Trade policy has been a major priority for the Trump White House, and while tensions with China and the European Union remain, a win-win trade deal is right in front of us.
Ten months ago, the United States, Mexico and Canada signed an agreement for a new trade deal, one that modernizes the NAFTA deal negotiated in the 1990s. It is time to bring NAFTA into the 21st century. Passing the U.S.-Mexico-Canada Agreement (USMCA) is the Trump administration’s top legislative priority this year and there are some encouraging signs that it’s on track.
How important is trade between the U.S. and its two neighbors?
Trade between the U.S. and Mexico and Canada totals more than trade with the next 11 countries combined. According to the National Association of Manufacturers, 2 million American jobs depend on exports to Mexico and Canada.
In my home state of Texas, Canada and Mexico purchase half of the state’s manufacturing exports. Manufactured goods often travel across the Texas-Mexico border several times before a final product is ready for shipment.
The USMCA is a good deal for America.
When NAFTA was negotiated in the 1990s, the digital transformation was impossible to predict. Updating that trade agreement and improving upon it will benefit U.S. manufacturers, consumers and the economies of all three countries.
How is the USMCA better than NAFTA?
There are stronger intellectual property protections; tougher punishments for anti-competitive behavior by state-owned enterprises; the removal of unfair trade barriers; provisions that reduce corruption; and improved rules on digital trade.
A report released by the U.S. International Trade Commission found that the USMCA will create more than 175,000 jobs in the U.S., raise wages for American workers, and generate tens of billions of dollars in GDP. This includes the creation of more than 75,000 jobs in the U.S. automotive sector. The deal will open new agriculture markets in Mexico and Canada for American farmers.
Trade in the energy industry is also of significant importance to Texas and other states. The USMCA locks down recent reforms in Mexico’s energy industry — foreign investment in energy will now be welcome in Mexico, which provides oil and gas companies the requisite certainty to make long-term investments.
The Trump administration deserves credit for putting policies in place that have brought back more than 500,000 manufacturing jobs in the last 2.5 years. Most observers bought into the idea that manufacturing jobs would never come back, but the Trump administration has proven the doubters wrong.
But needless delay by Congress in passing the updated NAFTA deal is adding uncertainty to manufacturing.
Some Democrats have tried to delay the USMCA, raising questions about provisions on labor standards.
Under the USMCA, Mexico will be required to raise their labor standards and includes worker protections and agreements in the core text of the deal. In the automotive sector, in order to receive duty-free treatment, nearly half of all auto manufacturing must be made by workers earning at least $16 an hour.
Congress must ratify trade agreements, and their input and review is necessary and helpful. But 535 people in Washington cannot negotiate a trade agreement between three nations.
Already Mexico’s Congress has ratified this deal. The central question now is whether the USMCA is an improvement on NAFTA, and any objective observer would conclude that it is much better.
Before the presidential election year begins in January, it is important that Congress approve the trade deal, which will benefit our economy, our consumers and our workers.
• Matt Mackowiak is president of Austin, Texas, and Washington, D.C.-based Potomac Strategy Group. He’s a Republican consultant, a Bush administration and Bush-Cheney reelection campaign veteran and former press secretary to two U.S. senators.
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