“USMCA Trade Agreement” By Gavin S.
On Tuesday, the historic U.S.- Mexico- Canada Agreement was signed off by Democrats in the House of Representatives. Following shortly after, top officials from the United States, Mexico, and Canada signed the revised version of the trade agreement. The USMCA trade agreement has been negotiated for nearly three years, as it was a campaign promise of President Donald Trump. The agreement was originally signed by all three involved nations on November 30, 2018. However, the deal underwent multiple revisions and congressional delays before its passing on Tuesday. House Speaker Nancy Pelosi stated “There is no question, of course, that this trade agreement is much better than NAFTA.” The deal has been seen as a rare show of bipartisan and cross-border cooperation.
The U.S.- Mexico- Canada Agreement essentially expands upon the previously established North American Free Trade Agreement. NAFTA was signed into action in 1994 under President Bill Clinton. NAFTA removed strict barriers placed on interregional trade, primarily with agricultural products. The trade agreement was intended to uphold a zero tariff platform. For many years the United States maintained this zero tariff policy. However, Mexico slowly increased tariffs on American products. Eventually, Mexican tariffs averaged 250% higher than U.S. tariffs on Mexican products, increasing trade prices and causing conflict between the two countries.
The newly created USMCA corrects the failed aspects of NAFTA and strengthens pre established trade between the U.S., Mexico, and Canada. The trade agreement now ensures zero tariffs across the board on all agricultural products. According to the American Farm Bureau Federation, the agreement also provides non- discriminatory grading standards for all agricultural products from all three nations. In addition, the agreement has lessened strict regulations on dairy farming and has created a market for Canadian dairy and poultry.
The U.S.- Mexico- Canada Agreement essentially expands upon the previously established North American Free Trade Agreement. NAFTA was signed into action in 1994 under President Bill Clinton. NAFTA removed strict barriers placed on interregional trade, primarily with agricultural products. The trade agreement was intended to uphold a zero tariff platform. For many years the United States maintained this zero tariff policy. However, Mexico slowly increased tariffs on American products. Eventually, Mexican tariffs averaged 250% higher than U.S. tariffs on Mexican products, increasing trade prices and causing conflict between the two countries.
The newly created USMCA corrects the failed aspects of NAFTA and strengthens pre established trade between the U.S., Mexico, and Canada. The trade agreement now ensures zero tariffs across the board on all agricultural products. According to the American Farm Bureau Federation, the agreement also provides non- discriminatory grading standards for all agricultural products from all three nations. In addition, the agreement has lessened strict regulations on dairy farming and has created a market for Canadian dairy and poultry.
In addition to agriculture, the trade agreement has provided further implications regarding auto manufacturers and pharmaceuticals. One major goal of the trade deal is for more automobiles to be produced in North America. Washington Post journalist Heather Long stated that “Trump has repeatedly threatened to slap hefty tariffs on car and vehicle parts coming from overseas into the United States.” In order to qualify for zero tariffs on automobiles, at least 75% of components needed for cars and trucks must be manufactured in Canada, Mexico, or the United States. The agreement has also brought major changes to the pharmaceuticals market. The original draft of the USMCA called for biologic drugs to receive ten years intellectual property protection. However, House Democrats demanded that the provision be removed for the final draft.
While a final version of the bill has not been released, Washington officials are optimistic that the deal will pass through Congress with ease. Once passed, the deal must be ratified by all three nations. Regardless of when the deal is finalized, it will nevertheless benefit all parties involved. USMCA is expected to create “north of 176,000 new jobs” and inject $34 billion into the U.S. auto industry, Commerce Secretary Wilbur Ross told FOX Business. In addition, the trade deal is set to stimulate international trade and generate billions of dollars in commerce.
How will this new trade deal influence international trade? Will the USMCA withstand the test of time, or be replaced like NAFTA? What sort of a role does supranationalism play in the formation of such trade agreements?
Works Cited
AFBF, Credit: “USMCA.” American Farm Bureau Federation - The Voice of Agriculture, www.fb.org/issues/trade/usmca/.
Angulo, Sharay. “U.S., Canada and Mexico Sign Agreement - Again - to Replace NAFTA.” Reuters, Thomson Reuters, 11 Dec. 2019, www.reuters.com/article/us-usa-trade-mexico-idUSKBN1YE1RO.
Garber, Jonathan. “Historic USMCA Deal Is Much Better than NAFTA: Pelosi.” Fox Business, Fox Business, 10 Dec. 2019, www.foxbusiness.com/markets/usmca-trade-deal-done.
Long, Heather. “USMCA Is Finally Done. Here's What Is in It.” The Washington Post, WP Company, 10 Dec. 2019, www.washingtonpost.com/business/2019/12/10/usmca-is-finally-done-deal-after-democrats-sign-off-heres-what-is-it/.
I think it will have a positive influence on the relationships between Mexico, Canada, and the US. It makes sense that the US has trade deals with them, because they are the closest countries to the US. I think the agreement about auto manufacturers is a very good for the economy of North American countries, especially the US with "$34 injected into the US economy." I think the USMCA is here to stay.
ReplyDeleteThis is a good way to strengthen our economy and the overall economy of North America. It allows us to better compete with other international trade organizations. Hopefully this will strengthen the bond between us and our neighbors. Hopefully it turns out to be more beneficial than its predecessor.
ReplyDeleteI think it will definitely benefit not only our economy but Canada and Mexico. If the trade agreement can really produce over 176,000 jobs and bring the U.S. $34 billion it will be one of President Trumps greatest achievements. I agree with Micheal that the USMCA will be here for awhile, but only if it works as well as predicted.
ReplyDeleteI agree with AJ that it is a good strengthening tool for our economy. It will make our bonds with other nations stronger and more reliable. It believe that this agreement will do great things for the US.
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