When it comes to trade, Nebraska’s two largest trading partners are Mexico and Canada. Between the two countries, they receive nearly 45 percent of Nebraska’s annual foreign trade.
So when the Trump administration announced Sunday evening that the U.S. has reached an agreement with both Canada and Mexico, it resulted in a sigh of relief from many in the agricultural industry, especially as farmers are harvesting one of the largest crops in state history.
Gov. Pete Ricketts praised the Trump administration Monday for the new trade deal with Canada and Mexico.
“The importance of this new deal to Nebraska cannot be understated,” Ricketts said. “These two countries are top customers for Nebraska, and are critical markets for growing trade opportunities.”
He said the new agreement makes progress in the three areas Nebraska’s leaders outlined for trade negotiations with these countries more than a year ago.
“Most importantly, it helps give Nebraska’s farmers and businesses much-needed certainty, and will help us grow these important trade relationships for years to come,” Ricketts said.
The three principles Nebraska leaders urged the Trump administration to follow when negotiating a trade agreement between the U.S., Canada, and Mexico are:
— Maintain market access. Negotiations should focus on growing market access with North American partners, especially in the areas of agriculture and manufacturing. Any changes should protect access to these markets as well as access for international firms that do business in and invest in Nebraska.
— Reduce tariff and non-tariff barriers. While NAFTA provides tariff-free trade for a variety of Nebraska commodities, there are still opportunities to reduce or eliminate tariffs on dairy, poultry, eggs and wine, as well as other non-tariff barriers on products, such as ethanol, and regulatory issues.
— Reflect technological advances. A modernized NAFTA should reflect technological advances made since the original agreement was put in place in 1993. For Nebraska, many of these advances have come in the areas of biotechnology and crop science.
According to the U.S. Census Department, last year Canada and Mexico contributed to more than $3 billion of trade with Nebraska. Ricketts said Canada and Mexico are also substantial direct international investors in Nebraska, employing about 6,400 people in the state.
For example, last year AG Growth International, a Canadian company out of Manitoba, purchased Global Industries in Grand Island for $100 million.
Ricketts said that Mexico is the state’s largest export market for corn, dairy products and sugar/sweeteners. Canada is Nebraska’s largest export market for ethanol and dog and cat food.
With a 1.8 billion bushel corn crop projected for Nebraska this year, corn is the largest Nebraska export to Canada and Mexico, accounting for more than $315 million.
The Nebraska Corn Board said the new agreement, which is being referred to as the United States-Mexico-Canada Agreement (USMCA), was published Monday for the governments from the U.S., Mexico and Canada to review and ratify by the end of November. In the U.S., the agreement must go through a 60-day review process before President Trump can sign the deal.
“Since discussions of a NAFTA withdrawal surfaced more than a year ago, we’ve been working hard to remind the president, our congressional leaders, farmers and the general public how important Canada and Mexico are for ag trade,” said David Bruntz, chairman of the Nebraska Corn Board and a farmer from Friend. “We still have a little way to go with final approvals, but this is definitely a step in the right direction, and we appreciate the work our administration has done to meet the NAFTA withdrawal deadline.”
Dan Wesely, president of the Nebraska Corn Growers Association and a farmer from Morse Bluff, said that Canada and Mexico buyers purchase more than 27 percent of Nebraska’s corn exports, nearly 32 percent of Nebraska’s ethanol exports and almost 22 percent of our state’s beef exports.
“By having a fair and open deal with our neighbors to the north and south, we can ensure markets for Nebraska producers, corn and value-added products for a long time,” Wesely said.
Also among Nebraska’s top agricultural exports to Canada and Mexico are:
— Beef: $246.6 million
— Soybeans and soybean products: $217.6 million
— Sugars and sweeteners: $124.2 million
— Ethanol: $88.5 million
— Pork: $78.3 million
Last year the United States exported $3.2 billion of corn and corn products to Mexico and Canada, supporting 25,000 rural jobs. The U.S. Chamber of Commerce estimates that trade with Canada and Mexico supports 14 million U.S. jobs across many sectors.
Steve Nelson, president of the Nebraska Farm Bureau, said the announcement that the U.S., Canada, and Mexico have come to terms on a new trade agreement is a major “win” for Nebraska’s farmers and ranchers. He also said it’s an “important step forward in helping eliminate trade-related uncertainty in agricultural markets.”
“This new deal not only maintains the positive market access system for our major commodities in Nebraska, but also sweetens the pot by addressing many concerns for our dairy producers, including improved market access,” Nelson said.
Over the last week, the U.S. announced trade talks and agreements with South Korea, Japan, the European Union and now with Mexico and Canada.
“While there is still much work to be done with China, these actions have us on the right path to providing access for Nebraska agriculture commodities to global customers who are critical to Nebraska farm and ranch families,” Nelson said.
The U.S. Grains Council (USGC) also emphasized the importance of the new agreement between the U.S., Mexico and Canada.
“No trade agreement has had more impact on our sector than NAFTA, which prompted explosive growth in our export sales to both countries as well as the development of a fully-integrated grains and livestock supply chain within North America,” according to USGC. “Over the past two decades, this agreement has proven beneficial for the producers, agricultural sectors and economies of all three countries.”
Rep. Adrian Smith, R-Neb., said the USMCA builds on the country’s trade successes.
“I have long supported a three-country agreement because it is vital to Nebraska’s agricultural producers and to our rural economy,” Smith said. “I look forward to considering USMCA as Congress studies the details and I commend President Trump’s team for their success in reaching this point.”
He is a member of the House Ways and Means Committee, which has jurisdiction over trade.
Sen. Deb Fischer, R-Neb., said she is optimistic that the agreement “will bring good opportunities to Nebraska producers and our state.”
According to the Associated Press, the new version would give U.S. farmers greater access to the Canadian dairy market. But it would keep the former North American Free Trade Agreement dispute-resolution process that the U.S. wanted to jettison. It offers Canada protection if Trump goes ahead with plans to impose tariffs on cars, trucks and auto parts imported into the United States.
The new pact will require regional content of 75 percent for automobiles, and also that 40 to 45 percent of vehicles coming to the U.S. be produced in plants paying at least $16 per hour. Mexico’s incoming foreign relations secretary, Marcelo Ebrard, said some new regulations may pose challenges for companies to adapt to. However, he also said that “finishing this process of renegotiation provides certainty for financial markets, investment and job creation in our country.”