October 1, 2018

Last Minute U.S., Canada Deal Ends Class 7

Top Story  |   |  By: Mike Opperman

The U.S. and Canada reached an agreement late Sunday night that will bring Canada into a revamped North American free trade deal with the U.S. and Mexico. The new deal will be called the United States Mexico Canada Agreement, or USMCA, and will replace the 24-year old North American Free Trade Agreement.

In a joint statement, U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said the agreement “will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”

According to Jim Wiesemeyer, Pro Farmer policy analyst, as part of the deal Canada will provide access to up to 3.59% of its dairy market, greater than the 3.25% the U.S. would have gained through the Trans-Pacific Partnership. Canada also agreed to eliminate the Class 7 pricing system, and the milk protein concentrate, skim milk powder and infant formula formerly included within Class 7 will be priced at the U.S. price.

U.S. dairy industry should approve of the developments, not only the end of Canada's Class 7 dairy pricing, but also a boost in the access to Canada's dairy market above the level in the TPP accord,” Wiesemeyer says.

Although the U.S. and Canada came to an agreement, the Canadian provinces still have to agree to the concessions. Under Canadian law, responsibility for agriculture is shared between the provinces and the federal government, Wiesemeyer says, and milk pricing is considered a provincial responsibility.

Congress will have to approve a new agreement as well, and a vote will happen early next year. “Including Canada in the package ups the odds of a favorable vote, but some Democrats have already signaled the agreement falls short in several areas, including labor protections and enforcement language,” Wiesemeyer says.




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