House of Reps. Democrats and White House come to terms of working deal for USMCA

Significant progress has been reached towards the possibility of signing the United States Mexico Canada Agreement (USMCA), an updated version of the North American Free Trade Agreement (NAFTA) into law, with U.S. House Democrats and the White House indicating they have come to terms on a working deal, according to various reports and statements issued today.

USMCA, in various ways, is actually based on the same rules and procedures and most of the same products, as the current NAFTA deal, which took effect in 1994. Analysts say that there are some great environmental and labor regulation improvements, and it incentivizes domestic production of cars and trucks. It’s also the first free trade agreement that has ever included intellectual property protections, which are very timely given the current trade wars that were triggered by the alleged theft of American intellectual property by China and other nations.

A key sticking point in USCMA negotiations has been related to concerns on behalf of House Democrats regarding enforcement tools for labor and environmental standards under the new deal, which they have been working on with the White House for more than a year, noted a CNBC report.

As for next steps, the report stated that the White House will need to submit ratifying legislation to Congress in order for the House to go ahead with approving the agreement, which could happen soon, adding upon the date when the White House submits text, the 90-day window to approve the deal will begin.

President Trump said, via Tweet, earlier today the prospects look positive for USCMA to move forward: “America’s great USMCA Trade Bill is looking good. It will be the best and most important trade deal ever made by the USA. Good for everybody - Farmers, Manufacturers, Energy, Unions - tremendous support. Importantly, we will finally end our Country’s worst Trade Deal, NAFTA!”

The call to move forward on USMCA has been voiced repeatedly, as noted in a September letter from former United States Secretaries of Agriculture going back the President Reagan’s Administration–– Secretary Tom Vilsack (2009-2017) Secretary Ed Schafer (2008–2009) Secretary Mike Johanns (2005–2007) Secretary Ann Veneman (2001–2005) Secretary Dan Glickman (1995–2001) Secretary Mike Espy (1993–1994) Secretary John R. Block (1981–1986)––to Speaker Nancy Pelosi, Minority Leader Kevin McCarthy, Majority Leader Mitch McConnell and Minority Leader Chuck Schumer.

The former Secretaries of Agriculture were direct in making their collective case for USCMA to be inked into law, saying that the U.S. needs a strong and reliable trade deal with its top two customers for U.S. agriculture products, adding that USMCA will provide certainty in the North American market for the U.S. farm sector and rural economy.

The letter also explained that the former Secretaries believe USCMA will benefit American agriculture and related industries.

“With Canada and Mexico being the first and second largest export markets for U.S. agricultural products, we believe USMCA makes positive improvements to one of our most critical trade deals,” they said. “Currently, NAFTA supports more than 900,000 jobs in the U.S. food and agriculture sector and has amplified agricultural exports to our North American neighbors to $40 billion this past year. Before NAFTA went into effect in 1994, we were exporting only $9 billion worth of agricultural products to Canada and Mexico. The International Trade Commission’s recent economic analysis concluded that USMCA would benefit our agriculture sector and would deliver an additional $2.2 billion in U.S. economic activity.”

“With Canada and Mexico being the first and second largest export markets for U.S. agricultural products, we believe USMCA makes positive improvements to one of our most critical trade deals,” they said. “Currently, NAFTA supports more than 900,000 jobs in the U.S. food and agriculture sector and has amplified agricultural exports to our North American neighbors to $40 billion this past year. Before NAFTA went into effect in 1994, we were exporting only $9 billion worth of agricultural products to Canada and Mexico. The International Trade Commission’s recent economic analysis concluded that USMCA would benefit our agriculture sector and would deliver an additional $2.2 billion in U.S. economic activity.”

What’s more, the letter pointed out that U.S. farm production exceeds domestic demand by 25%. And it added that agricultural exports account for 20% of farm income and support more than 1 million jobs.

In October, Neil Bradley, U.S. Chamber of Commerce executive vice president and chief policy officer, said that time is of the essence for Congress to move forward and enact USMCA sooner than later.

Bradley noted that the September edition of the Institute for Supply Management’s Manufacturing Report on Business posted its lowest reading in more than ten years [and has not shown growth for the last four months through November], which, he said, extends the trend the U.S. Chamber started noticing at the end of the summer.

“We started to see weakness on the business side of the economy, in contrast to the consumer side, which runs the risk of an economic downturn and, if not sufficiently corrected, ultimately there is the possibility of a recession,” he said.

Modal groups were pleased to see the level of progress that has been made on USMCA.

“Now with a clear path to USMCA’s ratification, this is an historic victory for truck drivers, motor carriers and the entire American economy,” said American Trucking Associations President Chris Spear. “The vast majority of trade in North America moves on truck, with $772 billion worth of goods crossing our borders with Mexico and Canada every year. USCMA will provide the certainty our industry needs while ensuring the United States remains competitive on the world stage.”  

Ian Jefferies, President and CEO of the Association of American Railroads (AAR) said that freight railroads applaud today’s announcement, which provides much-needed certainty with their two largest trading partners.

“Congress should move with haste to ratify USMCA before the end of the year and provide an economic shot in the arm to U.S. businesses,” explained Jefferies. “With renewed trade ties, freight railroads stand ready to deliver for rail customers throughout North America and move the goods that allow the U.S. economy to grow and compete in global markets.”