U.S. Agriculture Secretary pushes for USMCA passage
WASHINGTON, D.C. - One look at the crops in the People’s Garden outside of the U.S. Department of Agriculture in Washington, and you can tell it is past harvest time.
But this week, when we sat down one-on-one with U.S. Agriculture Secretary Sonny Perdue, he said it’s also past time for Congress to approve the new trade deal with Mexico and Canada, known as the U.S.-Mexico-Canada Agreement (“USMCA). He’s hopeful House Speaker Nancy Pelosi will bring it up for a vote by the end of the year.
“Are you confident this can get done even with the impeachment inquiry that’s underway?” Washington Correspondent Matt Knoedler asked Sec. Perdue.
“I think it can, yes. I believe so,” Perdue said. “Speaker Pelosi has handled it very maturely and cautiously that way. But I think the time is now to get it done.”
The USMCA would revise and update the 1990s-era North American Free Trade Agreement, a deal President Donald Trump has railed against for years both on the campaign trail and while in office.
“We will no longer be the stupid people that get taken care of so badly by our politicians because they don’t know what they’re doing,” Trump said during a 2017 rally in Youngstown, Ohio.
The modernized version that Trump agreed to last November with leaders of NAFTA nations, Mexico and Canada, could have a big impact on American farming, the food we eat, and what the U.S. sells around the world.
Canada and Mexico are America’s top agricultural export markets, totaling $40 billion in sales, according to the U.S.D.A.’s Foreign Agricultural Service; nearly one-third of all U.S. food exports go north and south of the border. In all, $15 billion worth of Pennsylvania goods, from farming to manufacturing, are on the line, according to the Office of the U.S Trade Representative.
Dairy is one of the most affected ag industries. The USMCA would eliminate Canada’s Class 7 milk market. It’s a quota system that allowed Canadian farmers to overproduce dairy products and inflate prices domestically, ultimately undercutting U.S. sales globally.
“They dumped those milk solids on the world market, which depressed U.S. world prices which U.S. producers were relying upon,” Perdue explained. “Overall, it decreased our price.”
This could be the opening Maggie Curtis has been waiting for. She and her husband are third generation dairy farmers milking more than 60 Jersey cows on their western Pennsylvania farm. Overall, she says they front 90 percent of the operating costs of milk production, but make just about 40 percent of the revenue after a downturn in the U.S. dairy market in 2018.
“There is a market available up there because we overproduce in this country,” Curtis said. “We have milk to sell.”
American dairy exports are at a five-year high, according to the U.S. Dairy Export Council. They support the USMCA, and like Perdue, they say the time to pass this is now.
“Mexico is far and away our largest export market at almost $1.5 billion a year,” according to Shawna Morris, USDEC vice president of trade policy. “No one comes to close to that, essentially.”
At the U.S. Dept. of Agriculture, Perdue and members of the Trump administration know the importance and significance of getting the USMCA done correctly because it will have big implications of getting a trade deal done with China.
“The world is looking,” Perdue said. “If we can’t do a trade deal with those with whom we share long borders, how can we be expected to do a trade deal around the world?”
Our interview with Sec. Perdue was just days before the Trump administration was scheduled to meet with Chinese negotiators here in Washington. According to Perdue, finalizing the USMCA, and ultimately getting it through Congress is a critical step to getting a much larger trade agreement passed with China.
“This is an important agreement with Canada and Mexico that demonstrates to the world that we want to trade,” Perdue said. “We want to trade fair, free, and reciprocally going forward.”
So, what needs to happen in Congress to get this deal done? First, the big step starts in the U.S. House where Pelosi says progress is being made. In an email to House colleagues last month, Pelosi assured Americans the impeachment inquiry wouldn’t slow down trade talks.
“House Democrats… continue to make progress in our discussions with the Trade Representative to secure key improvements to the USMCA,” Pelosi said in a statement on Sept. 30. “We are addressing our core concerns on, first and foremost, strong enforcement, labor, prescription drugs and environmental protections. We hope to continue further down the path to yes, but insist that any trade agreement strengthen America’s working families.”
Some Democrats are still worried about labor provisions and enforcement, but Perdue doesn’t believe that will slow or reverse the progress Pelosi says negotiators are making.
“I honestly believe, from my travels in both Democratic and Republican districts, I think if (USMCA) were brought to the (House) floor, it would pass frankly both caucuses,” Perdue said.
Groups that would benefit from the new trade deal, like the Dairy Export Council, are also hoping the speaker will call a vote by the end of the year. Perdue expects the vote to happen next month, with some Republican House members saying it could be sooner.
“Getting USMCA off the docket, getting it passed and behind us opens up more opportunities with new trade partners as well,” Morris said.
In September, all former U.S. secretaries of agriculture since the Reagan administration announced supportfor the USMCA. That includes Dairy Export Council President and CEO Tom Vilsack, who worked throughout the entire Obama administration.
Back on her Pennsylvania farm, Curtis says passage would provide some certainty to an industry that is often uncertain.
“We’re pretty close to Canada up here,” Curtis said during an interview via FaceTime. “It really does affect our Wisconsin dairy farmers, our Northern Pennsylvania dairy farmers and Northern New York dairy farmers. So, we need to get it passed on that basis alone.”
Outside of agriculture, the USMCA would attempt modernizing manufacturing guidelines between the three nations by requiring that 40-45% of auto content be made by workers earning at least $16 an hour. The three nations also re-work digital trade laws, and outlines ways to tackle air pollution.
But supporters say the clock is ticking. Mexican leaders have already ratified the deal in their legislature; Canada could vote later this month. That is putting more pressure on Congress to act soon.
However, there is a political element at play, specifically the 2020 presidential election. Passage would be a victory for President Trump, fulfilling a top 2016 campaign promise. But Democrats backing the trade agreement aren’t publicly as concerned about giving Trump a victory. Instead, they say it’s simply a good deal for the American worker.
Perdue said it can be both things, as long as both sides come to the table in the weeks and months ahead.
“I certainly hope that the current distractions don’t detract from the fact that this is a great trade agreement that needs to be ratified,” Perdue said.