The region’s export-heavy tree fruit industry welcomed progress this week on a new trade agreement with Mexico and Canada.
House Democrats announced Tuesday that they reached a deal with President Donald Trump’s administration on the U.S.-Mexico-Canada trade agreement, or USMCA. The House is expected to vote on the agreement next week.
The three countries’ leaders signed on to the agreement, which will replace the longstanding North American Free Trade Agreement, or NAFTA, in November 2018. All three countries’ governments still need to ratify the agreement. Only Mexico has ratified the agreement so far.
“The USMCA or the ‘new NAFTA’ is critical for Washington state’s interests and is a much-needed positive step in an otherwise uncertain trade environment,” said Lori Otto Punke, president of the Washington Council on International Trade, a Seattle-based organization that advocates for trade policies that benefits Washington workers, farmers and businesses, in a written statement.
The tree fruit industry has faced several trade uncertainties in the last year, so the agreement’s passage would be a much-needed positive development, said Mark Powers, president of the Northwest Horticultural Council, a Yakima-based organization that represents the Northwest tree fruit industry on public policy issues.
Cherries and apples continue to be hit with retaliatory tariffs from China in an ongoing trade dispute between the two countries. Meanwhile, apples have been hit with a significant tariff from India.
“Taking any uncertainty off the table is a good move,” he said. “This USMCA agreement (being ratified) should do that, and focus can move back to China and India.”
Passage of the USMCA ensures that Canada and Mexico remain open for U.S. agricultural products, including tree fruit grown in the Yakima Valley.
Earlier this year, Mexico removed a 20 percent tariff on apples along with several other retaliatory tariffs after the U.S. agreed to remove tariffs on steel and aluminum from the country. The U.S. also worked out a deal with Canada to remove tariffs on steel and aluminum, though the country did not place any tariffs on U.S. apples.
Mexico and Canada are the No. 1 and No. 2 markets for Washington apples. Maintaining or even growing those markets is crucial now with growers producing one of the largest apple crops ever this year.
A Nov. 1 report from the Washington State Tree Fruit Association put this year’s fresh apple crop at 137.3 million 40-pound boxes. That is just a few million boxes below the record 141.8 million boxes from 2014.
With about 30 percent of apples exported in a given year, it’s essential to minimize as many potential trade barriers or uncertainties as possible, Powers said.
“We got a lot of fruit to move this year,” he said. “With the agreement hopefully passed by the House by early next week and by the Senate shortly after, that would be a great Christmas present for tree fruit growers.”
Another industry that also stands to benefit from the passage of the USMCA is the Washington wine industry. The agreement includes one key provision that would now allow Washington wine to be stocked in the grocery store.
There are still several barriers, such as a high tax for Washington wines imported in British Columbia, but the passage of the USMCA would at least move things forward, said Josh McDonald, executive director of the Washington Wine Institute, which represents the industry at both the state and federal level.
Despite barriers, Washington still sends more than $10 million in wine to Canada annually, according to figures provided by the Washington Wine Institute.
“Having a more open and free trade experience with Canada can only help,” McDonald said.
The dairy industry will also stand to benefit with the agreement’s passage. In the new agreement, Canada agreed to end a pricing program that allowed the country to undercut prices for milk powder and other related products in Canada and foreign markets.
Canada also agreed to import a set amount — up to 3.59 percent of domestic production — of U.S. dairy products, including milk, cream and cheese, tariff-free.