Nebraska agriculture and industry will benefit from the new trade agreement between the U.S., Canada and Mexico that will go into effect July 1, Gov. Pete RIcketts said.
Ricketts, along with Canadian Consul General Ariel Delouya, Mexican Deputy Consul General Ricardo Sanchez and Kyle Wells, Canada desk officer at the U.S. Department of Commerce, participated in a teleconference on the agreement Wednesday.
“Nebraska is an agricultural state as it is our No. 1 industry,” Ricketts said.
“We need to look to grow our trade relationships to be able to grow our state and our No. 1 industry.”
The online event was sponsored by the Nebraska Chamber of Commerce.
The new United States, Mexico, Canada Agreement (USMCA) takes the place of the North American Free Trade Agreement, a tri-lateral agreement among the three countries that went into effect in the early 1990s.
The renegotiated agreement modernizes the pact and creates a new trade foundation. It enhances intellectual property digital trade, agricultural markets and balanced manufacturing policy.
According to the Nebraska chamber, the USMCA presents opportunities for Nebraska producers, businesses and manufacturers.
The agreement represents opportunities for enhanced trade among Nebraska and its largest trading partners, Mexico and Canada. The two countries represent a market for more than 40% of the state’s exports.
According to Wells, in 2019, Nebraska exported $3.3 billion in products to Canada and Mexico, accounting for 44% of the state’s total goods exports to the world.
He said Nebraska exported $1.6 billion to Canada — 21% of Nebraska’s total global exports.
Agricultural and construction machinery, at $339 million, accounted for the state’s largest export, with oil and gas second at $331 million; pesticides and fertilizers at $187 million; meat products and meat packaging at $181 million; and pharmaceuticals at $59 million.
Wells said Nebraska exported $1.7 million to Mexico — 23% of the state’s global exports.
Oilseeds and grains, at $883 million, was Nebraska’s largest export to Mexico, with grain and oilseed milling products, at $364 million, second; meat products and meat packaging, $202 million; pharmaceuticals and medicines, $52 million; and agricultural and construction machinery, $36 million.
When it comes to tariffs, Wells said that all products under NAFTA will remain at zero under USMCA.
He said Canada will provide new and expanded access (via trade rate quotas) for U.S. exports of milk, cheese, cream, skim milk powder, condensed milk, yogurt and several other dairy categories.
He said the agreement also eliminates its tariffs on whey and margarine.
Ricketts said as Nebraska pulls out of the COVID-19 economic doldrums, trade agreements such as the USMCA become important components in reviving the economy.
On Wednesday, the University of Nebraska-Lincoln reported that Nebraska’s leading economic indicator rose during May.
The report said that the leading indicator rose 2.45% in May after sharp declines in March and April.
According to the report, most components of the indicator improved during the month, as the state economy began to recover from the COVID-19 pandemic. Initial claims for unemployment insurance dropped sharply compared with March and April. Building permits for single-family homes also rebounded after dropping in April. There was even an increase in airline passenger enplanements relative to the previous month, as air travel began its slow recovery.
“The increase in the leading indicator confirms that the Nebraska economy will grow over the next six months,” said economist Eric Thompson, director of the Bureau of Business Research at the university.
Thompson said the pace of recovery should be strong but will depend on a variety of related factors, including “the strength of the global economy, the rate of virus spread, the degree of change in consumer spending patterns and the ability of businesses to adjust to changing conditions.”
A new trade agreement with Canada and Mexico could help pick up the pace of recovery.
Ricketts has gone on two trade missions to Mexico and one to Canada as governor.
“We have two great partners with Canada and Mexico, and the USMCA is a great way to take our relationship to the next level,” he said.