Here’s what we know so far on details for the new United States-Mexico-Canada Agreement trade deal. Most of these details are from the Office of the United States Trade Representative, which has posted information about the new deal.
- The new United States-Mexico-Canada Agreement allows 3.6 per cent more American access to the Canadian dairy market. It also eliminates Class 6 and 7, which priced Canadian milk competitively with U.S. milk (although usually not lower) in order to compete with milk protein isolates and to sell skim milk powder.
- The new deal limits Canadian exports of skim milk powder, milk protein isolates and infant formula.
- For skim milk powder and milk protein concentrates, the aggregate export cap will be 55,000 MT in the first year after the agreement enters into force, falling to 35,000 MT in the second year. Exports above this threshold will be charged an export surcharge of C$0.54 per kilogram. These caps are significantly below what is now exported.
- For infant formula, the export cap will be 13,333 MT in the first year, increasing to 40,000 MT in the second and subsequent years. Above this threshold exports will face a surcharge of C$4.25 per kilogram.
- Both caps will be increased by 1.2 per cent a year, an amount equivalent to Canada’s historical population growth.
- Both countries will review this area of the agreement five years after it comes into force and every two years after that.
- It does look like Canada will be able to price skim milk solids used to produce nonfat dry milk, milk protein isolates, and infant formula as low as the American price within its export quotas. That should allow Canadian milk to continue to displace imports.
- Chicken imports from the U.S. will increase to 57,000 MT by the sixth year of the agreement, growing one per cent for 10 years. The United States will still be eligible to export up to 39,844 MT under Canada’s World Trade Organization (WTO) tariff rate quota regime. Chicken Farmers of Canada says it is glad to see stability in the sector again, but that between the CETA, CPTPP and now the USMCA it has given up about 10 per cent of its market to imports.
- Ten million dozen eggs and egg-equivalent products will be allowed in year one of the agreement, growing one per cent for an additional 10 years. Canada has agreed to allow 30 per cent of import licenses for shell egg imports to be granted to new entrants as well. As with chicken, the United States will still be eligible to export up to 21.37 million dozen egg and egg-equivalent products under Canada’s WTO tariff rate quota regime.
- Canada has agreed to provide the United States and other country members of the World Trade Organization access equivalent to no less than 3.5 per cent of the previous year’s total Canadian turkey production. This will allow the United States to export additionally up to 1,000 MT of turkey products each year for the next 10 years than the current access.
Broiler Hatching Eggs
- About 21.1 per cent of Canada’s domestic broiler hatching eggs was already given to the U.S. under the original Canada-U.S. Free Trade Agreement. There will be no change to that number under USMCA
- Prime Minister Justin Trudeau and Trade Minister Chrystia Freeland said in a press conference Oct. 1 that there would be significant compensation for dairy farmers. It won’t come quickly, but will arrive when the trade agreement comes into effect, said Freeland. That will give them time to come up with a plan.