U professor: New trade deal with Mexico and Canada is mostly business as usual
The two countries are important export markets for Minnesota businesses and farmers
A new trade deal for the United States, Mexico and Canada means business as usual for most Minnesota industries that depend on the trade partners, according to a University of Minnesota international trade expert.
The U.S., Mexico, Canada Trade Agreement, or USMCA, will replace the North American Free Trade Agreement, which has been in place since 1994. Top Democrats on Tuesday announced a deal with the White House that would allow it to move forward.
"The changes that have been made don't affect, in my view, the general shape of our advantages from NAFTA, but what they do is get rid of the uncertainty about whether or not NAFTA is going to continue," said Robert Kudrle, a professor at the U’s Humphrey School of Public Affairs.
Kudrle thinks the biggest effect of the USMCA agreement will be an end to a period of confusion and uncertainty for industries dependent on trade with North American neighbors.
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"The president started out by saying that NAFTA was the worst trade agreement ever signed,” said Kudrle. “Then two years later, he comes back with an overall package that's a little bit more protectionist, in the view of most observers, mainly on the manufacturing side, and a little bit more liberal in some agricultural products such as dairy, but not terribly different from what we started out with."
The trade certainty is important for Minnesota businesses and farmers.
"Minnesota is a power house in a number of industries," said Kudrle. "Ag in one form or another is by far our largest export, but we are also very big in precision products, high quality manufacturing."
Canada and Mexico are important agricultural markets for Minnesota, with ag products leading all industries in exports, according to the Minnesota Department of Agriculture.
Minnesota’s total agricultural exports generate $7.1 billion a year, and about half of all agriculture and agri-food exports go to the two North American neighbors.
Mexico is Minnesota's top export market for corn poultry, dairy and soybean meal. Canada ranks second in Minnesota exports of poultry, dairy and feed, according to MDA data.
Minnesota also sells a lot of manufactured goods in Canada and Mexico. According to data from the Office of the United States Trade Representative, Minnesota's largest goods export market in 2018 was Canada, with $4.8 billion in manufactured or processed items sold north of the border. Mexico ranked second with $2.3 billion in Minnesota exports in 2018.
The top five Minnesota goods exported to Canada and Mexico in 2018 were transportation equipment; machinery; processed food; computer and electronic products; and electrical equipment, appliances and components.
Rep. Collin Peterson, DFL-Minn., who chairs the U.S. House Agriculture Committee, called the USMCA agreement "great news" for businesses and farmers, adding that it provides "needed certainty" for farmers.
“The USMCA also preserves the market our farmers are currently accessing while making modest gains for our dairy, poultry, and wheat growers in the Canadian market," Peterson said in a statement. "Rural America has faced many hurdles and challenges with these trade wars, and passing the USMCA is a step in the right direction."