In 2017 alone, Montana exported $685 million worth of goods to Canada, which represents 42 percent of the state’s total goods exports, according to the Office of the United States Trade Representative.
So on Sunday, when the Trump administration announced that trade officials from the U.S., Mexico and Canada had reached a deal to restructure the North American Free Trade Agreement, Montana officials began scrambling to scour the details.
“Canada is our largest trading partner, by a long shot,” explained Casey Lozar, the division administrator of the Montana Department of Commerce’s Office of Tourism and Business Development. “Exports to Canada make up more than a third of the state’s total exports. So trade with Canada is critically important to the Montana economy.”
The state's exports to Canada are more than twice those to South Korea, Montana's second-largest export market, he added.
The new pact, called the U.S.-Mexico-Canada agreement, will have to be approved by Congress. Lozar said he and other officials haven’t had time to fully review what would change from the old NAFTA deal, which became law in 1994. However, they're working hard to understand all ramifications.
“Any new trade agreement, we’ll be looking at how it affects Montana’s agricultural industry, which is a big driver of the Montana economy,” Lozar said.
Montana Farm Bureau Federation President Hans McPherson said Monday that early indications look positive for Montana wheat, of which the state exports $560 million annually.
“We understand that Canada has agreed to grade imports of United States wheat in a manner no less favorable than it accords Canadian wheat, and to not require a country of origin statement on its quality grade or inspection certificate,” McPherson said in an email.
"In addition, Canada and the United States agreed to discuss issues related to seed regulatory systems," he continued. "We also heard that to facilitate the marketing of food and agricultural products, Mexico and the United States agreed that grading standards and services will be non-discriminatory for all agricultural goods and will establish a dialogue to discuss grading and quality trade-related matters.”
A senior Trump administration official told Politico that the new agreement also will open up the Canadian dairy market to U.S. exports at a level higher than the previous 3.25 percent markup negotiated under the Trans-Pacific Partnership.
McPherson said the elimination of Canada’s dairy pricing program, called the “Class 7” program, would benefit U.S. farmers. The U.S. would now have access to an additional 3.6 percent of Canada’s dairy market, which he said is better than what would have been achieved under the TPP agreement that was scrapped by the Trump administration.
“Trade is critical to agriculture, especially trade with our two closest neighbors,” McPherson said. “The U.S.-Mexico-Canada agreement builds on the success our farmers and ranchers have seen from NAFTA. Mexico is still an $18 billion market for U.S. ag products.''
Details of how the agreement would affect wood were less clear Monday. Montana wood producers have long advocated for tariffs on imported softwood lumber from Canada to keep prices from dropping too low for Montana producers to maintain a profit.
“We just got word of the agreement last night, so we’re still working through all the details to get a better understanding of potential implications,'' Lozar said. "Certainly it’s a little too early to glean any specifics.”
Lozar noted that Montana producers are keeping a close eye on tariffs imposed by the Trump administration on exports and the resulting retaliatory tariffs imposed by foreign governments on U.S. goods. Earlier this summer, Montana grain growers and metal manufacturers told the Missoulian that retaliatory tariffs were hurting their bottom line.
The largest exports from Montana to Canada are minerals, fuels, cement, live animals, edible vegetables and pulse crops like lentils.
Lozar said Canadian tourism to Montana is also very important to the economy, and maintaining a good relationship with Canada is critical to state business advocates.
“The Department of Commerce is part of a network committed to helping Montana businesses compete in the global marketplace,” Lozar said. “We work to help them become more resilient to changes in the domestic economy and we put a lot of energy into working with Montana companies to find new markets for them. That helps in terms of increasing sales, hiring more workers and creating sustainable business models that will ride through the ebbs and flows of the economy.”
Montana recently secured a $325,000 State Trade Expansion Program grant, which the Commerce Department will match in-kind with another $108,333. The funds will go to Montana businesses for eligible export activities.
“International sales are a major part of Montana’s economy, as exports last year hit a record $1.6 billion,” said Commerce Director Pam Haxby-Cote in a statement. “The STEP grant funds programs to help small businesses tap into the incredible potential for growth that exports can provide.”
Eligible export activities include exhibiting at international trade shows, translating promotional materials into foreign languages and participating in international business matchmaking activities facilitated by the U.S. Commercial Service.