More than 600 U.S. industry associations, agriculture producer organizations and chambers of commerce sent a joint letter last week to members of Congress, urging them to pass the successor agreement to the North America Free Trade Agreement. Approval indeed would serve the national interest.
“U.S. manufacturers export more made-in-America manufactured goods to our North American neighbors than they do to the next 11 largest export markets combined,” the letter notes, “and the two countries account for nearly one-third of U.S. agricultural exports.”
Canada and Mexico, the letter says, “are the top two export destinations for U.S. small and medium-size businesses, more than 120,000 of which sell their goods and services to Canada and Mexico.”
The Nebraska Retail Federation as well as the chambers of commerce for the Omaha area, Lincoln, Kearney, North Platte and Scottsbluff signed the letter, as did the Nebraska Chamber of Commerce & Industry. Eleven Iowa economic development organizations signed. So did the American Farm Bureau Federation, Corn Refiners Association, Farm Equipment Manufacturers Association, Irrigation Association and Farmers for Free Trade.
The proposed United States-Mexico-Canada Agreement, now before Congress, would maintain the existing free trade benefits under NAFTA and make improvements in several ways:
» It facilitates e-commerce. NAFTA, which took effect in 1994, didn’t address the issue, since online commerce has become significant only more recently.
» It has stronger protections for intellectual property, including patents, copyrights and trade secrets.
» It enables significant efficiencies in customs processing.
» It facilitates greater financial services trade.
Agricultural associations support passage of the agreement because without approval and a potential withdrawal from NAFTA, the open-market conditions in place for decades would be jeopardized. The USMCA, the American Soybean Association says, “maintains zero tariffs on U.S. soybeans and soy products and” — in an improvement over NAFTA — “provides the highest enforceable sanitary and phytosanitary standards of any trade agreement to date.”
Mexico and Canada “are the U.S. corn industry’s largest, most reliable market,” the National Corn Growers Association notes. Mexico is the No. 1 importer of Nebraska corn and wheat, and it’s No. 2 for Nebraska’s exports of soybeans and soybean products, dry edible beans, sorghum and distillers grains.
Because NAFTA already removed most tariff barriers among the three countries, the USMCA isn’t expected to produce huge gains in U.S. economic output or jobs. After six years the new accord would increase U.S. economic output by an estimated $68.2 billion, or 0.35%, according to the International Trade Commission, an independent U.S. government entity. U.S. employment, the commission said, would rise by a projected 176,000 U.S. jobs, an increase of 0.12%.
How the new agreement would ultimately affect the U.S. automobile manufacturing sector is unclear. The Trump administration insisted on requirements to pressure automakers to shift more jobs to the United States. Economists disagree on the likely outcome.
The U.S. Trade Representative projects that over five years the USMCA would boost the U.S. auto sector by 76,000 jobs. The International Trade Commission estimates a lower figure, at 28,000 additional full-time jobs. The U.S. auto sector currently employs just under 1 million people. Analysts with the International Monetary Fund concluded that job gains would be even smaller, saying the new supply-chain demands would likely redirect a sizable share of automobile production out of North America altogether.
On balance, however, the USMCA is a net positive for our country, as the industry associations make clear. The agreement preserves free trade with Canada and Mexico, two vital markets for our exports. It addresses e-commerce for the first time, safeguards intellectual property and enables customs efficiencies. It offers the highest-quality sanitary assurance about agricultural exports.
These are significant benefits, warranting passage of the accord by Congress.