USCA Expresses Disappointment in Exclusion of COOL in USMCA
Columbus, MT – Following the House of Representatives passage of the U.S.-Mexico-Canada Trade Agreement (USMCA) on Thursday, Leo McDonnell, Director Emeritus, United States Cattlemen’s Association (USCA), and long-time cattle industry leader hassent a letter to the President of the United States, agriculture committee leaders in both congressional chambers and the House Ways and Means Subcommittee on Trade expressing disappointment at the exclusion of a country of origin labeling provision in the U.S.-Mexico-Canada Trade Agreement (USMCA). McDonnell provided clarification for policy-makers as USMCA approaches approval in the U.S. Senate and by the president and corrected misinformation provided by proponents of the trade agreement that misrepresent the impact of the North American Free Trade Agreement (NAFTA) on the U.S. cattle industry.
“While some have said that NAFTA has had a positive impact on U.S. cattle producers, that is not correct,” wrote McDonnell. “NAFTA was an extension of the 1988 Canada-U.S. Free Trade Agreement (CUSFTA) to include Mexico and superseded the previous agreement with Canada. As one looks at the impact of North American free trade agreements you would need to go back to 1988 to accurately study prior trade flows with Canada and 1993 with Mexico as the two agreements went into force on January 1, 1988 and January 1, 1994 respectively.”
“Looking at the three-year average prior to CUSFTA (1985,1986, 1987) on just live cattle, Canada was exporting on average 280,000 cattle to the U.S. However, during the last three years (2016,2017, 2018), exports from Canada have averaged 1,200,000.”
“When studying cattle and beef/live cattle equivalents combines, the U.S. trade deficit with Canada has expanded by the equivalent of nearly 1.59 million head. Given this data, since NAFTA was implemented the U.S. trade deficit in cattle and beef/cattle equivalency with Mexico has expanded from 724,600 head to 1,220,700 head.”
“Industry analysts most often use a formula that a 1% change in supply impacts price 1.5% to 2%. Using that basis, just the increase in the trade deficit in cattle and beef with Canada and Mexico of over 4% has impacted prices 6% to 8% and this is an industry that operates on very narrow margins that have historically had problems maintaining a 3% to 4% return on investment. This is further compounded by what the USITC Chairmen in 1999 stated in her report, ‘packers can and do use imports to suppress domestic prices’ and the Republican Commissioners on the U.S. Senate Trade Deficit Commission Report in 2000, “Easy availability of imports can limit price increases either by expanding available supply or reducing the ability of businesses to raise prices in order to pass on increases in their costs.”
McDonnell described how currency devaluation or manipulation of the Mexican peso in the mid-1990’s increased the impact of artificially cheap imports into the U.S. market, something McDonnell said was hardly a win for U.S. ranchers struggling to recover from the agriculture collapse of the 1980s.
“U.S. cattle producers were promised in past trade agreements that cattle and beef would be included for Special Rules for Perishable and Cyclical Ag Products in future trade agreements; however, this does not seem to be the case with USMCA,” he wrote.
“This administration promised to “Make America Great Again,” but it is becoming evident this does not include U.S. ranchers. The failure to include meaningful Country of Origin Labeling (COOL) for beef in USMCA is disheartening at best. During the few years that COOL for beef was in effect, U.S. ranchers experienced one of the greatest cattle markets in history because consumers and retailers were given choices and U.S. ranchers were allowed to compete on a more level playing field by identifying their product for consumers. Certainly, without COOL how can one have a level playing field or even expect to compete,” McDonnell pointed out.
“Today, China requires the U.S. to comply with the following: 1) All beef must be derived from cattle that were either born raised and slaughtered in the U.S. or 2) are imported from Canada or Mexico and then raised and slaughtered in the U.S. or 3) imported from Canada or Mexico for direct slaughter in the U.S. Chinese consumers will be better informed about U.S. produced beef than American consumers.”
“I feel it is important that the record needs to be set straight about the impact of NAFTA and USMCA and to express our disappointment that USMCA fails to address the problems it will create for U.S. ranchers.”
Established in March 2007, USCA is committed to enhancing and expanding the cattle industry’s voice on Capitol Hill. USCA has a full-time presence in Washington, giving cattle producers across the country a strong influence on policy development. For more information go to www.uscattlemen.org.