Trade Cases

USMCA Meets Varied Reaction

Written by Sandy Williams

The renegotiated NAFTA, now called USMCA (the U.S.-Mexico-Canada Agreement), still needs to be ratified in Mexico, the United States and Canada, but it is generating a plethora of commentary, both supportive and cautious.

The new deal reached late Sunday “provides certainty to financial markets and supports investment and job creation in our country,” said incoming Mexican Foreign Minister Lopez Marcelo Ebrard.

“The deal creates an opportunity for modernization and diversification of our productive sector. It will allow us to maintain the competitiveness of the Mexican manufacturing industry, which will keep its access to the world’s largest market,” said Ebrard during a press conference. Ebrard added that the key demand of incoming Mexican President Lopez Obrador has been met: respect for the “sovereignty of the Mexican state, particularly over its energy source.”

Mexico President Enrique Pena Nieto hailed the new agreement as “the achievement of what we proposed from the beginning: a win-win-win agreement.” 

Canadian Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland also called the new treaty a win for all involved. “Free and fair trade in North America…is in a much more stable place than it was yesterday,” said Trudeau on Monday. “We now have a path forward.”

“A year and a half ago with rising questions about the future of NAFTA, I was asked how we would respond. My answer was that we’d respond as Canadians always have in uncertain times. We’d be constructive, and reasonable, but we’d also be firm,” said Trudeau. “We’d protect our interests and promote our values. We’d show determination, and also flexibility, and we would remain united…. That’s exactly what we did.”

Canada’s ambassador to the United States, David MacNaughton, said the new agreement and the concessions on dairy haven’t been a “great win,” but rather “a great save.” The agreement will remove a lot of uncertainty, he added.

The Dairy Farmers of Canada were “deeply disappointed” by concessions made regarding the dairy sector that DFC says puts the “livelihood of thousands of Canadians and the future generations of dairy producers seriously at risk. “

“The announced concessions on dairy in the new USMCA deal demonstrates once again that the Canadian government is willing to sacrifice our domestic dairy production when it comes time to make a deal,” said Pierre Lampron, President of Dairy Farmers of Canada. “The government has said repeatedly that it values a strong and vibrant dairy sector – they have once again put that in jeopardy by giving away more concessions.”

The Canadian Chamber of Commerce called the new agreement “a step forward for…clarity and predictability in the relationship with our NAFTA partners.”

“While we applaud the achievement of an agreement, Canada must remember the lesson this turbulent period has provided: We must never again allow ourselves to be overly-dependent upon one trading partner,” added Chamber President and CEO Perrin Beatty. “We must continue to diversify our markets to protect ourselves from capricious and unfair actions in the future.”

U.S. business reaction to the new agreement included congratulatory statements from the Steel Manufacturers Association and the American Association of Railroads and a call to Congress for approval.

Said SMA in a statement: “The USMCA can now be sent to Congress as a trilateral deal. However, due to requirements under TPA legislation and an analysis by the U.S. ITC, it is uncertain when Congress will vote on the agreement.

“Under the USMCA, steel and aluminum tariffs will remain in place on imports from Canada and Mexico, as well as the retaliatory duties those countries have placed on U.S. agricultural goods and other products. Senior administration officials indicated there would be further negotiations aimed at resolving those issues, but did not say when.”

SMA President Philip K. Bell stated, “We are pleased with the changes in the rules of origin and automotive content requirements. We believe this is a key part of the modernization of the agreement and these new provisions will help promote the production and use of domestic steel. The SMA stands ready to assist the administration with the conclusion and implementation of this agreement, and we encourage swift Congressional approval.”

The American Association of Railroads stated: “The free flow of goods across North America without burdensome tariffs is a net positive for U.S. workers, bedrock industries and the economy. Our industry knows this firsthand due to the massive amounts of goods we move – such as automobiles, agricultural yields and energy products – as part of a sophisticated supply chain that was shaped in large part by free trade. We encourage Congress to address this new agreement in a very deliberate yet urgent manner to provide much-needed certainty for commerce across this continent.”

