Overview of the CUSMA

The CUSMA, also known as the USMCA, stands for the Canada-United States-Mexico Agreement, a comprehensive free-trade agreement between the three countries. Following through on campaign promises, President Donald Trump opened negotiations on a "new NAFTA." Signed on November 30, 2018, the agreement superseded the former North American Free Trade Agreement (NAFTA), which was replaced due to the United States' reported dissatisfaction with the loss of "vast amounts of money" and jobs. After it was amended in December of 2019, the CUSMA became enforced on July 1, 2020, and will expire if not renewed after sixteen years.

Former Mexican President Enrique Pena Nieto, former U.S. President Donald Trump, and current Prime Minister of Canada Justin Trudeau signing the CUSMA on November 2018.

Former President Donald Trump discussing NAFTA

CUSMA's Impact on Industries

The CUSMA covered a wide expanse of trade topics. Most of the new provisions had significant effects on industries of note, specifically the agricultural, auto, digital, and pharmaceutical industries.

The Agricultural Sector

The agricultural sector is best described as the establishments that grow crops, raise animals, harvest fish, and similar activities that produce the end product that is seen in grocery stores. The agricultural sector also includes technology that aids in food and drink production as well as sanitary practices.

Canada’s Dairy Industry

To understand the negotiations, Canada’s supply management system in relation to the dairy industry specifically needs to be clarified. The supply management system essentially prevents overproduction by setting quotas for farmers for how much product to produce based on the amount Canadians are expected to purchase. Farmers’ incomes are kept stable through a guaranteed minimum price for their product. Furthermore, the protectionist method of high tariffs (some as high as 300%) on foreign products make them extremely expensive, limiting options for Canadian consumers.

The results of supply management and its practices are that farmers have stable incomes, consumers pay a higher amount for their dairy, and foreign products are prevented from the system.

The U.S. does not follow a supply management system. The federal government supports the farming industry through subsidies, paid for by American taxes. There is no current system in place to manage overproduction.

Previously, under NAFTA…

NAFTA did not have as large of a change as the CUSMA on the agricultural industry. Largely expanding on the pre-existing FTA between the US and Canada, the NAFTA provisions of note included dropping tariffs and trade restrictions on most agricultural products, with the exception of the most sheltered products within each country, mainly Canadian dairy, poultry, and eggs.

U.S Concerns

Former U.S. President Donald Trump has commented on his opinions of Canada’s protectionist policies for its dairy industry:

Trump speaking about "standing up" against Canada for U.S. dairy farmers at a public event in Wisconsin