USMCA gets approval to replace 25-year old NAFTA

The US, Mexico, and Canada have finalized a trade deal that will replace the 25-year-old North American Free Trade Agreement (NAFTA).

Back in September, our friends at Manufacturer.com published an article about “Exploring business and the USMCA in the USA.”

They met hours after Democrats in US Congress said they would support the deal after the White House agreed to strengthen the labor and environmental rules.

House Speaker Nancy Pelosi declared the revised pact “infinitely better” than the deal the three countries announced last year.

US President Donald Trump, who had accused the Democrats of holding up the deal, also declared victory.

He tweeted, “It will be the best and most important trade deal ever made by the USA. Good for everybody – Farmers, Manufacturers, Energy, Unions – tremendous support, Importantly, we will finally end our country’s worst Trade Deal, NAFTA”

NAFTA

During his 2016 presidential campaign, Mr. Trump promised to replace Nafta, which he and many Democrats blame for speeding the decline of US manufacturing.

Talks started in 2017 and the three countries agreed to terms last year. Among the most eye-catching changes were new rules that require a higher share of North American-made parts for a vehicle to qualify for tariff-free treatment.

AAFA President and CEO Rick Helfenbein said in a statement “An integrated North American supply chain is an integral component of the apparel and footwear industry. Further, in a time of trade uncertainty, it will provide businesses with the ability to invest confidently in the region.  That said, it is paramount that the transition from NAFTA to USMCA occurs smoothly — to ensure that there are no negative impacts as the business community comes up to speed with the new rules.”

FDRA President and CEO Matt Priest “While the USMCA includes the same exact footwear provisions as provided under NAFTA, we are glad that some added certainty has been provided with the announced deal today with House Democrats. With this announced agreement, it is our hope that the administration will continue its focus on ending the trade war with China and explore new trade agreement opportunities with other important trading partners in the months ahead.”

Democrats, who control the House of Representatives, were also pushing for changes to strengthen enforcement of labor and environmental rules and provide more flexibility governing drug pricing.

Moises Kalach, a leader of the CCE business lobby, which represented Mexico’s private sector in the negotiation of the U.S.-Mexico-Canada Agreement (USMCA). “We would have liked to have been (in the negotiations) more … to give our opinion more. This is the reality, we participated but not as much as we would have liked.”

USMCA

On Tuesday, Democrats said they had reached an agreement with the White House on new provisions and were planning to support the deal in a vote.

“There is no question, of course, that this trade agreement is much better than Nafta but… it is infinitely better than what was initially proposed by the administration,” Ms. Pelosi said.

The US business community said news that the deal would move forward was a relief and urged Congress to bring it to a vote quickly as Canada and Mexico are two of the US’s biggest trade partners.

“Farmers have been struggling in the face of bad weather and unpredictable trade policy,” said Angela Hofmann, co-executive director of the lobby group, Farmers for Free Trade.

“Passage of USMCA will be a significant win for farmers, workers, and all Americans,”

U.S. Trade Representative Robert Lighthizer added in a statement that the agreement “will benefit American workers, farmers, and ranchers for years to come” and “will be the model for American trade deals going forward.”

Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), another influential trade voice among Senate Republicans, said in a statement. “Renegotiating NAFTA was a central campaign promise made by President Trump. He kept his word and Americans will enjoy the many benefits of this upgraded trade deal as a result.”

Democrats’ decision to advance the deal, known as USMCA, gives Mr. Trump a victory on one of his signature issues, trade. But it also serves to undercut criticism by Republicans that the Democrats are too focused on impeachment to govern.

For Mexican President Andres Manuel Lopez Obrador, the mood is primarily one of relief. He confirmed the final sticking points, namely labor rights, steel, and aluminum, had been overcome and will no doubt be glad to be rid of the negotiations that were threatening to drag on well into 2020.

Conclusion

In an unusual display of bipartisan and cross-border cooperation in the Trump era of global trade conflicts, top officials from Canada, Mexico, and the United States on Tuesday signed a fresh overhaul of the quarter-century-old trade pact.

“Trump wants to be seen as a guy who can accomplish things and make deals, and Democrats want to show they’re not just about investigating and impeding the president,” said Stephen Moore, an economic adviser to Trump during the 2016 campaign.


Author: Jeffrey Clark

A management professional with 25 years global experience working with fortune 500 and speciality brands, specializing in lean manufacturing, product, supply chain management, procurement, sourcing, and operations. Proven proactive leadership, vision, creative, and successful strategic business skills to drive revenue and profit growth in highly competitive domestic and global markets. A strong relationship builder, functions effectively as an integral member of a cohesive senior executive team. Proven ability to source, identify and capitalize on emerging trends and niche market opportunities.