Besieged Michigan farmers back new trade pact with Canada and Mexico

LANSING — Michigan farmers are calling on Congress to swiftly pass a new trade agreement with Canada and Mexico, saying it could provide partial relief from low prices, a trade war with China and heavy rains that kept crops out of the ground this spring. 

“It’s huge to our futures in many industries,” Michigan Farm Bureau President Carl Bednarski said Monday.

Bednarski, who farms corn, soybeans and wheat in Caro, spoke at a Farm Bureau gathering to raise support for the United States-Mexico-Canada Agreement. Negotiated by the Trump administration, that’s the replacement for the North American Free Trade Agreement, better known as NAFTA. 

Heads of state in each country have signed the revised agreement, and lawmakers in Mexico ratified it in June. It still needs signoff from lawmakers in the United States and Canada.​ 

Supporters want Congress to approve the deal this year to avoid distractions in the run-up to the 2020 presidential election. 

Michigan exported nearly $58 billion in all goods in 2018, the seventh highest in the nation. That included $23.8 billion to Canada and $12.3 billion to Mexico.

Canada and Mexico rank among Michigan’s top five trading partners in agriculture. Michigan exported more than $900 million in agriculture products to Canada in 2018, and $174 million to Mexico. 

Pushing hard for the deal are dairy farmers, who produce the state’s most valuable agricultural commodity, valued at more than $1.6 billion. They say the pact would bolster access to Canadian markets at a time when Increased automation dramatically increased production, lowering prices to levels that don’t cover costs.

Thousands of dairy farms have closed nationwide, including hundreds in Michigan.

The deal would eliminate Canada’s protectionist “Class 7” milk powder pricing system, which critics say flooded the market with Canadian products and left U.S. producers unable to compete. 

The pact would also add export surcharges on dairy products that exceed certain thresholds and end a grading system in Canada for wheat that American farmers complain penalizes certain U.S.-grown wheat. 

“I’m comfortable in saying this is a significant improvement to NAFTA in a number of different industries,” said Tom Vilsack, president and CEO of the U.S. Dairy Export Council, who also served as Iowa governor and secretary of agriculture under President Barack Obama. 

“This is about supporting your farmers. It’s about supporting good paying jobs. It’s about supporting economic activity.”

Representatives of Michigan manufacturers and small businesses also joined agriculture interests in supporting the agreement Monday, calling it an improvement over NAFTA and a boon to Michigan.

“We see this as a crucial way of improving the economy,” said Chuck Hadden, president and CEO of the Michigan Manufacturers Association.

The deal includes provisions, for instance, that cars must have 75 percent of their components manufactured domestically to qualify for zero tariffs.

Bednarski said a new pact “could not come at a more critical time” for Michigan farmers as they grapple with a years of depressed commodity prices, 

Still, the agreement would fall short of fixing the full slate of Michigan farmers’ woes — including fallout from Trump’s trade war with China. The country has retaliated against Trump $60 billion in tariffs on U.S. goods, including steep surcharges on soybeans that has cut off cut off American farmers from the Chinese market and sent soybean prices tumbling. 

“It isn’t going to necessarily provide a lot of relief for what’s currently taking place in China,” said Vilsack. 

U.S. soybean farmers previously sent about half their crop to other countries, and about 60 percent of those exports last year went to China. 

“We’re now beginning to deal with a world where that’s no longer going to be the case,” Vilsack said.

Nevertheless, a new North American trade pact could give some Michigan farmers relief as they continue to press the Trump administration to resolve the spat with China, Bednarski said. 

“Let’s get [one agreement] done and have a roadmap to the next one,” he said. 

But Congress must first approve the deal. 

U.S. House Speaker Nancy Pelsosi, a Democrat, has yet to bring the deal to the floor,  but this month told CNBC: “We hope that we’re on a path to yes.” 

Some Democrats have called for stronger mechanisms to enforce environmental and labor protections in the pact. Labor groups including the AFL-CIO say they can’t support the new pact without major changes.

The new pact requires 40 to 45 percent of auto parts to be made by workers earning at least $16 an hour in the coming years. But unions say many autos made in the U.S. and Mexico already meet that standard, suggesting the new requirement would make little difference. 

Unions want stronger, more wide-ranging labor standards and enforcement tools. 

“The agreement’s labor standards should be based explicitly on the relevant International Labor Organization Conventions, which include the freedom of association, collective bargaining, equal remuneration, prohibitions on child labor, forced labor and discrimination, rather than vague references to the principles that underlie those rights," the AFL-CIO said in a statement earlier this month.

Supporters of the pact called some of those concerns valid, but said they could be resolved after the agreement is approved — as governments hammer out policies to implement it.