Following a weekend marathon bargaining session between U.S. and Canadian trade negotiators, officials announced that Canada has agreed to terminate its controversial Class-7 dairy pricing program just hours before a deadline that will allow the final trade deal to be approved by Mexico’s outgoing President, Enrique Peña Nieto.
The move is expected to allow Canada to have a seat at the table in the renegotiated North American Free Trade Agreement (NAFTA) which will now be termed the United States, Mexico, Canada Agreement (USMCA) and was facing a crucial Sept. 30 deadline for all three countries to be part of the trade-deal.
“USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region,” U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said in a joint statement. “We look forward to further deepening our close economic ties when this new agreement enters into force.”
Michigan Farm Bureau Livestock Specialist Ernie Birchmeier called the announcement of a finalized trade deal between the United States, Mexico and Canada very welcomed news for agriculture. While the original NAFTA package was important for the economies of all three countries, it needed updating, he said.
“The elimination of Canada’s Class-7 milk classification and additional access for U.S. dairy into Canada was a sticking point for the Trump administration and trade negotiators,” Birchmeier said. “We appreciate the fact that they held steadfast in their conviction to level the playing field for U.S. dairy farmers and accessing more market opportunities.”
According to Birchmeier, elimination of Canada’s Class 7 was a make-or-break issue for U.S. trade negotiators. “U.S. dairy producers claimed that Canadian dairy policy, which relies heavily on subsidies and supply management was akin to having your cake and eating it too,” he said. “If Canada insists on having a supply management program, then they need to actually manage their milk supply rather than being allowed to flood the global market with highly subsidized dairy products, as they were doing under the Class-7 scheme.”
The Trump administration had formally notified Congress on Aug. 31 that it planned to sign a new free trade agreement in late November with Mexico and Canada if outstanding issues were ultimately resolved by the Sept. 30 deadline.
Under Trade Promotion Authority requirements, the U.S. trade office is required to submit reports from the various committees detailing their views on the agreement’s potential impacts to Congress. Additionally, the Trump administration is required to make the text of the updated deal publicly available 60 calendar days before it plans to sign the agreement on Nov. 30, 2018.