Everybody likes Christmas presents, and the report on Tuesday that President Trump and congressional leaders have struck a deal on a North American trade agreement is an early Christmas present for U.S. farmers.
We sure do need it: This is great news at the end of a tough year.
Or at least it will be great news if Congress takes the necessary steps to approve the new United States-Mexico-Canada Agreement (USMCA).
It can’t vote soon enough.
Here in Iowa, I’ve just finished my 47th crop and it was one of the most strenuous of my life. We didn’t complete the harvest until last Sunday night, which was weeks behind our normal schedule.
But the delays were only a part of it. All year long, we confronted a series of challenges. A wet spring made planting difficult. A wet fall turned our acres to mud, preventing trucks from driving into our fields. Harvest was much harder than normal. At least we didn’t have to confront a blizzard, though we did have to handle about a foot of snow, spread across half a dozen snow events.
These were weather problems, and there’s not much we can do about them except complain. Even the shortage of liquefied petroleum gas, which we use to dry our corn, was fundamentally a weather problem. The cold and wet climate boosted demand for LP gas beyond what our providers initially could deliver.
Yet the worst part of 2019 may have been the ongoing uncertainty about trade.
For corn and soybean farmers like me, about a third of what we grow ships to customers in other countries. We depend on exports for our livelihood.
Yet we’re all suffering through a series of trade spats with just about everybody, from China to the European Union. Earlier this month, the Trump administration started a new dispute, slapping metal tariffs on Argentina and Brazil. Even this can affect farmers because we buy machinery from companies that now will face higher prices for their raw materials.
From one day to the next, we just don’t know how we’re going to fare. In the headlines, we read about new tariffs with China. Then we hear about how talks are underway. Then we learn they’ve broken down. The latest word is that they may be back on again. Or maybe nothing will happen until after the 2020 elections.
Who really knows?
The one thing I know is this: The nonstop uncertainty is financially devastating.
The most frustrating uncertainty has involved our two best and closest trading partners: Canada and Mexico. They are good neighbors and excellent customers. Mexico, for example, is the top destination for corn grown in the Unites States. The Mexicans also buy a lot of our pork, soybeans and barley.
Much of this trade was made possible a generation ago, when a Democratic president and a Republican Congress worked together to negotiate and approve the North American Free Trade Agreement, better known by its acronym, NAFTA. That trade agreement has fueled economic growth and increased prosperity across our continent.
President Trump argued that NAFTA needed an update, and in some respects, he was right: A lot has happened in the last quarter century since that agreement was signed, including the rise of e-commerce and new concerns about intellectual property.
Yet the president also threatened to quit NAFTA entirely. Even if he wasn’t serious, his rhetoric affected everything from stock prices to commodity values.
Nobody knew what to expect – and so lots of people prepared for the worst.
Thankfully, it looks like we may shut down this front in our trade wars because of USMCA, the proposed successor to NAFTA. Under its provisions, U.S. dairy farmers will enjoy better access to Canadian markets, and that’s a good thing. And there is some important new language that covers innovations like seed technology which were not available when NAFTA was negotiated. For the most part, however, USMCA doesn’t do much for American farmers beyond what NAFTA already did for us.
Except in one truly important way: It locks us into a trade deal for the foreseeable future with our two best sets of customers.
In other words, USMCA ends a terrible period of uncertainty.
It’s a gift of stability – and I hope we get to enjoy it before Congress takes its Christmas vacation.
This piece was previously published in The Hill on December 12, 2019 https://thehill.com/opinion/international/474169-a-ratified-usmca-would-be-a-christmas-gift-of-stabilityrnd=1576101743