MOOOVING ON FROM NAFTA: A better deal on dairy with Canada, but at what cost?

• Author: Boehm, Eric
• Position: POLICY - North American Free Trade Agreement

ONE OF THE few liberalizing policies contained in the Trump administration's rewrite of the North American Free Trade Agreement (NAFTA) amounts to little more than "a drop in the milk bucket," according to one new analysis, while other measures will significantly limit free trade.

Allowing American dairy farmers to export more of their goods to Canada, tariff-free, was a major goal for President Donald Trump in his yearlong effort to replace NAFTA with the United States--Mexico--Canada Agreement (USMCA). The president has often harped on Canada's dairy protectionism, citing it as a problem with the trade compact he famously described as "one of the worst deals" during his campaign for the White House.

It was a rare instance in which Trump--who has described himself on Twitter as "Tariff Man"--took the side of free trade. In announcing the terms of the USMCA in October, the Office of the United States Trade Representative called the lowering of Canadian tariffs on American milk, cheese, and butter a "key accomplishment" of the negotiations.

It remains to be seen whether Congress will approve the USMCA in its current form. The governments of Canada and Mexico must also OK the deal before it becomes official. While the dairy provision is a victory for free trade, Congress should weigh its impact against the USMCA overall.

Under NAFTA, U.S. exports to Canada accounted for about 3 percent of total Canadian dairy sales. A complex system of quotas and massive...