Trump announces USMCA deal to replace NAFTA
Kansas exported $2.5 billion of goods to Canada last year, with hundreds of millions of that coming from aviation and agriculture.
A last-minute international deal means Kansas farmers and manufacturers know their products will keep flowing north, state leaders are saying.
The United States and Canada struck a deal just before a key deadline late Sunday that will keep Canada in a trade agreement with the U.S. and Mexico. The new agreement replaces the North American Free Trade Agreement, or NAFTA.
On Monday, Kansas leaders hailed the new trade deal, saying it will provide certainty to farmers and manufacturers.
“Canada’s inclusion in the US-Mexico-Canada Agreement is great news for Kansas farmers and manufacturers in the Fourth District and around the country,” Rep. Ron Estes, a Republican representing southcentral Kansas, said in a statement.
Canada’s status as Kansas’s top export market underscored the agreement’s importance, he added.
President Donald Trump had voiced frustration with NAFTA over what he viewed as unfair trading terms. At the White House Monday, he called the new deal, which must still be ratified by Congress, the “most important deal we’ve ever made by far.”
Kansas exported $907 million in aircraft and parts to Canada in 2017. Industrial machinery and computers accounted for another $326 million. Automobile exports to Canada from Kansas were valued at $181 million.
Kevin Doel, the spokesman for the Kansas Department of Commerce, said in an email that Kansas exports to Canada have exceeded $2 billion in nine of the past 10 years and it consistently ranks as the state’s first or second biggest trading partner depending on the year.
Between 2016 and 2017, exports from Kansas to Canada increased by $724 million or 40.6 percent percent, primarily driven by the state’s aviation industry, according to Doel.
The exact effects of the new trade agreement on the state’s aerospace industry, concentrated in Wichita, were not entirely clear Monday.
According to the Office of the United States Trade Representative, the new deal will push supply chains to use more United States parts in automobile production. The deal also requires that automobiles be comprised of 75 percent parts from North America.
“This is going to raise the standard by what percentage of a car needs to be made in North America to get in duty free, and hopefully the same standards will apply in the aircraft industry as well,” Rep. Roger Marshall, a Republican representing western Kansas, said.
The agreement’s effects on the agricultural industry were somewhat clearer. At its heart, the agreement will make it easier for American farmers to sell dairy products in Canada.
Todd Domer, a spokesman for the Kansas Livestock Association, said details of the agreement were not yet available. But, he said, “we’re hopeful the new agreement will be beneficial for Kansas dairy producers.”
“It looked like it was trending that way during negotiations, but we just don’t know the specifics are yet at this point,” Domer said.
Before Canada and the United States struck a deal Sunday, the United States previously reached an agreement with Mexico, which is a much larger agricultural trading partner for Kansas than Canada. The state exported more than $700 million in oilseeds and grains to Mexico last year.
“Getting some type of resolution to both Canada and Mexico is absolutely key to our members,” said Ryan Flickner, director of the Kansas Farm Bureau’s advocacy division.
Gov. Jeff Colyer said Kansas jobs ranging from farming and energy to aviation are dependent on trade with Mexico and Canada.
“Renewing and modernizing this agreement will be a great help to farmers, ranchers, and businesses in Kansas,” Colyer said.
Sen. Pat Roberts noted that since the original North American Free Trade Agreement in 1994, the value of U.S. agricultural exports to Canada had risen 271 percent and 305 percent for exports going to Mexico.
“That is no small impact on rural America, as well as the American economy,” Roberts said. “This trade pact will provide our farmers and ranchers with much needed export market certainty and will strengthen the relationship with two of our most important trading partners.”
Sen. Jerry Moran called the trade announcement “clearly a positive development.” He said he appreciated the Trump administration “working to make certain these markets remain available to Kansas farmers, ranchers and manufacturers, providing them some much-needed certainty.”
Congress must approve the deal – a process that may stretch into 2019. Once Trump and the leaders from Canada and Mexico sign the agreement, the administration and congressional leaders will need to write legislation to implement the deal and win passage in Congress.
Trump threatened to go ahead with a revamped NAFTA, with or without Canada. It was unclear, however, whether Trump had authority from Congress to pursue a revamped NAFTA with only Mexico.
NAFTA tore down most trade barriers between the United States, Canada and Mexico, leading to a surge in trade among them. But Trump and other critics said it encouraged manufacturers to move south of the border to take advantage of low Mexican wages, costing American jobs.
Contributing: Bryan Lowry of the Kansas City Star and the Associated Press