As industry members prepare for the start of a new year, there had been a number of significant 2019 trade developments with a significant impact on agriculture. Many agricultural groups are hopeful that the momentum of positive change can carry forth into 2020. One of the most substantial changes for 2019 was the progress of the U.S.-Mexico-Canada Agreement (USMCA).
The markets in Canada and Mexico represented nearly $40 billion worth of food and agricultural exports in 2018, with expectations for the USMCA to provide for another $2 billion in export value. The process of negotiating agreeable conditions in the deal was a lengthy one, with the ratification process also taking longer than some in the industry would like. The House of Representatives recently passed the USMCA by a large margin, with expectations for full ratification soon. Another one of the most impactful 2019 trade developments was the breakthrough made between the U.S. and China.
For much of 2019, many farmers were suffering under the increased tariffs imposed by China, prompting move trade relief payments through the Market Facilitation Program. After nearly 18 months of continuous negotiations, an initial deal was finally reached between China and the U.S. Some trade tariffs will remain in place for a time for imports from China, but the relationship between the two counties appears to be on the mend. There are expectations for China to purchase approximately $50 billion in American farm products under the Phase One agreement, while work continues to reach a more substantial trade arrangement.
There was also significant progress made in the Japanese market in 2019. The U.S.-Japan Trade Agreement that was signed by President Donald Trump back in October should create more potential for American farmers in the fourth-largest export market for U.S. ag products. The agreement basically provides the U.S. with the trade benefits to Japan that would have been acquired through the multinational Trans-Pacific Partnership.