January 15, 2020

Once USMCA Passes the Senate, Pay Attention to Canadian Implementation

 |  By: Anna-Lisa Laca

The U.S. Senate is expected to pass the U.S.-Canada-Mexico-Agreement this week. The deal which will replace the North American Free Trade Agreement will then need to be ratified in the Canadian parliament. Canadian implementation of the deal will be a critical component, according to Tom Vilsack, CEO of the U.S. Dairy Export Council. 

“It's not a question of whether it's going to pass the Senate, it's a question of when,” Vilsack told AgriTalk Radio Show host Chip Flory. “There's strong support for this agreement. It's clearly better than NAFTA and it certainly, for the dairy industry, could lead to up to $300 million of additional sales, primarily in the Canadian market.”

Once the deal passes the Senate, it will be Canada’s turn to ratify the agreement. 

“At that point, we want to keep a wary eye on the Canadian implementation,” Vilsack warned. “As they eliminate Class 7, which has really distorted the powder market, and replace it with a new pricing system, we want to make sure that it does what it's supposed to do, which is to provide a fairer pricing system for powder.”

Skim milk powder sales posted their highest month ever in November throughout the global supply, so Vilsack said it’s important to ensure that upward trend continues. 

Another key component of the agreement is a side letter that addresses Geographic Indicators. The letter provides the U.S. greater protection against Mexico making a deal with the EU to protect certain change names for the benefit of EU nations. 

“So that's also a benefit that will accrue from the USMCA which is important to the dairy industry in the United States,” Vilsack added.