www.crs.gov | 7-5700

October 5, 2018

Agricultural Provisions of the U.S.-Mexico-Canada Agreement

according to the U.S. Trade Representative, and will

expand exports of U.S. agricultural goods. While USMCA

includes provisions that address many sectors, this report

summarizes the agriculture and sanitary and phytosanitary

(SPS) provisions of the agreement. The President is

expected to sign USMCA on November 30, 2018, before

sending the agreement and implementing legislation to

Congress for approval. It must also be approved by the

governments of Canada and Mexico.

Canada and Mexico were the first- and third-leading export

from $8.7 billion in 1992 to $39 billion in 2017, while

imports rose from $6.5 billion to $47 billion over the same

time period. There has been a trade deficit for agricultural

products since 2014, including an $8 billion trade deficit in

2017 that is the largest deficit since NAFTA was signed.

Figure 1. U.S.-NAFTA Agricultural Trade, 1992-2017

Source: CRS from USDA, Global Agricultural Trading System. Data

are not adjusted for inflation.

broader provisions on transparency for the implementation

of TRQs, such as requirements for advanced notice of

changes to the quotas and making publicly available details

Canada has further agreed to changes in its milk pricing

system that has set low prices for Canadian skim milk

solids, undercutting U.S. exports. Six months after USMCA

goes into effect, Canada will eliminate its Class 7 milk

price (which includes skim milk solids, Class 6 in Ontario)

and will set its price for skim milk solids based on a

that the United States and Canada meet five years after the

implementation of the agreement—and every two years

after that—to determine whether to modify the dairy

provisions of the agreement.

USMCA increases the TRQs for U.S. poultry and egg

exports to Canada. Much like the rules governing its dairy

sector, Canada has a supply management system for

chicken, egg, and turkey production and has allowed only a

small amount of those products to be imported duty free.

Under the agreement, the duty-free quotas for chicken starts

Under USMCA, Canada will revise its grain grading

policies to treat U.S. wheat in a way that is “no less

favorable than that it accords to like wheat of national

origin.” Canadian inspection certificates for wheat currently

do not allow for a grade, so U.S. exports cannot receive

premium prices that would come with a higher grade.

USMCA provides that neither the United States nor Canada

are allowed to have country of origin on wheat quality

certificates for wheat from either country.

plants from diseases, pests, toxins, and other contaminants.

USMCA’s SPS chapter calls for greater transparency in

SPS rules and regulatory alignment among the three

countries. Under the agreement, countries must base their

SPS rules on “relevant scientific principles” and eliminate

those rules that no longer have a scientific basis. While

USMCA commits the United States, Mexico, and Canada to

seek alignment and equivalence in their SPS regulations, it

also requires them to notify and give opportunity to

comment on any additions or changes to SPS rules.

The agriculture chapter of USMCA lays out protections and

coordination on agricultural biotechnology, an issue that is

not addressed in NAFTA. USMCA requires the United

States, Mexico, and Canada to make publicly available the

details on the approval process for crops produced with

biotechnology, encourage producers to submit concurrent

applications for approval, and ensure that decisions on

those applications are made in a timely manner. Further,

when an import into a member country is found to have a

low level presence of an unapproved crop produced with

international organizations. The provisions of USMCA

apply to crops produced with conventional biotechnology

methods, including recombinant DNA and gene editing.

Canada allows its provinces to control the sale of beer,

wine, and spirits, a system that in some cases has disrupted

market access for U.S. products with barriers such as higher

prices for imported products. USMCA requires that each

country have the same treatment for distributing another

country’s spirits, wine, beer, and other alcoholic beverages

wines in grocery stores by November 1, 2019. The

agreement further includes rules to promote transparency

and harmonization of labeling for wine and spirits

beverages among the three countries and prevent labeling

from acting as a barrier to trade.

Geographical indications (GIs) are place names used to

identify products that come from certain regions or places.

have already agreed to in trade negotiations with the

European Union (EU) but lays out transparency and

notification requirements for any new GIs that a country

wants to recognize. The agreement also details a process for

determining whether a food name is common or should be

protected. In a side letter accompanying the agreement,

Mexico confirmed a list of 33 terms for cheese that would

remain available as common names for U.S. cheese

producers exporting to Mexico. The list includes some

terms that are protected as GIs by the EU, such as Edam,

products labeled as Bourbon Whiskey and Tennessee

Mezcal, which must be produced in Mexico. In a side letter

accompanying the agreement, the United States and Mexico

further agreed to protect American Rye Whiskey,

USMCA includes protections for proprietary formulas for

prepackaged foods and food additives that limit the

information countries subject to the agreement can ask for

from food companies looking to export. Countries can ask

The United States has agreed to allow more access for

imports of Canadian dairy products and sugar and

sweetened products. The agreement details the phase-out

period for U.S. tariffs on cotton and peanut imports from

Canada, which will be eliminated five years after the

agreement takes effect. U.S. imports of peanut products—

including shelled and unshelled peanuts and peanut

butter—from Canada are currently subject to a 131.8%

groups. The agreement does not include changes to trade

remedy laws to address seasonal produce as requested by

Southeastern U.S. produce growers. It also does not address

non-tariff barriers to market access for U.S. fresh potatoes

in Canada and Mexico. Finally the agreement does not

address a resolution for retaliatory tariffs on U.S.

agricultural exports to those countries.