USMCA

A trade deal with Mexico and Canada for American prosperity.

America First Policies believes the North American Free Trade Agreement (NAFTA), signed in 1994, should be revised to protect the interests of our American workers, farmers, ranchers, and businesses. The US-Mexico-Canada Agreement (USMCA), signed in November 2018 by President Trump, Canadian Prime Minister Justin Trudeau, and Mexican President Enrique Peña Nieto, will replace NAFTA and promote economic growth and job creation in the United States; strengthen our manufacturing base and our national security; expand our agricultural, digital and services industry exports; and protect U.S. intellectual property rights. A fair and balanced trade deal with our North American neighbors will bring jobs back to America’s shores, bring supply chains back from Asia, increase wages and incomes, and support U.S. manufacturing and agriculture.

The Facts: 

  • The North American Free Trade Agreement (NAFTA) was enacted in January 1994 under President Bill Clinton.
  • NAFTA, which was signed by the U.S., Mexico, and Canada, progressively lifted tariffs and restrictive quotas on nearly all goods by 2008.
  • NAFTA caused the loss of approximately 700,000 jobs as production moved away from the U.S. California, Texas, and Michigan, and other states where manufacturing was based were hit the hardest.
  • NAFTA was the template for other misguided trade agreements and its principles were applied to the World Trade Organization (WTO) and countries like China.
  • NAFTA established a system known as Investor-State Dispute Settlement (ISDS) for investors to settle dispute under the agreements. These courts undercut an American advantage due to our honest court system and respect for the rule of law.
  • The damaging effect of NAFTA on Mexican agriculture and small business dislocated millions of Mexican workers who later illegally came to the U.S. seeking work.
  • This increased the supply of workers which effectively put pressure on the U.S. labor market to lower wages for working-class American workers.
  • The U.S. trade balance with Canada and Mexico accumulated a nearly $2 trillion deficit from 1994 to 2017.
  • Tens of thousands of manufacturing plants have closed from 1977-2014, many as a direct result from the impact of NAFTA
  • As manufacturing facilities moved overseas or to Mexico, communities across the Rust Belt were ravaged
  • The United-States-Mexico-Canada Agreement (USMCA) was signed by President Donald J. Trump, Canadian Prime Minister Justin Trudeau, and former-Mexican President Enrique Peña Nieto on November 30, 2018.
  • In order for the USMCA to take effect, it must be approved by the U.S. Congress.
  • Democratic House Speaker Nancy Pelosi (D-CA) has refused to allow for a vote on the USMCA in the House of Representatives.
  • More than 200 major companies and industry groups have come out publicly to voice their support for the USMCA.
  • The USMCA sets a strong template for future trade agreements that will put American workers and businesses first by forging free, fair, and reciprocal trade.
  • The USMCA is expected to bring back jobs to America while making up for the significant shortfalls under NAFTA.
  • The agreement maintains tariff-free access to the Mexican and Canadian markets for American producers while also eliminating other trade restrictions in place from NAFTA.
  • Under the agreement, new rules of origins are set in place, including specific regulations for light trucks, auto parts, and passenger vehicles, providing an incentive to source goods in U.S.
  • It will require at least 70% of a vehicle producer’s purchases of steel and aluminum to originate in North America.
  • New automotive rules of origin require 75% of the content of an automobile to be created in North America, a substantial increase from the 62.5% under NAFTA.
  • For the first time in any trade deal, the USMCA requires 40% to 45% of the labor used to manufacture automobiles be paid at least $16 per hour, a boon to the U.S. automotive industry and workers.
  • This raises the standard for other countries in addition to helping American workers.
  • Extensive red tape will be cut by the removal of ‘nontariff’ barriers to entry that put American small businesses at a significant disadvantage.
  • Businesses will be able to better protect their intellectual property in addition to stopping counterfeit goods and other types of fraud.
  • Important environmental and labor standards will be easier to enforce under the new agreement.
  • Specifically, the labor chapter forbids the trade of products that are produced by forced labor and requires Mexico to revamp its labor justice and collective bargaining system, a big win for the rights and protections of workers in Mexico.
  • An April 2019 report conducted by the U.S. International Trade Commission notes that the USMCA will have a positive impact on all sectors of the U.S. economy.
  • 176,000 news jobs are expected to be created as a direct result of the new trade agreement in addition to $68.2 billion in new GDP growth.
  • Auto suppliers will invest $34 billion more into the U.S. and will sell $23 billion more each year in automotive parts.
  • 76,000 automotive jobs are expected to be created in the first five years of the USMCA.
  • Exports to Canada are expected to increase by 5.9% ($19.1 billion).
  • Exports to Mexico are expected to increase by 6.7% ($14.2 billion).
  • Food and agriculture exports are expected to increase by $2.2 billion.
  • USMCA ensures that American investors and financial organizations have the right to conduct transactions across borders on a non-discriminatory basis.
     
