Canada-United States-Mexico Agreement and Canada's Agriculture Sector
On September 30, 2018, the United States, Mexico and Canada announced the completion of negotiations toward a new Canada-United States-Mexico Agreement (CUSMA).
The CUSMA will preserve the existing agriculture commitments between Canada, the United States (U.S.), and Mexico, and help to further bring together an already highly integrated industry.
Throughout the negotiations, the Government of Canada worked extremely hard to advance the interests of Canadian farmers and food businesses. We know that they are strong economic drivers for creating well-paying jobs and growing the middle class, particularly in our rural communities.
Canada secured a number of beneficial outcomes for agriculture under the CUSMA, including additional market access for:
- sugar-containing products,
- peanuts, and
- peanut butter.
The agreement also secures liberalized rules of origin for margarine, establishes new obligations for agricultural biotechnology, and creates a new Committee on Agricultural Trade to help address trade issues.
Supply management system
The Government has maintained the three pillars of Canada's supply management system for dairy, poultry and eggs — production control, pricing mechanisms, and import control — despite strong U.S. attempts to dismantle them.
Under the new CUSMA, Canada has agreed to grant additional market access to the U.S. for specific quantities (expressed in metric tonnes) of dairy products. The CUSMA also grants market access to the U.S. for chicken, eggs and turkey products.
Canada's market access for dairy in the CUSMA is estimated at approximately 3.59% of Canadian production. Total market access to foreign competitors for dairy under all trade commitments, including the CUSMA, is estimated at approximately 10% of Canada's production. Canadian farmers will continue to supply the vast majority of the Canadian market. Since market access is granted in terms of specific volumes, as the demand for dairy products rises in Canada, the production of milk of our Canadian farmers will also rise to meet this market growth.
Canada has negotiated reciprocal access to the U.S. dairy market, including tonne-for-tonne access for most dairy products.
Canada and the U.S. have both agreed to tariff elimination for whey in 10 years. Canada has also agreed to ensure the elimination of current milk classes 6 and 7 within six months from the entry into force of the agreement, and to establish an export charge on skim milk powder, milk protein concentrates, and infant formula if exports exceed certain thresholds.
The Government has committed to fully and fairly supporting farmers and processors in the supply management sector for loss of market share.
The Government has announced the formation of new working groups comprised of representatives from the supply management sector. These working groups — two with dairy farmers and processors; and one with poultry and egg farmers and processors — will develop strategies to ensure Canada maintains its robust dairy, poultry and egg industries, now and into the future.
The structure of the dairy working groups is informed by consultations with the Dairy Farmers of Canada and the Dairy Processors Association of Canada, and is comprised of two components:
- A working group that will collaborate to develop mitigation strategies to fully and fairly support farmers and processors to help them adjust to the CUSMA. It will also discuss support to reflect the impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); and
- A separate dairy working group that will chart a path forward to help the dairy sector innovate and remain an important source of jobs and growth for future generations.
The poultry and egg working group will focus on both short-term and long-term goals for the sector.
The federal government will engage with provincial and territorial governments on an ongoing basis throughout the process.
Who will be part of these working groups?
- Representatives from national and regional industry organizations and associations — with industry delegates to be determined in consultation with the industries themselves.
- Academic leaders, industry and financial experts may also support the working groups, as necessary
- Government officials
When will these working groups be up and running?
More information on timing will be available in due course.
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