U.S. agriculture groups are watching the pending negotiations between the U.S., Mexico, and Canada as the countries work on renewing the U.S.-Mexico-Canada trade agreement. Tony Rice, the director of trade policy for the National Milk Producers Federation, said the USMCA is very important for the dairy industry and U.S. dairy exports.
“Last year, we exported around $4 billion in dairy products, whether it was fluid milk, cheese, whey products, or dry ingredients to those two markets. They’re number one and two, respectively, with Mexico and Canada, and the USMCA agreement has brought a tremendous number of benefits in growing our exports to Mexico, particularly, and simultaneously to Canada, and servicing the demand in those two markets. The tariff-free access that we get into Mexico is invaluable to us, and preservation of that tariff-free access is key as we begin this review process that formally begins July 1, 2026, but we know that governments are already, especially with Mexico, kicking off this process of evaluating what issues are on the table.”
Rice said the Federation supports the continuation of USMCA, but that doesn’t mean it can’t be improved, starting with U.S. dairy access to Canada.
“Canada made several commitments that they, frankly, haven’t fulfilled since the implementation. So, there are two components, the first of which was on market access, and on paper, Canada committed to expanding their tariff rate quotas for a series of dairy quotas for U.S. dairy exports. But in practice, what we’ve seen is an inability for our exporters to actually meet the demand in Canada and fill those quotas. We’re not trying to crack open the market further; it’s more so making sure we get the access that was already negotiated in the USMCA agreement.”
There’s also a problem with non-fat milk solid exports from Canada into the U.S.
“After a certain threshold, there’s a surcharge that needs to be applied, and we’ve seen them hold the commitments on skim milk powder and milk protein concentrate, but almost immediately after USMCA implementation, what we saw is a spike in some of these other product categories, like food preparations that are skim milk powder blends, or milk protein isolates, which is different from milk protein concentrates. Because it’s a different tariff category, they can circumvent those USMCA limits that were established. So, very clever, but certainly defies the intent of the agreement.”
Over $2.5 billion worth of dairy exports went to Mexico last year, but that doesn’t mean there isn’t something to improve.
“One lingering issue that we have is related to the use of common cheese names. So, think like parmesan, feta, and asiago. These are names that the European Union has an interest in trying to monopolize as its own. During USMCA negotiations, Mexico agreed to protect a list of about two dozen common cheese names, like feta, and this is increasingly becoming a concern as the European Union is seeking to finalize its own trade negotiations with Mexico, which could bring exclusive use rights for terms like feta. If you can’t label a cheese as feta, what do you call it? White Greek-style products? So, it creates a lot of headaches and a lot of challenges.”
The formal negotiations are scheduled to begin on July 1.