USMCA Gains Steam, Bipartisan Support
Amidst all the trade tensions and tariff talks, any good news stands out vibrantly. One piece of good news that’s rippling through the headlines is the prospect of a new U.S.-Mexico-Canada (USMCA) trade agreement. The agreement, which would supplant NAFTA, could be signed as early as Thanksgiving, alleviating some of the trade burden currently nagging at the U.S. manufacturing economy.
Those following news about global trade know things haven’t been going all that smoothly. The original draft of USMCA was originally ratified on October 1, 2018; however, it was only a partial solution to the goal of replacing NAFTA. The original deal included provisions to make dairy markets more accessible, while improving trade for raw materials such as steel and aluminum.
Now, the focus is on labor and technology. According to those familiar with the deal, there are more than 200,000 union contracts requiring reevaluation to ensure fair labor standards across all parties of the trading bloc. This, coupled with new environmental regulations that still need to be reviewed, are the current hindrances against formally signing the second part of USMCA.
Bipartisan support is rising
One of USMCA’s biggest critics has been House Speaker Nancy Pelosi. She and many other Democrats opposed the abrupt abolishment of NAFTA without a suitable replacement plan already signed. But even despite early tensions, Madam Speaker Pelosi and other Democrats are coming around to USMCA. Bipartisan support is on the rise.
According to the speaker, the only thing holding back a deal is the lack of “the enforceability assurance that we need to have” regarding labor and union agreement terms. Much of this stems from Mexico’s labor reformation policies, which have taken time to culminate.
Another bright spot for USMCA is the fact that it’s picking up bipartisan support even despite extreme tensions in government ― including a formal impeachment inquiry against the president.
How will manufacturing benefit?
With USMCA slated to pass as early as Thanksgiving, it comes just in time to bolster the contracting manufacturing economy. Two major facets of USMCA will have an immediate, positive effect on American industrialism.
First, uniform labor laws set the stage for emphasis on domestic manufacturing. USMCA encourages larger manufacturers (i.e. automakers), to keep their operations inside the U.S., making it easier for them to compete against previously unfair labor advantages in other countries.
Second, USMCA improves raw material import-export prices, alleviating one of the major economic burdens currently facing manufacturing. With the prices of raw steel and aluminum a chief focus of USMCA, manufacturers will be able to get the materials they need to improve domestic production.
All that’s left is to sign
Murmurs from inside the White House surmise that the nuts and bolts of USMCA are in-place, and they’re just waiting for the deal to be formally signed. The White House has even published the scope of the final agreement. The holdup in signing appears to come from the lack of enforceability assurances Speaker Pelosi mentioned when she spoke with the media. Given this accountability, USMCA may finally culminate as a true successor to NAFTA and a boon for the manufacturing industry.