Why USMCA is a big win for U.S. Dairy

Mark O'Keefe
USMCA agreement

Trade rules reformed with Canada, solidified with Mexico, opening new doors of opportunity to increase exports in North America. 

The U.S. Senate’s bipartisan passage of the United States-Mexico-Canada Agreement (USMCA) on Thursday, Jan. 16 wasn’t just an overhaul of the rules of trade in North America.

It was a big win for U.S. Dairy, paving the way for continued growth of exports to neighboring countries.

Exports of cheese, milk powder, whey protein and other dairy products and ingredients provide a financial boost not only to dairy farmers and manufacturers but to millions of U.S. workers whose jobs are supported by the U.S. dairy industry.

According to the International Trade Commission, U.S. dairy exports are projected to increase by more than $314 million a year under USMCA.

Mexico largest U.S. Dairy export market

A generation ago, almost all the milk produced in the United States stayed in this country.

Today the milk from one out of seven tankers leaving American dairy farms ends up in products and ingredients sold to other countries, with Mexico the No. 1 market, accounting for about one-fourth of all exports.

“If we don’t export, think about all the milk production that would be staying here,” said Jaime Castaneda, the U.S. Dairy Export Council’s senior vice president of trade policy.

Castaneda and his trade policy team worked for months to assert what the U.S. dairy industry needed in USMCA, which will replace the North American Free Trade Agreement (NAFTA).

Trade reformed with Canada, solidified with Mexico

USMCA fundamentally changes Canada's trade-distorting policies, reforms Canada's controversial dairy pricing system and provides exclusive Canadian market access for U.S. farmers and manufacturers.

The trade agreement strengthens the U.S. dairy industry's relationship with Mexico and establishes new protections for products that rely on common cheese names, such as parmesan and feta.

U.S. dairy exporters sold $1.4 billion in dairy products and ingredients to Mexico in 2018. An economic impact study showed that every $1 of U.S. dairy exports to Mexico generates $2.50 of economic activity in the United States.&nbs-p;

USMCA breaks down trade barriers

"USMCA makes important strides to break down trade barriers, opening the door to new opportunities and supporting the flow of high-quality American dairy products to two valuable export markets," said Tom Vilsack, president and CEO of USDEC, in a joint news release with the National Milk Producers Federation (NMPF).

Looking ahead: USMCA compliance essential

In the end, the U.S. Senate vote for USMCA was a bipartisan 89-10, sending the legislation to President Trump for his expected signature.

The Office of the United States Trade Representative (USTR) helped work out differences and details between two political parties and three countries.

“Under President Trump's leadership, USTR and USDA negotiated an agreement that will deliver a more certain future for our dairy farmers and rural economy," said Jim Mulhern, president and CEO of NMPF, in the news release.

"The U.S. must now remain diligent and proactively work with Canada and Mexico to implement USMCA in both letter and spirit. Full compliance is essential to achieving more fair trade with Canada and protecting American-made cheeses in Mexico."

Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.