Trump holds off terminating NAFTA as dairy groups urge for update of trade deal

By Mary Ellen Shoup contact

- Last updated on GMT

US President Donald Trump says he will renegotiate with Canada and Mexico on dairy trade.  ©iStock/Coco Casablanca
US President Donald Trump says he will renegotiate with Canada and Mexico on dairy trade. ©iStock/Coco Casablanca
In a bipartisan congressional letter, a group of 68 members of the House of Representatives wrote to US President Donald Trump about the importance of modernizing instead of withdrawing from NAFTA.

The National Milk Producers Federation (NMPF), the US Dairy Export Council (USDEC), and the International Dairy Foods Association (IDFA) said the 23-year-old pact is a critically important agreement that needs to be modernized, not withdrawn from, as the US relies on its exports to Canada and Mexico to survive.

According to USDEC, the US dairy industry exported approximately 15% of its milk production, worth roughly $5bn. To its NAFTA partners alone, the US exported $1.2bn of dairy products to Mexico and $631m to Canada.

“As we conveyed to our Mexican partners in our visit there earlier this year, NAFTA is very important to both our countries and has yielded strong benefits for agriculture,”​ Michael Dykes, D.V.M., president and CEO of IDFA, wrote.

“To build upon that track record, we need to address unfinished business such as the remaining tariff and nontariff trade barriers that Canada has pursued.”

Trump holds off termination of NAFTA

The letter comes amid uncertainty of NAFTA’s future as Trump has routinely called the trade agreement a “disaster”​ and the “worst trade deal in history.” ​Last week, Trump said he is prepared to “terminate NAFTA”​ if the US, Canada, and Mexico are unable to renegotiate trade policies.  

Trump signed an executive order over the weekend to conduct a study on US trade agreements directed by the US Commerce Department to determine whether or not the US has been treated fairly by its trading partners and the World Trade Organization.

“I will hold on the termination, let’s see if we can make it a fair deal because NAFTA’s been a horrible deal for the United States. It’s been very good for Canada. It’s been very good for Mexico because Canada’s been very rough on the United States,”​ Trump said.

US Commerce Department Secretary, Wilbur Ross, said the report on US trade relations will be issued in 180 days.

Targeting Canada’s milk classification system

In the letter, US dairy leaders urged Trump to address Canada’s most recent revisions to its milk classification system, which changed in April 2016 when the Canadian province of Ontario implemented a new milk price class, Class 6, which has slashed US exports of ultrafiltered milk.

“What happened here was that the Canadian government decided to lower the costs and the price, providing an incentive for processors in Canada to use Canadian products and making it more difficult, in fact, if not impossible for US imports,”​ USDEC CEO, Tom Vilsack, said.

In addition, the US dairy sector said that Canada’s newly-implemented Class 7 National Ingredient Strategy has “displaced current US imports and is poised to negatively impact global milk powder markets.”

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