USTR Lighthizer

New Life for USMCA? both Democrats and Republicans work with USTR toward ratification before Aug

Key USTR officials negotiating the deal with Mexico and Canada are working both sides of the Capitol in an effort to ease concerns not only over the provisions of the pact but Trump’s ongoing tariff war with Mexico, Canada, Europe and China. Speaker Nancy Pelosi and her Democratic leadership team were upbeat about the U.S.-Mexico-Canada Agreement as they left a meeting with Robert Lighthizer, Trump’s top trade official, saying he finally seemed to take heed of their demands to modify the trade deal. Some Congressional leaders believe it could be ratified  before August.

Senate Republicans, who have been critical of Trump’s decision to slap tariffs on U.S. allies, were relieved at signs that the administration appears to be backing off that offensive as part of an end-game agreement with Canada and Mexico, as well as Congress. See U.S. removed tariffs on imports of steel and aluminum from Canada and Mexico.

Pelosi is fighting to ensure that the agreement’s labor and environmental protections are strongly enforceable See Top Labor Leader Wants USMCA to be “fixed.” and Democrats try to smooth USMCA passage.

 

“I’m pretty optimistic about it,” said Sen. John Cornyn (R-Texas). “Everybody wants to do it, I saw Mrs. Pelosi say that she wanted labor reforms done by the Mexicans and they proceeded to do the labor reforms. And I think there’s just a broad bipartisan acknowledgment that this is in Americans’ best interest and we ought to get it done.”

Though it’s only May 2019, advocates of the deal know they need to move quickly. As the Democratic presidential campaign ramps up, the possibility of passing new major legislation decreases significantly. Republicans and pro-trade Democrats say that if the legislation can’t pass before the chamber breaks for August, it may stall permanently.

USTR released an analysis of the estimated impact the USMCA will have on U.S. investment, purchases of U.S. auto parts, and jobs in the U.S. automotive sector.

The analysis, based in large part on information provided by North American automakers, estimates that over a five-year period the USMCA will result in:

  • $34 billion in new automotive manufacturing investments in the U.S.;
  • $23 billion in new annual purchases of U.S.-made automotive parts; and
  • 76,000 jobs in the U.S. automotive sector alone.

The USTR analysis notes that the USMCA is already helping to stimulate billions of dollars in new auto manufacturing investments in the United States.  Fiat Chrysler, Ford, General Motors, Toyota, and Volkswagen have publicly announced recent investments that were partly influenced by their anticipated need to comply with USMCA’s rules of origin.

The analysis states, “The automotive rules of origin (ROO) in the North American Free Trade Agreement (NAFTA) are outdated, contain significant loopholes, and have encouraged the outsourcing of U.S. jobs. The new automotive ROO in the United States-Mexico-Canada Agreement (USMCA), by contrast, are designed to incentivize investment, production, and employment in the U.S. automotive sector (see Annex 1 for a Summary of Key USMCA Auto Rules of Origin Provisions).”

Sources:

https://www.politico.com/story/2019/05/15/trump-trade-congress-1327362

USTR Statement re Estimated Impact of USMCA on the U.S. Automotive Sector
https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/april/statement-us-trade-representative 

 

Posted: May 21, 2019 (Herb Cochran)

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