[Vision2020] New NAFTA "moderate change"; Improved by Dems; Parts taken from Obama's Trans-Pacific Partnership
ngier006 at gmail.com
Wed Jul 8 11:20:25 PDT 2020
Reprinted from December, 2017
Washington (CNN)After reaching a deal on the final version of the United
States-Mexico-Canada Agreement, President Donald Trump tweeted that it
"will be the best and most important trade deal ever made by the USA" --
and called its predecessor, the North American Free Trade Agreement, "our
Country's worst Trade Deal."
But the two deals are far more alike than they are different -- and the
impact of the renegotiated agreement may not be that big. In April, the US
International Trade Commission, a federal government agency, found the
initial version of the USMCA would create 176,000 jobs after six years and
increase the GDP by 0.35% -- an impact the agency described as "moderate."
(For comparison's sake: The US added 266,000 new jobs in November alone.)
Here are six key differences between the two agreements:
Auto manufacturing boost
The USMCA requires 75% of a vehicle's parts to be made in one of the three
countries -- up from the current 62.5% rule -- in order to remain free from
tariffs when moving between the three signatory countries.
It also requires more vehicle parts to be made by workers earning at least
$16 an hour, which may provide a boost to manufacturing in the United
States, where wages are higher than in Mexico.
The International Trade Commission report found that these changes would
add 28,000 jobs in the industry over six years, while also leading to a
small increase in the price of vehicles that consumers pay.
But the American Automotive Policy Council, which represents General
Motors, Ford and Fiat-Chrysler, argued the ITC report underestimated the
long-term investments US automakers will make because of the USMCA.
A Trump administration report was more positive, projecting that the deal
would create 76,000 auto jobs over five years. That would mean a more than
7% increase in employment over the current 990,000 US auto workers.
On Tuesday, the trade group said the big three automakers were "pleased"
that the USMCA was moving forward.
"The USMCA allows the US auto industry to remain globally competitive by
ensuring vehicles and auto parts are able to move freely across country
lines," said Matt Blunt, president of the American Automotive Policy
Council, in a statement
But auto plants are capital intensive and it takes a long time to move
production. Industry analysts have said that some automakers may opt to pay
the tariff at least at first, rather than move plants or shift hiring.
A GM spokesperson said Tuesday that the company had already made numerous
changes in anticipation of the more stringent standards set by the USMCA,
including shifting production plans of a new Chevrolet electric vehicle
back to the United States, and building a new GM/LG battery plant near
Labor laws strengthened
Manufacturing workers have long blamed NAFTA for sending jobs to Mexico,
where wages are lower, and it was a priority for Democrats that the USMCA
strengthen the enforcement of labor rules, creating a more level playing
field for American workers.
Lawmakers were able to include some changes to enforcement language before
coming to an agreement Tuesday with the Trump administration, and the deal
now has the backing of the AFL-CIO, the largest federation of unions in the
"For the first time, there truly will be enforceable labor standards --
including a process that allows for the inspections of factories and
facilities that are not living up to their obligations," said AFL-CIO
President Richard Trumka in a statement.
The deal struck by Democrats provides for an interagency committee that
will monitor Mexico's labor reform implementation and compliance with labor
obligations. It also, for the first time in any US trade agreement, allows
for "rapid response" panels to review whether specific facilities are
violating workers' rights and to levy duties or penalties on products made
at those facilities.
Dairy farmers get more market access
The original NAFTA eliminated tariffs on most agricultural products traded
among the three countries. Canada and Mexico are already the two biggest
export markets for US farmers and ranchers.
The USMCA will keep those tariffs at zero, while further opening up the
Canadian market to US dairy, poultry and eggs. In return, the United States
will allow more Canadian dairy, peanuts and peanut products, as well as a
limited amount of sugar, to cross the border.
Updating NAFTA for the digital era
The USMCA includes sweeping new benefits for the technology sector, in a
chapter on digital trade that wasn't a part of the original NAFTA. The new
provisions aren't expected to directly create new jobs, but could provide a
boost to US businesses in other ways.
For example, the new trade deal prohibits Canada and Mexico from forcing US
companies to store their data on in-country servers. It also ensures that
US companies cannot be sued in Canada and Mexico for much of the content
appearing on their platforms -- a legal protection Pelosi had pushed to
exclude from USMCA amid an ongoing debate at home about whether tech
companies still deserve that liability shield under domestic law.
The agreement provides $600 million to address environmental problems in
the region -- like sewage spillovers from Tijuana that impact San Diego --
and makes regulations easier to enforce by doing away with a requirement to
prove a violation affects trade.
While the new enforcement measures pleased most Democrats, they didn't go
far enough to get environmental groups like the Sierra Club to support the
The final text "will be even worse than we originally anticipated for our
air, water, climate, and communities," said Sierra Club Executive Director
Michael Brune in a statement.
Congress keeps control over biologic drugs
Democrats negotiated the removal of what would have been new, controversial
protections for biologic drugs. They argue it would have hamstrung Congress
from being able to legislate on drug pricing issues.
The provision that was removed from the trade deal would have required the
three countries to provide at least 10 years of exclusivity for biologics,
which are complex and costly to make. Currently, the US provides 12 years
of exclusivity, while Canada provides eight years and Mexico five years.
Republicans have long supported including exclusivity provisions for
pharmaceutical companies in trade deals, and the pharmaceutical industry
quickly came out against the provision's removal.
"Eliminating the biologics provision in the USMCA removes vital protections
for innovators while doing nothing to help US patients afford their
medicines or access future treatments and cures," said Stephen Ubl, CEO of
PhRMA, a trade group. "The only winners today are foreign governments who
want to steal American intellectual property and free ride on America's
global leadership in biopharmaceutical research and development."
CNN's Vanessa Yurkevich and Holmes Lybrand contributed to this story.
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