Last year, leaders from the United States, Canada and Mexico sat at a table together to go over details of a revamped NAFTA that would rejigger the 25-year trade deal. Now, the newly proposed agreement, USMCA—United States Mexico Canada Agreement—is in the middle of a political battle as President Trump seeks congressional approval while also trying to work with China on another new trade deal.
But as things get caught up in the tennis match environment of political debate, research is already showing that multiple industries in Arizona would benefit from the pending trade agreement. Mining, agriculture and energy are all areas that could see major boosts if the USMCA is passed and could impact 230,000 jobs in Arizona that depend on trade with Mexico and Canada. A report, released by the Arizona-Mexico Commission, Arizona Chamber Foundation and the Arizona Chamber of Commerce and Industry, illustrates this notion as well as outlines provisions that are helpful to some Arizona industries.
While the agreement is debated, local leaders, including Glenn Williamson, CEO & Founder of the Canada Arizona Business Council, are waiting to see how things shake out.
“All we want is a rule book. If I need to do business between Arizona and Canada and Mexico, I’ll still do business. It’s still going to happen, but this is a rejiggering by the government for what we need to do,” Williamson said. “At the end of the day, the U.S. is the consumer between the three involved in the agreement. The government recognizes that and is using it as leverage to rearrange things. If this Congress goes back in and doesn’t pass the USMCA, then we end up going back to how things were before NAFTA, and then we have a big problem. That would be horrifying.”
Under the North American Free Trade Agreement, Arizona’s economy experienced major expansion and strengthened ties with Canadian and Mexican companies. Some 400 Canadian companies are now doing business here in Arizona and have annex offices, while also doing business in Mexico, essentially using Arizona as a gateway.
“If you think about how well it’s worked all these years, the political issues and everything, the reality is that it’s worked for more than 25 years and relationships have been made multi-generationally,” Williamson said. “The format may get shifted, but this is something that’s not going to get undone or go away. No matter how threatened the agreement may get, it’s not going away. We have seen many Canadian companies set up here waiting to expand, such as Circle K and Sinclair Tech.”
Under USMCA, there would be even more business and economic expansion as well as stronger ties with Canadian companies looking to expand, according to the report.
Between 2015-2017, Arizona exported $10.5 billion annually to Canada and Mexico, and more than 228,000 jobs in Arizona are dependent on the annual trade and investment relationship with our border neighbors. In that same time frame, Arizona land ports of entry (POEs) processed an average of 400,000 northbound trucks coming in from Mexico and nearly $28 billion in trade.