The American Trucking Association praised the governments for “coming together on a framework for continued free trade between the three North American nations.” ATA Chief Economist Bob Costello noted that trucks move nearly $385 billion in goods between the U.S. and Mexico and $336 billion across the Canadian border.

“ATA is pleased that the United States, Canada and Mexico will continue their nearly 25-year-long tradition of free and open trade among North American neighbors,” said ATA President and CEO Chris Spear. “The wide-ranging pact is a positive step for the nearly 50,000 Americans working in jobs directly connected to cross-border trucking – as well as the more than seven million Americans working in trucking-related jobs.”

“Ford is very encouraged by today’s announcement, and we applaud all three governments for working together to achieve free and fair trade in a strong regional agreement,” said Joe Hinrichs, executive vice president and president of Ford Global Operations. “We stand ready to be a collaborative partner to ensure this agreement is ratified in all three markets because it will support an integrated, globally competitive automotive business in North America. The benefits of scale and global reach will help to drive volume and support manufacturing jobs.”

A report by the Advisory Committee for Trade Policy Negotiations was released along with the text of the new USMCA by the USITC. The report argues for the lifting of Section 232 tariffs on steel and aluminum so that the benefits of the renegotiated agreement can be realized. Said the committee: “While farmers and ranchers are pleased that progress has been made toward a modernized NAFTA, unless Mexico’s retaliation against U.S. agricultural exports resulting from U.S. Section 232 tariffs is lifted, any benefits of the agreement to U.S. farmers will be eclipsed by the damage done by these tariffs. The ACTPN therefore believes for the U.S. agriculture sector to fully realize the benefits of provisions in the U.S.-Mexico agreement, there also must be swift resolution of outstanding disputes affecting U.S. agricultural exports to these two countries.”

The United Steelworkers issued a statement on Monday supporting the new agreement, but also calling for tariffs to be removed from Canada. “From the beginning, the USW has made it clear that Canada should not have been subject to Section 232 measures. Our economies are integrated, and our national security interests are intertwined, as are our steel and aluminum markets. The U.S. has no stronger or more reliable economic and national security partner. The impacts of any provisions in this area are key concerns not only on a bilateral basis, but for the USW, whose members work in this sector in both countries.”

The Canadian branch of the USW also expressed its dismay that resolution of steel and aluminum tariffs was not included in the new agreement. “Canadians expected that an agreement on NAFTA would result in the U.S. lifting the bogus national-security tariffs on Canadian steel and aluminium. Instead, it appears Canadian steel and aluminum workers are among those being sacrificed in the concessions made by the Liberal government in this deal,” said Ken Neumann, United Steelworkers Canadian Director.

“The Liberals made concession after concession, until the Trump administration got the deal it wanted. In the process, the Canadian government sold out Canadian steel and aluminum workers. So much for the ‘win-win-win’ deal promised by this government,” said Neumann. “Canada’s government must draw a line on this issue. The U.S. tariffs on Canadian steel and aluminum must be lifted immediately.”

Thomas Gibson, president and CEO of the American Iron and Steel Institute, commented, “We appreciate the administration’s hard work to reach this trade agreement between the U.S., Canada and Mexico–especially regarding measures that ensure North American steel continues to be used in automobile production. We are pleased that the agreement is trilateral, as the relationship between our three countries has been extremely beneficial for the steel industry and resulted in robust trade and investment in the region over the past 25 years. This new agreement is significant as it will keep our manufacturing supply chains strong throughout North America.”

The National Association of Manufacturers commented: “Manufacturers are extremely encouraged that our call for a trilateral agreement between the United States, Canada and Mexico has been answered,” said Jay Timmons, the group’s president and CEO. “Today, there’s a massive amount of goods flowing across North America, meaning our countries’ economies are inextricably linked. What’s more, as the United States works to put an end to China’s cheating and unfair trade practices, we are better off united with our North American allies.”

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