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Why Minnesota agricultural interests are lauding the new USMCA trade deal

The replacement to NAFTA has been estimated to increase U.S. agricultural exports by $2 billion.

House Speaker Nancy Pelosi
House Speaker Nancy Pelosi speaking during a news conference on the USMCA trade agreement on Tuesday. Rep. Dean Phillips is at left.
REUTERS/Yuri Gripas

This week, House Speaker Nancy Pelosi and the White House reached a deal on passing the United States Mexico Canada Agreement. The House could vote on the agreement as soon as next week. (Senate Majority Leader Mitch McConnell said the Senate will not take up a vote on the deal until the new year.)

The far-reaching agreement touches on virtually all aspects of trade between the three countries, everything from intellectual property protections to the finer points of the Canadian dairy market.

The agreement is a big deal for Minnesota: In 2018, Minnesota had $7.2 billion in exports to Canada and Mexico combined, with two thirds of that going to Canada. And while many Minnesota economic sectors will be affected by the deal, Minnesota farmers have been particularly vocal in pushing for the agreement’s ratification.

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Expanding agricultural markets

USMCA is meant to replace the The North American Free Trade Agreement, which was signed in 1994 by President Bill Clinton in to remove trade barriers and facilitate clearer rules of trade between the three North American countries.

USMCA establishes several new components when compared for NAFTA. For example, the deal establishes a comprehensive tri-national update to intellectual property law, with several components like extending copyright term of 70 years for an author.

REUTERS/Brian Snyder
Minnesota is the number one state for turkey production in the nation and two of the top five markets for distribution are Mexico and Canada.
But the boon for U.S. agriculture has particular relevance to the Minnesota economy: The agreement is expected to increase U.S. agricultural exports by $2 billion and improve market access for sectors like poultry and dairy.

Minnesota is the number one state for turkey production in the nation and two of the top five markets for distribution are Mexico and Canada. The key change established in the USMCA allows U.S. producers to export at least 3.5 percent of Canada’s turkey production from the previous year, significantly expanding the northern country’s intake of U.S. poultry.

Minnesota is also one of the top ten milk producers in the nation. With dairy, Canada will end a dairy pricing class system that has intentionally limited specific kinds of U.S. dairy exports into the country. The news is concerning to dairy farmers in Canada, who say they’re already strained, but positive for dairy farmers in Minnesota.

“This is a much-needed step as we continue to work on trade with countries all over the world,” Minnesota Farm Bureau President Kevin Paap told the Mankato Free Press. “I think this shows Congress can get those agreements done on a bipartisan basis.”

“As the largest turkey producing state in the nation, we need access to North American markets for our products,” Paul Kvistad, president of the Minnesota Turkey Growers Association, said in a statement. “The USMCA preserves the turkey industry’s trade relationship with Mexico – the industry’s largest export partner – and creates new opportunities for trade with Canada.”

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Minnesota delegation supportive

Several of Minnesota’s representatives in Congress have lauded the final agreement on USMCA. Reps. Angie Craig and Dean Phillips stood behind Pelosi as she announced the finalized deal at a press conference.

“The administration forwarded what we considered an improvement over NAFTA. A good trade deal, but imperfect, as many of them are,” Phillips told The Morning News on WCCO. “And over the course of the year … we came to what was considered to be a significantly improved deal for the United States.”

Craig said that the final result “bolsters our economy, is good for family farmers, protects American workers, and improves access to affordable prescription drugs.”

dairy cow
REUTERS/Shannon Stapleton
With dairy, Canada will end a dairy pricing class system that has intentionally limited specific kinds of U.S. dairy exports into the country.
Rep. Collin Peterson, the Chair of the Agriculture Committee, said he pushed for this deal for months. “This announcement is great news for farmers, businesses and workers in Western Minnesota and nationwide. The threat of leaving NAFTA without a deal would have been devastating, and this deal provides needed certainty for our producers.”

Rep. Betty McCollum of St. Paul offered the strongest condemnation of the original version of the deal. “While the initial proposal by the Trump administration fell woefully short of needed provisions to protect workers and consumers, House Democrats negotiated meaningful and transformative safeguards to ensure that the USMCA improves upon both the original NAFTA and the flawed proposal put forth by the Trump administration,” she said.

Republicans in the delegation considered it a win as well. Rep. Pete Stauber said “agreement is great news for our nation,” calling it a win for “Minnesota’s farmers, manufacturers, businesses, and families.”

Rep. Jim Hagedorn said he was the first member of the Minnesota delegation to the support the USMCA. “I am thrilled that the White House, Republican leadership and Speaker Pelosi were able to reach an agreement to finally deliver this much-needed and well-deserved win to our workers, businesses, farmers and families,” he said.

“I hope the Senate will move quickly to ratify the deal and send it to President Trump’s desk.”