The USMCA went into full force today, July 1. Farmers hope to see additional marketing opportunities for their products. (Photo: Joseph L. Murphy/Iowa Soybean Association)

USMCA enters into full force

July 1, 2020 | Bethany Baratta

July 1 marks the first day of entry for the U.S.-Mexico-Canada Agreement (USMCA) and the next chapter of expanded opportunities for Iowa’s farmers. 

“The implementation of the USMCA is a win for Iowa soybean farmers, livestock producers, and our many communities supported by agriculture,” said Iowa Soybean Association (ISA) Public Affairs Director Michael Dolch.

USMCA replaces the 1994 North American Free Trade Agreement (NAFTA), which provided significant opportunities to expand soybean sales to Mexico and Canada. The agreement improves on NAFTA in its intellectual property and labor protections and includes provisions for biotechnologies, including gene editing.

“The agreement not only sustains the growth realized under NAFTA, but also lays a strong foundation for future growth,” Dolch said.

Mexico is the second-largest market for whole soybeans, soybean meal and soybean oil from the United States, according to the American Soybean Association. Canada is the fourth-largest purchaser of U.S. soybean meal and seventh-largest buyer of U.S. soybean oil.

Early on, ISA saw the opportunities the trade pact’s modernization could create for Iowa’s farmers.

Since late 2018, ISA members have engaged in conversations with U.S. Trade Representative Ambassador Gregg Doud and Iowa’s congressional delegation asking questions about the agreement and ultimately lending support for its passage and implementation.

“ISA directors and advocate members helped make this agreement a reality through in-person and virtual advocacy,” Dolch said.

The final agreement was signed by the United States, Mexico and Canada in December 2019. It passed the U.S. House of Representatives on December 19, 2019, the Senate on January 16, 2020, and was ratified on January 29, 2020. Canada and Mexico then ratified the agreement in March and April, respectively.

The agreement maintains zero tariffs on U.S. soybeans and offers a pathway to continued industry growth.

“In our early conversations about this new deal, we asked USTR to do no harm—to ensure Iowa soybean farmers could remain competitive,” said ISA president Tim Bardole of Rippey. “So, it’s definitely a good day for Iowa soybean producers, and it’s going to continue to benefit our market and all of Iowa agriculture.”

 Iowa Gov. Reynolds said the agreement it a positive step for Iowa’s entire economy.

“I look forward to USMCA opening new markets for high-quality Iowa exports, increasing wages, jobs, and economic activity,” Reynolds said in a statement. “With USMCA officially in force, our state and the entire nation will reap the benefits in the years to come.”

Iowa exports more than $10.3 billion in agricultural products to Canada and Mexico each year, which supports 86,500 Iowa jobs, according to the USDA Foreign Agricultural Service. Iowa Agriculture Secretary Mike Naig celebrated day 1 of the deal in a statement.

“Today, Iowa farmers gain greater access to our two largest export markets: Canada and Mexico,” said Iowa Ag Secretary Mike Naig. “Because of the Trump administration’s efforts to renegotiate unbalanced trade agreements, our producers will see significant improvements to rules of origin and intellectual property protections, and new opportunities with expanded market access. USMCA’s entry into force marks the beginning of a welcome new chapter for North American trade.”

ISA hasn’t let its foot off the gas since the agreement was fully ratified, Dolch says.  Instead, the association remains committed to addressing the uncertainties farmers are facing both domestically and abroad, Dolch said.

“We must continue seeking and growing destinations for Iowa soybeans while supporting key domestic markets like Iowa’s biodiesel and livestock industries."