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Industry Partners

Trilateral Trade Agreement Praised by Grocery Industry

Retail partners believe move is positive for the U.S. supply chain
Photograph: YouTube

After more than a year of tireless negotiations, President Trump achieved a goal of overturning the 1994 North American Free Trade Agreement on the night before the Oct. 1 deadline, reaching a new trade agreement with Canada and Mexico that has drawn favor with grocery industry organizations.

The deal, dubbed United States, Mexico, Canada Agreement (USMCA), aims to "modernize" trade relationships by covering digital-age issues such as protection of intellectual property rights and data. The new agreement also has strong implications for the dairy industry as it eliminates the Class 7 program that allows "low-priced dairy ingredients to undersell American dairy products," according to a statement from the White House. Canada has also agreed to provide enhanced access for American dairy, eggs and poultry to market.

USMCA will also require that vehicles be made of at least 75% parts made in the U.S., Canada or Mexico to avoid tariffs.

Trump Tweeted that the deal "opens markets to our farmers and manufacturers, reduces trade barriers to the U.S. and will bring all three great nations together in competition with the rest of the world."

National Retail Federation President and CEO Matthew Shay said the federation was pleased that the new agreement preserves NAFTA’s trilateral framework, "which is critical to protecting North American supply chains that support millions of American jobs" but modernizes NAFTA for the 21st century, which he added is a "goal retailers have shared from the start." 

Geoff Freeman, president and CEO of the Grocery Manufacturers Association, called the agreement a "victory for American consumers and an important step in building the world’s strongest trading partnership," adding that U.S. consumers rely on the "high-quality ingredients and affordable products" made possible through trade with Canada and Mexico.

"This trade agreement will drive future growth, create more jobs in American food, beverage and household product manufacturing, and provide American consumers with greater choice and affordable goods," he said.

Freeman noted that grocery industry sales "add $1 trillion to the U.S. economy every year, including $20 billion in exports to Canada and Mexico," which buy about half of all U.S. processed product exports.

Tom Stenzel, president and CEO of United Fresh Produce Association, added that the strong relationship members have established between the three countries has enabled "the growth of the fresh produce industry over the last quarter century."

The Product Marketing Association's VP of global membership and engagement Richard Owens affirmed that having a "single agreement" among the countries is "the best way to address the extensive relationships and investments in produce and floral production and sales that have developed in North America. "

"The six-year review and 16-year duration of the agreement give confidence for future investment to further build and expand trade among the countries as our members work to supply consumers’ expectations of a vast range of fresh produce and floral products year-round," Owens said. "Some of our members sought provisions on seasonal products not included in the final agreement, and we appreciate commitments from negotiators to continue to examine opportunities to address their concerns.” 

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