Trade Cases

Senate Approves New USMCA Trade Pact

Written by Sandy Williams

The Senate voted its approval of the United States-Mexico-Canada Agreement in a sweeping 89-10 bipartisan vote on Thursday. The trade agreement now goes to President Trump for signature. The Canadian parliament is expected to follow suit, allowing the USMCA to be implemented later this year.

The final agreement adds language addressing the internet, digital services and e-commerce development, as well as prohibiting currency manipulation. 

Rules of origin for the auto industry is one of the biggest changes in the agreement. The USMCA will require 75 percent regional content, up from 62.5 percent in NAFTA, to receive tariff-free access between Canada, Mexico and the U.S. Seventy percent of steel and aluminum purchased for production must be produced in North America. In addition, a labor value requirement stipulates that 40 to 45 percent of vehicle content must be made by workers earning more than $16 per hour.

Thomas Gibson, president and CEO of the American Iron and Steel Institute applauded the passage of the agreement.

“Today’s passage of USMCA in the Senate is great news for steelmakers, our workers and our customers,” said Gibson in a statement. “It will help create jobs and foster investment in manufacturing, building upon the success of NAFTA. For the steel industry specifically, the USMCA improves upon the original NAFTA by strengthening the rules of origin for steel-intensive goods, incentivizing the use of North American steel in manufactured goods and bolstering our manufacturing supply chains with customers in the automotive, auto parts, pipe and tube, and machinery industries, among others. Nearly 90 percent of U.S. steel mill product exports go to Canada and Mexico, so securing those markets for our exports is critical for American steelmakers.

“The USMCA also will benefit the steel industry by promoting increased cooperation and information sharing among the North American governments to address circumvention and evasion of trade remedy orders. These measures will help the steel industries of our three countries continue to work together to address the repeated surges of dumped and subsidized steel imports that have plagued the North American market in recent years.”

Steel Manufacturers Association President Philip Bell commented, “The SMA is pleased with the Senate’s bi-partisan passage of USMCA. The USMCA succeeds in its goal of maintaining free trade between the three countries. This agreement provides strong provisions on new automobile manufacturing, rules of origin content requirements, trade enforcement, labor and the environment. The stronger definition of what constitutes North American steel will help ensure that more steel is made within the region. We applaud the work of Ambassador Lighthizer and his team in reaching this landmark agreement.”

The American Trucking Industry called the USMCA “a boon to our economy and our industry.”

“NAFTA was the oldest of our 17 trade agreements and due for the sorts of modernization that USMCA made,” said ATA Chief Economist and Senior Vice President of International Trade Policy and Cross-Border Operations Bob Costello. “With this new trade agreement in place, we can expect to see increases in exports to Canada and Mexico and a measurable increase in our gross domestic product in the years ahead. Because trucks move 70 percent of all freight in the U.S., implementation of USMCA will have direct benefits to the trucking industry.”

ATA President and CEO Chris Spear added, “It is proof positive that even in this increasingly polarized political environment, our elected leaders can still get big things done for the good of our country. President Trump, Speaker Pelosi and Leader McConnell all deserve credit for setting aside partisanship and moving this important modernization of our trade policy forward.

“We hope that this shared victory will pave the way for more bipartisan solutions on the critical issues facing our country, such as the infrastructure crisis and the skyrocketing costs it’s imposing on the American people.”

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