The United States-Mexico-Canada Agreement looms over the congressional agenda this summer. In recent weeks, officials have rolled up their sleeves and begun to prepare the ground for a positive vote on this landmark trade agreement. Approval of USMCA is an urgent priority for the U.S. business and agriculture community.
While Washington wouldn't be recognizable without partisan differences, the constructive engagement on USMCA between the administration and Congress has been noteworthy. Forward movement is also evident in the recent passage of landmark labor reform by Mexico's Congress and news that legislatures in both Canada and Mexico are beginning consideration of the pact. In fact, Mexico's Senate may vote as soon as next week.
Another critical step forward came on May 17, when the administration announced it was dropping its tariffs on steel and aluminum from Canada and Mexico. Ending those tariffs and the retaliatory duties levied by our North American neighbors has unleashed a new wave of congressional and business support for USMCA.
One by one, obstacles are being removed. Important talks between the administration and congressional Democrats over lingering concerns are ongoing, and these concerns should not be minimized. But it's also true that USMCA approval has taken on a fierce urgency to create certainty in the marketplace, boost economic growth and job creation, and pave the way for future trade talks.
Certainty. An early vote for USMCA will provide U.S. businesses from every sector—from agriculture to manufacturing and services—the certainty that their exports to Canada and Mexico will enter those markets duty-free.
This certainty is invaluable because these two markets are invaluable to American business. U.S. trade with Canada and Mexico:
- Reached nearly $1.4 trillion last year, or $3.8 billion daily;
- Supports 12 million American jobs spread across every state in the union;
- Is vital for U.S. manufacturers, who export more made-in-America manufactured goods to Canada and Mexico than they do to the next 11 largest export markets combined;
- Accounts for nearly one-third of U.S. agricultural exports; and
- Powered growth in U.S. services exports from $27 billion in 1993 to $91 billion in 2017.
Certainty is what American job-creators require if they are to make brick-and-mortar investments and create more jobs for the long haul.
Growth. USMCA isn't just about holding on to what you've got. USMCA will boost economic growth by improving the market access guaranteed for U.S. businesses.
For example, the agreement further opens the Canadian market to U.S. agricultural exports such as dairy products, poultry, and wine. U.S. farmers and ranchers have faced five years of declining commodity prices, so USMCA's improved market access is more than welcome.
And make no mistake: These are growth markets. U.S. exports to Mexico and Canada have grown more over the past decade than sales to any other country. In each case, exports have expanded by more than $100 billion annually.
No other market comes close. In fact, Mexico and Canada accounted for about 40% of the growth in U.S. goods exports in dollar terms over the past decade.
In particular, USMCA promises growth for America's small and midsized exporters. Canada and Mexico are the top two export destinations for U.S. small and medium-size enterprises, more than 120,000 of which sell their goods and services in our two North American neighbors. When an American small business starts exporting, it's almost always to Canada or Mexico.
Modernization. USMCA also promises substantial new benefits by modernizing the rules for commerce in North America to reflect the realities of 21st century trade. Deferring enactment of the agreement means deferring these benefits.
To illustrate, when NAFTA was negotiated a quarter century ago, there was no e-commerce, so it's no surprise the agreement did not address this booming sector. Here, USMCA's digital trade chapter sets a new, high standard.
Similarly, USMCA modernizes protection for intellectual property. The cutting-edge medicines known as biologics are a case in point—the old NAFTA did not protect them for the simple reason that they had not yet been invented. All kinds of industries will benefit from modernizing trade rules in this way.
Precedent. USMCA's path-breaking provisions will serve as a precedent for future trade agreements and provide benefits that will multiply in the years ahead—but only if Congress approves USMCA.
For example, USMCA prohibits "behind the border" barriers against U.S. exports. Too often, foreign governments deploy regulations or standards in an arbitrary way to block imports. USMCA halts this kind of protectionism in disguise.
USMCA also raises the bar with binding enforcement for all chapters. This includes labor and the environment, which were not subject to state-to-state dispute settlement under the NAFTA.
The U.S. is beginning trade negotiations with Japan, the EU, and potentially other countries. Approving USMCA will allow these breakthroughs to serve as a precedent that will shape these agreements.
The Trump administration negotiated a good deal with Canada and Mexico and it deserves to be approved without delay. Approving USMCA will provide job creators with the certainty they need to invest and hire, and the improved market access it promises will spur economic growth. It will modernize North American trade in ways that set a positive precedent for future trade talks.
Each day that passes without approving USMCA is a day that these benefits are deferred. Let's build on our momentum and seize these benefits.
Myron Brilliant is executive vice president and head of international affairs at the U.S. Chamber of Commerce.
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