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ITC Releases Report on USMCA

Tuesday, April 23, 2019

(North American Meat Institute)

ITC Releases Report on USMCA. On Thursday, the U.S. International Trade Commission (ITC) released its report assessing the likely economic impact of the U.S.-Mexico-Canada Agreement (USMCA). The Commission's report estimates that the USMCA would raise U.S. real GDP by $68.3 billion, or 0.35 percent, by the sixth year after it enters into force, and would create 176,000 U.S. jobs, increasing employment by 0.12 percent. Total annual U.S. agricultural and food exports are expected to increase by $2.2 billion, or 1.1 percent when the USMCA is fully implemented.

USMCA is expected to lead to small increases in U.S. exports to Canada of poultry meat, dairy products, eggs, and egg-containing products, as well as wheat and alcoholic beverages. The agreement would require Canada to establish a duty-free tariff-rate quota (TRQ) for live chickens and chicken meat of U.S. origin, in addition to the existing World Trade Organization quotas. Model results indicate that U.S. poultry meat exports to Canada would increase by $183.5 million, or nearly 50 percent, in year six of the agreement.

The Meat Institute also developed an initial statement supporting the findings saying, "Although the ITC report will take some time to analyze, we are encouraged by our initial review of it, which finds USMCA would yield positive gains for the U.S. economy and agriculture sector, with increases in U.S. poultry exports to Canada. It is clear USMCA, if ratified, would preserve duty-free access to two of the U.S. meat and poultry industry's most crucial foreign markets - access the ITC underscores as beneficial in their evaluation of the agreement."

Although the USMCA would bolster the U.S. meat sector, its true benefits would not be fully realized until the three countries work to remove tariffs currently in place. The Meat Institute continues to encourage the Administration to lift steel and aluminum tariffs on imports from Canada and Mexico, and is urging Canada and Mexico to, in turn, remove retaliatory tariffs on U.S. meat exports. In the latter half of 2018, pork export value to Mexico alone declined $218 million, and in January 2019, this trend continued, as U.S. pork export value to Mexico dropped a staggering 28 percent.

Release of the ITC report removes one of the remaining procedural hurdles before Congress can consider the new trade deal. However, the timeline for Congress to consider USMCA remains uncertain. The report was originally set to be released in March but was delayed after the 35-day partial government shutdown. Now the Trump Administration needs to submit to Congress the final USMCA text, a draft statement of administrative action and implementing legislation to move the process forward.

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