USMCA Clears Next Hurdle

Dec 13, 2019  | 5 min  | Ep4517

Another trade deal was sealed earlier this week as all parties came together over the USMCA.

Paul Yeager has more on the landmark trade pact. @PaulYeager

Three signatures from representatives of Mexico, Canada and the United States led to cheers in Mexico City this week.

The USMCA earned its first round of approval in November of 2018.

Robert Lighthizer, U.S. Trade Representative: "The result I think, is the best trade agreement in history. I think it's going to do the most for manufacturing in this region.  It's going to do the most for farmers in this region.  Its digital trade and e-commerce provisions are the gold standard, there are none better in the world."

But the exact details and language have proven to be challenging and time-consuming.

Sen. Charles Grassley: “Four months of that year, we got to blame President Trump because it didn't move because he had tariffs on aluminum and steel. So it took us five, almost five months to talk the president out of that, take him off. He took them off.”

And eventually many of the hurdles were cleared by the groups working for passage. The pact nudges manufacturing back to the United States, requiring 40-45 percent of cars eventually be made in the countries that pay autoworkers at least $16 an hour.

Rep. Nancy Pelosi, Speaker of the House: “We were in range for a while, but until we could cross a certain threshold of enforcement for our worker’s rights, for environment and for the prescription drug issue."

The pressure between parties involved in USMCA negotiations was palpable as they tried to balance what would earn passage in each country that was in the deal.

Rep. Richard Neal, (D) Massachusetts, Chairman of House Ways and Means Committee: "These were intense, argumentative, angry negotiations. I mean, this got really hot on a number of occasions. I think we set a world record for hanging up on each other, myself and the trade rep. And, but at the same time, we also knew that this was an opportunity that we couldn't let get away from us."

Proponents of the USMCA wanted to have the deal ratified by the end of 2019 and out of the 2020 presidential election year. Supporters will have to wait for their gift to come in the new year.

Sen. Mitch McConnell, Senate Majority Leader: "We will not be doing USMCA in the senate, between now and the end of next week. That'll have to come up in all likelihood, right after the trial is finished in the Senate."

Senator Grassley praised the support from former Obama Secretary of Agriculture, Tom Vilsack, in seeking approval for the pact. The dairy industry may be one of the big winners of the NAFTA replacement. Vilsack is now the CEO of the U.S. Dairy Export Council. Mexico and Canada currently import about $1.5 billion in U.S. milk products, more than 25 percent of all U.S. dairy exports. The pair made a push for passage back in August during a visit to an Iowa dairy production facility.

The U.S. International Trade Commission or USITC, says USMCA would increase U.S. dairy exports to Canada by $227 million as the Class 7 policy restricting imports is removed. Exports to Mexico could rise by more than $50 million.

R-CALF, the nation’s largest producer-only cattle trade association says USMCA is a win for agribusiness giants at the expense of cattle farmers and ranchers.

Other U.S. commodity groups praised the deal as a chance to export more American-raised goods to their already major trading partners to the north and south.

Sen. Charles Grassley, R- Iowa: “We're going to see a $34 billion investment in manufacturing in the United States, we're going to see 174,000 jobs created. So I think that besides updating NAFTA, which was absolutely necessary. This is a very good piece of legislation.”

The USITC says USMCA would add $68 billion in GDP and increase food and agricultural exports by $2.2 billion.

The Mexican legislature could sign off soon. The Canadians are likely to take the deal up in late January.

For Market to Market, I’m Paul Yeager. 

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