The U.S., Canada and Mexico reached an agreement on a new, modernized free trade agreement to succeed the 24-year-old North American Free Trade Agreement.
Distilled Spirits Council and Wine Institute praised the agreement, noting that it made major improvement in market access for alcohol beverages.
But, DSC Interim President/CEO Clarkson Hine noted that while the agreement maintains duty-free access for U.S. spirits exports to Canada and Mexico, U.S. whiskeys continue to face retaliatory tariffs in those markets.
Currently, Canada is imposing a retaliatory tariff of 10% on all U.S. whiskey imports in response to the steel and aluminum tariffs. In 2017, total U.S. whiskey exports to Canada were valued at $48.7 million.
In addition, Mexico is imposing a retaliatory tariff of 25% on U.S. whiskeys. In 2017, total U.S. whiskey exports to Mexico were valued at $13.4 million.
“Now that this important agreement has been achieved, we hope the three parties can quickly resolve their other trade disputes so that free and fair trade for U.S. whiskey exports is resumed,” Hine concluded.
Still, Hine was pleased by what has been accomplished. The agreement reaffirms commitments concerning the internal sale and distribution of distilled spirits and tariff-free trade in spirits, he said, adding it also establishes new best practices regarding labeling and certifications for beverage alcohol, which will help to facilitate trade in spirits among the three countries.
In addition, the United States secured Mexico’s agreement to consider granting distinctive product recognition for “American Rye Whiskey,” a fast-growing category of American Whiskey. The new agreement also preserves distinctive product recognition for “Bourbon” and “Tennessee Whiskey” in Canada and Mexico, and for “Canadian Whiskey,” “Tequila” and “Mescal” in the United States.
The U.S. spirits sector has expanded significantly over the past two decades, and U.S. spirits are now exported from small, medium and large distillers located in 42 states, supporting the direct and indirect employment of an estimated 1.5 million people across America.
Canada has agreed to resolve the ongoing dispute regarding grocery store access for U.S. wines in British Columbia by ensuring the discriminatory policies are removed by Nov. 1 of next year.
‘Real Progress’ for U.S. Wines
“This agreement represents real progress towards improved market access for U.S. wines in Canada. In settling the U.S. WTO case, Canada has finally acknowledged that it must live up to its WTO obligations and that blatantly discriminatory policies cannot be tolerated,” said Robert P. Koch, Wine Institute president/ceo. We still have much work to do in other areas of market access, but this is a significant accomplishment.”
“The inclusion of the alcohol annex is also a very positive step in our long-standing efforts to remove trade barriers and grow U.S. wine exports. We thank Ambassador Lighthizer and his entire team for their tireless efforts to secure these gains,” Koch said.
The White House was triumphant in announcing the accord, noting that “for years, politicians have called for the renegotiation of NAFTA, but President Trump is following through where others have failed.
White House Cites ‘Wins’
It said the new United States-Mexico-Canada Agreement (USMCA) has “a number of wins for American businesses and workers.
- American auto manufacturers and workers will benefit from new rules of origin requiring 75 percent of auto content to be produced in North America. The White House said “for years, NASTA rules have helped incentivize offshoring, leading many manufacturing jobs to leave the US. The new agreement “will incentivize billions of dollars in additional United States vehicle and auto parts production, and workers will also benefit from rules that will incentivize the use of high-wage manufacturing labor in the auto sector, supporting better jobs for American workers.”
- USMCA’s labor chapter represents the strongest labor provisions of any trade agreement. USMCA’s labor chapter is a core part of the agreement and will make the labor provisions fully enforceable.
- USMCA is a win for American farmers, ranchers, and agribusiness as it includes important improvements that will enable food and agriculture to trade more fairly. Canada will eliminate its “Class 7” program that allows low-priced dairy ingredients to undersell American dairy products. Canada will provide new access for American dairy products, eggs, and poultry.
- The new agreement includes a modernized, high-standard chapter that provides strong protection and enforcement of intellectual property rights. This includes 10 years of data protection for biologic drugs and a large scope of products eligible for protection.
- USMCA contains the strongest measures on digital trade of any agreement. This includes rules to ensure data can be transferred cross-border and to minimize limits on where data can be stored.
The agreement leaves in place Trump Administration tariffs on imported steel and aluminum.
The agreement will “sunset” in 16 years, unless it’s actively renewed or renegotiated. The three countries will meet every six years to decide whether to renew USMCA.