USMCA Goes Into Effect

Jul 3, 2020  | 3 min  | Ep4546

On the 1992 presidential campaign trail, Ross Perot said there would be a “giant sucking sound” if a trade pact was signed between Canada, Mexico and the United States as jobs from America would be headed south towards cheaper labor. 

Almost 10,000 days later, the United States has a new NAFTA aimed at improving shortcomings of the 1990’s era pact.

Josh Buettner reports on the beginning of the USMCA.

This week the United States Mexico Canada Agreement, or USMCA went into effect.  The trade deal replaces the nearly 3 decade old North American Free Trade Agreement, or NAFTA, which was negotiated by Presidents George H.W. Bush and Bill Clinton.

Various business groups, some labor unions and a majority of the agricultural industry hailed the new pact’s implementation.  The start fulfilled a major campaign promise for President Trump who is currently mired in stalled or incomplete trade overhauls with the EU, UK and China.  The president kept up his barrage on NAFTA as “the worst trade deal ever made.”

President Donald Trump: “That's been bugging me for about 25 years, I think that's why I became president, you want to know the truth, what we've done with your great deal, the USMCA and Canada no longer takes advantage of us like they did.”

Critics charge much of USMCA simply updates NAFTA.

The new deal includes country of origin rules for automobile parts, higher labor and environmental standards championed by Democrats, as well as digital trade and intellectual property provisions.  USMCA also delivers a top presidential priority – greater access to the Canadian market for American dairy operations – along with overall certainty for other U.S. farm commodities.

Rep Collin Peterson/D-Minnesota/Chair – House Ag Committee: “There are some troubling signs out there of people using COVID as a reason to put up trade barriers.  We see some monkey business going on in Mexico.  We continue to worry about the Canadians and what they’re up to with dairy policy.  So we need to be vigilant and we need to make sure that the agreement is enforced and it goes into place the way that it was intended.”

Though concerns linger, farm state lawmakers generally gave positive marks to USMCA’s ascension in a virtual roundtable this week hosted by the non-profit group Farmers for Free Trade.

Sen. Joni Ernst/R-Iowa: “It also does things for, of course, Iowa dairy and Iowa egg producers, where we see significant strides forward over the past deal.  So I do think it is important that we continue to tout the success of this phenomenal trade deal.  Hopefully this will lead to many more in the future with other trading partners and I love the point that there are many more mouths to feed outside of the United States than within the United States.”

According to a 2019 report by the U.S. International Trade Commission, the new agreement is expected to create 176,000 jobs over six years and boost U.S. gross domestic product nearly four-tenths of one percent.

USMCA comes with a 16 year expiration date but is subject to review every six years allowing member nations to choose an extension of the agreement.

For Market to Market, I’m Josh Buettner. Twitter contact: @mtmjosh

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