The new deal among the United States, Canada and Mexico that updates the North American Free Trade Agreement (NAFTA) is being hailed as a win for U.S. industry — with many trade experts expressing relief that Canada signed on at the eleventh hour.
“The fact that this is a trilateral deal is the biggest takeaway,” said Alice Gómez, vice president and counsel at Cornerstone Government Affairs in Washington, D.C., and an advisor on legislative issues to the Society of American Florists. “We came very close to having a bilateral agreement presented to Congress, and that would have been a nonstarter for many lawmakers. Getting Canada back at the table [represents] a collective sigh of relief from industry and policymakers and it’s a big win for the Trump Administration.”
The agreement, known as the United States-Mexico-Canada Agreement or USMCA, comes after more than 14 months of intense negotiation among the countries. It will replace NAFTA, the pact signed into law in 1994 that governs the more than $1.2 million worth of trade among the three countries.
One important caveat, and a point lost in some of the reporting on the agreement, according to Gómez: USMCA won’t go into effect until leaders from Canada, Mexico and the United States sign it and their respective legislative bodies sign it into law. That’s expected to happen by 2020.
“The ink is still wet on the agreement,” she said. “The story is not finished, and NAFTA is still the law of the land.”
Still, Gómez added, most experts agree the new agreement would “do no harm to trade as it currently stands with Canada and Mexico” and, in fact, “could facilitate trade in flowers if implemented correctly.”
“USMCA will improve cooperation among Canada, the United States and Mexico on sanitary and phytosanitary matters by ensuring each countries’ laws and trade practices are transparent and that decision-making is based on science and risk analysis,” she said, adding that other provisions in the legal text could also expedite import checks and reduce paperwork, which is important for perishable product. “The agreement also modernizes and in some respects simplifies customs procedures by requiring countries to allow for electronic payments of duties, taxes and other charges associated with shipping products across borders, including allowing for electronic submission of associated documentation. Finally, there are other provisions that generally boost cooperation on trade in products like flowers, such as requirements to allow stakeholders to participate in the development of regulations.”
Steve Register of Flores Ixtapan S de RL de CV, Tenango-Ixtapan de la Sal, in Villa Guerrero, Mexico said that, as a grower and exporter in Mexico, he and his team have been keeping a “close eye on the developments.”
“Early on we were concerned about tariffs possibly being placed on the cut flowers we export to the U.S., but over the course of the negotiations that possibility continued to appear less likely,” he said. “We are relieved to know that the negotiations have finished and that there will be no tariffs placed on cut flowers.”
In addition, he added, “the research we have done shows there will be no changes with USMCA to exporting our buckets.We are very relieved and very excited to increase our exports to the U.S. of both cut flowers and buckets that are commonly used in the floral industry.”
Gómez said that most beltway insiders are now turning their attention to China, and how the Trump administration might move forward with trade negotiations there.
“There’s a general feeling of, ‘Now that we’ve cleared the deck with North America with this agreement, we can start regrouping and improving what’s going on with China,’ which is the real issue for this administration,” Gómez said, noting that some of the language included in the USMCA, including stipulations against currency manipulation, seemed to be thinly veiled references to China. (Currency manipulation has not historically been an issue among Canada, Mexico and the United States. “A lot of what’s been done is paving the path forward for this next chapter.”
Look for more coverage of trade negotiations with China in upcoming EBrief and Floral Management issues.
Mary Westbrook is the editor in chief of Floral Management magazine.