

USMCA also supports modern breeding methods – the first time in a trade agreement negotiated by the United States – by establishing transparency and cooperation obligations in situations where agricultural shipments are found with a low-level presence (LLP) of biotech events approved in the country of export but not approved in the country of import.

A U.S. Department of Agriculture (USDA) Economic Research Service (ERS) study cited by Stitzlein also suggested the USMCA would modernize border procedures, allowing products to cross borders more quickly, easily and efficiently without compromising governmental standards.

“Trade agreements hold the key to opening markets and resolving tariff and non-tariff barriers to allow movement of coarse grains, co-products in all forms and other agricultural exports where they are demanded,” Stitzlein said in his testimony. “With effective policies in place and followed, trade works and the world wins.”

Exports of grains in all forms (GAIF) – including U.S. corn, barley, sorghum, distiller’s dried grains with solubles (DDGS), ethanol and certain meat products – have increased 279 percent to Mexico and 431 percent to Canada since the North American Free Trade Agreement (NAFTA) went into effect.

Mexico has recently topped all other markets in GIAF imports, with total marketing year shipments growing 6.3 percent year-over-year to a new record of 25.2 million metric tons (almost 1 billion bushels in corn equivalent) between 2016/2017 and 2017/2018. Mexico is the top international buyer of U.S. corn, barley and DDGS as of the last full marketing year’s data, with sales in each category increasing from the prior year.

Canada set a new record for imports of grains in all forms in 2017/2018 and is the second largest buyer of U.S. ethanol and barley, in addition to the eighth largest market for both U.S. corn gluten feed/meal and DDGS and the ninth largest U.S. corn market.

The U.S. Grains Council participated in the USMCA negotiations on behalf of the U.S. feed grains and ethanol industries.

Click here to read Stitzlein’s full testimony.