The North American Free Trade Agreement, now going on 25 years old, has created the world’s largest trading bloc by value of products traded between its member countries. The new and improved NAFTA is called the United States – Mexico – Canada Agreement.
According to the National Association of Manufacturers, Canada and Mexico alone purchase 20% of the total value of U.S. manufacturing output, and purchase more U.S.-made goods than our next 10 trading partners combined, despite representing only 6% of the world’s population. In addition, NAM reports the jobs of more than 2 million American manufacturing workers depend on exports to Canada and Mexico, along with more than 43,000 small and medium-sized businesses. In 2017, Indiana exported $13.2 billion of its products to Canada and $5 billion to Mexico. Combined, this represents 48% of all Indiana exports.
USMCA rebalances and modernizes NAFTA, to include (but not limited to):
- State-of-the-art customs agreements, less red tape at the border
- De minimis raised, the amount below which no customs duties are charged, such as for many components and small parts shipments; this will particularly help small businesses
- Provisions added for digital trade, non-existent in 1994, when NAFTA came into being, and stronger penalties for online piracy
- Preventing data localization provisions, as the “cloud” eliminates the needs for separate data centers in each country
- Rules of origin, higher USMCA content requirements
- Greater market access for American agriculture, especially for U.S. dairy farmers selling into Canada, and for U.S. poultry exports to Canada and Mexico.
USMCA will help set a standard and template for future Free Trade Agreements, as it will produce the most integrated trading bloc in the global economy. The USMCA Coalition – composed of 450 associations, but led by the U.S. Chamber of Commerce, National Association of Manufacturers and the Business Roundtable – is helping the U.S. trade representative to obtain anecdotes among exporters in each House member’s district, in order to help get USMCA over the finish line in the House, especially as it has already been ratified by Mexico and Canada, and as the clock is ticking on it.
Speaker of the House Nancy Pelosi implemented four USMCA working groups, to include enforcement, environment, labor and pharmaceutical. A current sticking point for USMCA among some House and Senate Democrats involves labor provisions in Mexico, to include $16 an hour for Mexican autoworkers. U.S. Trade Rep. Ambassador Robert Lighthizer is trying to get Speaker Pelosi to hold the USMCA vote in the House by late October. However, having announced her impeachment proceedings would begin, it could derail the House’s USMCA vote until later this year or early next year.
Sen. Todd Young and Mike Braun have already pledged their support for USMCA. However, as Indiana is the most manufacturing-intensive state and the most export-dependent state (per capita), please contact your U.S. representative to ask him or her to ask Speaker Pelosi to bring up USMCA for a vote.
An international businessman by profession, Nate LaMar also manages government relations for his employer, and served as Henry County Council President from 2009-19.