As the new NAFTA heads to Congress for ratification, businesses are mobilizing to rally for the modernized free trade agreement that has blessed the United States, Canada and Mexico to the tune of trillions of dollars since its inception in 1994.
It’s been almost three months since President Donald Trump, Canadian Prime Minister Justin Trudeau and former Mexican President Enrique Peña Nieto signed the new United States-Mexico-Canada Agreement (USMCA), and roadblocks are popping up, largely along party lines.
Now, is the time to clean up any concerns, say industry and agriculture leaders who are organizing to help address obstacles before the USMCA goes to Congress in April.
“Congress needs to approve this agreement because it will preserve and strengthen our trade ties with Canada and Mexico which are by far our two largest export markets,” said John Murphy, Senior Vice President for International Policy for the U.S. Chamber of Commerce in Washington, D.C. “It will preserve these trade relationships that have grown so much in the last 25 years that today they now support 14 million American jobs.”
As the White House prepares to fight for the new deal, the Chamber and other groups are launching a coalition to coordinate outreach to Congress and others. The new USMCA is updated for the cyber age with new provisions like protections for intellectual property and digital trade.
Once the U.S. approves the pact, Mexico and Canada are expected to follow. But variations imposed by the U.S. could change their minds.
Areas of conflict in the U.S. include enforcement of minimum wage hikes for Mexican auto workers, environmental protections and provisions that give protections for drug manufacturers.
“Hopefully they’re resolvable,” Speaker Pelosi told the national press corps recently about the outstanding issues, “because I’m optimistic always.”
Senate Finance Committee Chair Chuck Grassley (R-Iowa), has issued similar remarks, indicating he wants resolution before Congress addresses it.
Here are the main flashpoints:
Enforcement of new labor requirements The new USMCA contains a requirement that at least 40 percent of all auto content be made by workers making at least $16 an hour. U.S. union leaders and House Speaker Pelosi want assurance that the rule and other labor rights provisions be enforced.
Recently, Mexican ambassador to the U.S. Martha Barcena addressed Pelosi’s remarks at an event in Washington D.C. hosted by the Canadian Business Council.
“We are very and totally committed to amend the labor laws. We are just waiting for the debate to take place,” Barcena said.
Metal tariffs are still in place High ranking officials in all three countries want tariffs on steel and aluminum imports from Canada and Mexico and retaliatory tariffs lifted. In the U.S., Grassley is calling on the administration to act now. He also is working on a bipartisan bill that would rein in the president’s ability to impose tariffs for national security reasons.
Drug patent protection USMCA provisions offer drugmakers some protections from generic competition that the pharmaceutical industry supports. Opponents, who include the American Association of Retired Persons and generic drug manufacturers, worry the deal will restrict competition and push up prices in the U.S.
Environmental protections There is a chapter in the USMCA that deals with trilateral environmental protections to reduce pollution, strengthen environmental governance, conserve biological diversity, and sustainably manage natural resources. Democrats want assurance of enforcement.
Fair treatment of LGBTQ workers Canadian Prime Minister Justin Trudeau inserted language into the agreement to protect workers in all three countries against discrimination on the basis of sexual orientation and gender identity. This move resulted in a Nov. 16 protest letter from House Republicans that stated that “a trade agreement is no place for the adoption of social policy.”
Meanwhile in Arizona, chambers of commerce and businesses are lobbying for ratification of the USMCA. Mexico is Arizona’s number one trade partner. Canada is second. Manufacturing products account for the state’s largest portion of exports to both countries. Currently, Arizona exports totaling more than $200 million are impacted by the tariffs by the 10 and 25 percent duties on aluminum and steel.
Across the country, other cities like New York, Houston, St. Louis, Chicago, Austin and Detroit are now major export centers as well. Free trade is imperative to their prosperity, chambers and other business groups said.
“Voting down the USMCA would weaken the entire North American continent as we compete for continued supremacy against the European Union and the Asian Tigers. Democrats must get on board,” states a U.S. Chamber report on USMA’s impact.
To view the full text of the USMCA that was signed on November 30, 2018, click here.