Large and small companies across rural Arizona would profit from a new, modern free trade deal that sets the ground rules for one of the most powerful trading blocs in the world between the U.S., Mexico and Canada, rural mayors and economic development experts said.
The new updated agreement contains provisions that would lower trade duty thresholds to open up international commerce for smaller importers and exporters, add protections for sensitive intellectual property and digital trade, preserve and grow jobs, increase local tax revenues and more.
Most importantly, the new pact, called the United States-Mexico-Canada Agreement (USMCA), would preserve free trade and secure the intricate cross border supply chains that have developed over the past 25 years under the current North American Free Trade Agreement (NAFTA), they said.
“We need to really be communicating with Congress that this is something we do not want – but need – in order to keep our economy moving in the right direction and keep our economy strong with Mexico,” Yuma Mayor Douglas Nicholls told Chamber Business News.
Border communities like Yuma, Nogales, Douglas, Lukeville and Naco rely not only on cross border trade, but shoppers on both sides of the border who have moved back and forth freely for decades, Nicholls said.
Largest industries impacted
For Arizona, the deal is critical. Mexico and Canada are its largest trading partners. In 2018, Arizona’s cross-border trade with Mexico totalled $16.7 billion. More than 228,000 Arizona jobs are dependent on trade with Canada and Mexico, according to a report by the non-profit Arizona Chamber Foundation and the Arizona-Mexico Commission.
Arizona’s leading industries that provide thousands of jobs and much-needed tax revenues in rural parts of the state are among those most affected by tariffs. Mining, agriculture, defense manufacturing, tourism, energy.
Under free trade, companies like Freeport McMoRan mining in southern Pima County, Frito Lay manufacturing in Pinal County in the central part of the state, and cabinet manufacturer American Woodmark Corporation in the north in Mohave County have flourished.
Open trade is important for agriculture in many rural economies. In Nogales, fresh produce alone provides a direct economic impact of more than $303 million annually and more than 2,500 jobs to the area, according to the Nogales-Santa Cruz County Economic Development Foundation. Add in indirect impacts and the industry supports more than 4,000 jobs with an economic jolt of $437.7 million.
Maintaining free trade for poorer communities
Strong trade is essential for rural areas in the state that are struggling with higher poverty and unemployment rates, economic development experts said.
While urban areas like Maricopa County are enjoying the fruits of an extremely healthy economy, some rural areas are challenged. They can’t afford to lose jobs and revenue from tariff-free trade, advocates said.
“We’re hearing a lot of positive messaging regarding the state of Arizona’s economy. But the truth is that 84 percent-plus of all new jobs being touted are going to Maricopa County,” said Liza Noland, rural director of Local First Arizona Foundation and the Arizona Rural Development Council, whose mission is to advance economic development in rural areas.
“Additionally, the majority of our rural counties have not seen a return in active businesses following the closure of so many during the recession.
“Arizona’s economic growth is exciting, but rural Arizona needs help.”
Free trade pluses
According to the World Bank Group (WBG), open trade is a proven tool for ending poverty locally and globally. Regions that are open to international trade tend to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people. Open trade also benefits lower-income households by offering consumers more affordable goods and services, according to the WBG that works to increase trade across borders.
While preserving free trade is considered the most important aspect of USMCA, a number of new provisions and chapters benefit both rural and urban areas.
Lower trade duty thresholds on many products will open up international trade to smaller and medium-sized companies. New chapters offer protections for intellectual property and digital trade, set forth labor reforms for border industries in Mexico to raise wages, and increase environmental protections.
Awaiting USMCA passage in Congress
The USMA is designed to bring one of the world’s largest free trading blocs into the modern age and benefit consumers, workers, farmers, ranchers, manufacturers and other businesses in all three countries.
Mexico’s top law-making bodies almost unanimously approved the USMCA. Canadian leaders have stated they will as well.
As members of the U.S. Congress continue to negotiate over specific provisions including labor and environmental protections, thousands of industry leaders and groups are calling on lawmakers to act.
Read more about the effort at: 600+ business groups call for ratification.