  • The agreement modernizes and updates the current customs system to ensure a speedier process.
  • Click here for Senior Policy Advisor Curtis Ellis' interview on possible U.S.-Canada trade deal from August 30, 2018.
  • Click here for Senior Policy Advisor Curtis Ellis' interview on U.S.-Mexico trade deal from August 28, 2018.

Serge Shikher and Mihir Torsekar, U.S. International Trade Commission, “U.S.-Mexico-Canada Trade Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors,” April 2019, https://www.usitc.gov/publications/332/pub4889.pdf

Office of the U.S. Trade Representative, “United-States-Mexico-Canada Trade Fact Sheet Rebalancing Trade to Support Manufacturing,” https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets/rebalancing

Office of the U.S. Trade Representative, “Estimated Impact of the United States-Mexico-Canada Agreement (USMCA) On The U.S. Automotive Sector,” April 18, 2019, https://ustr.gov/sites/default/files/files/Press/Releases/USTR%20USMCA%20Autos%20White%20Paper.pdf
 

Office of the U.S. Trade Representative, “USMCA Modernizing NAFTA into a 21st Century Trade Agreement,” October 2018, https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/october/united-states%E2%80%93mexico%E2%80%93canada-trade-fa-1

Office of the U.S. Trade Representative, “USMCA Rebalancing Trade to Support Manufacturing,” October 2018, https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/october/united-states%E2%80%93mexico%E2%80%93canada-trade-fa-0

Office of the U.S. Representative, “USMCA Strengthening North American Trade in Agriculture,” October 2018, https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/october/united-states%E2%80%93mexico%E2%80%93canada-trade-fa-2

Office of the U.S. Trade Representative, “USMCA Supporting America’s Small and Medium-Sized Businesses,” November 2018, https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/november/united-states%E2%80%93mexico%E2%80%93canada-agreement

Office of the U.S. Trade Representative, “The President’s 2017 Trade Policy Agenda,” March 2017, https://ustr.gov/sites/default/files/files/reports/2017/AnnualReport/Chapter%20I%20-%20The%20President%27s%20Trade%20Policy%20Agenda.pdf

USMCA Coalition, “How USMCA Modernizes North American Trade,” February 2019, https://www.usmcacoalition.org/wp-content/uploads/2019/02/023607_INTL-USMCA-Coalition_Onepager_final.pdf

U.S. Census Bureau, “Trade in Goods with Mexico,” https://www.census.gov/foreign-trade/balance/c2010.html

NAFTA Secretariat, https://www.nafta-sec-alena.org/Home/Texts-of-the-Agreement/North-American-Free-Trade-Agreement?mvid=2

Jeff Faux, “NAFTA’s Impact on U.S. Workers,” Economic Policy Institute, December 9, 2013, https://www.epi.org/blog/naftas-impact-workers/

Read More:

U.S. Secretary of Commerce Wilbur Ross, “These NAFTA Rules are Killing Our Jobs,” Washington Post, September 21, 2017, https://www.washingtonpost.com/opinions/wilbur-ross-these-nafta-rules-are-killing-our-jobs/2017/09/21/657bee58-9ee6-11e7-9083-fbfddf6804c2_story.html?utm_term=.6a1148679851

Dan DiMicco, “A Nation That Builds Things,” Wall Street Journal, December 15, 2009, https://www.wsj.com/articles/SB10001424052748704398304574598031665178094

U.S. Secretary of Commerce Wilbur Ross, “Free Trade is a Two-Way Street,” Wall Street Journal, July 31, 2017, https://www.wsj.com/articles/free-trade-is-a-two-way-street-1501542569

Jeff Faux, “NAFTA, Twenty Years After: Disaster,” Economic Policy Institute, January 3, 2014, https://www.epi.org/blog/nafta-twenty-years-disaster/

Laura Carlsen, “Under Nafta, Mexico Suffered, and the United States Felt Its Pain,” New York Times, November 24, 2013, https://www.nytimes.com/roomfordebate/2013/11/24/what-weve-learned-from-nafta/under-nafta-mexico-suffered-and-the-united-states-felt-its-pain

Nina Pavcnik, “The Impact of Trade on Inequality in Developing Countries,” Dartmouth College, August 25, 2017, https://www.dartmouth.edu/~npavcnik/docs/JH%20Inequality.pdf

Curtis Ellis, “Will Congress Betray USA with USMCA Opposition?,” World Net Daily, November 9, 2018, https://www.wnd.com/2018/11/will-dems-betray-america-with-usmca-opposition/

Bill White, “Trump derangement shouldn’t stop Congress from passing a trade deal,” Daily Caller, April 29, 2019, https://dailycaller.com/2019/04/29/white-trump-trade-deal

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