USMCA will achieve fairer, more reciprocal trade that supports high-paying American manufacturing jobs and grows the economy. USMCA includes innovative provisions to incentivize new investments in the American auto industry and support high-paying jobs for American auto workers.
CONS;
1. THE USMCA INTRODUCES NEW TRADE PROTECTIONISM THAT WILL CONSTRAIN GROWTH
First, the new protectionist measures the agreement introduces—restrictions on auto trade and investment, government procurement contracts, and textiles—will constrain US growth. Contrary to official US “fact sheets,” the USMCA will hurt the overall US economy unless those restrictions are removed or modified. While politically difficult, Congress should insist on improvements to remedy defects exposed by the USITC study.
Top White House officials misread the USITC report when they tout the USMCA as boosting US growth by 0.3 percent per year. In fact, the study estimates that on balance the market access provisions of the USMCA would restrict trade and cause US growth to decline by 0.12 percent.
Why the discrepancy? Unlike past US trade deals, the USMCA makes almost no changes to tariffs or nontariff barriers; such restrictions were removed years ago under the existing NAFTA. Trade liberalization under the USMCA, including the changes in US access to the Canadian dairy market, is limited and more than offset by the new protectionist measures.
The 0.3 percent growth is entirely due to USITC estimates that the USMCA will induce more US investment by reducing uncertainty in policies on data, ecommerce, and intellectual property rights. That analysis mistakenly credits the USMCA with achieving those gains. But those reforms are already part of Mexican and Canadian policy through the revised TPP that they have joined.[1] And those reforms generally are applied to all countries, so the United States already is a beneficiary.
Furthermore, the USITC cost-benefit analysis did not account for the additional uncertainty created by the “sunset clause,” a major new provision mandating that the pact expire in 16 years unless the three trading partners explicitly extend it. At the very least, North American businesses will have to make contingency lans for changes that could be introduced in the trade pact because of its possible termination. If the sunset clause had been considered by the USITC economists, the increased uncertainty would offset in whole or part the reduced uncertainty attributed to other parts of the agreement.
2. NEW RULES OF ORIGIN WILL HURT US AUTO SECTOR COMPETITIVENESS
lans for changes that could be introduced in the trade pact because of its possible termination. If the sunset clause had been considered by the USITC economists, the increased uncertainty would offset in whole or part the reduced uncertainty attributed to other parts of the agreement.
3. PHARMACEUTICAL PATENT RULES NEED TO BETTER BALANCE CONSUMER INTERESTS
lans for changes that could be introduced in the trade pact because of its possible termination. If the sunset clause had been considered by the USITC economists, the increased uncertainty would offset in whole or part the reduced uncertainty attributed to other parts of the agreement.
4. IMPROVED ENVIRONMENTAL PROVISIONS STILL FAIL TO ADDRESS CLIMATE CHANGE
Fourth, in the environmental area, the USMCA is “best in class” compared to trade agreements signed by other countries, with provisions for the enforcement of multilateral environmental agreements (MEAs), extensive disciplines on fishery subsidies, and new obligations regarding combatting marine litter that are “TPP-plus.” But more is needed.
Critics charge that the USMCA did not make enough progress because it maintains investor-state dispute settlement (ISDS) procedures in the energy sector (which they claim favor industry interests) and does not directly link the pact’s commitments to specific MEAs. The MEA language can be clarified with a few simple edits; the ISDS issue, while more politically charged, also could be recast: Trump officials never seemed committed to retaining it.
Oddly, despite considerable talk about a green new deal, congressional critics of the USMCA have missed one of the pact’s most egregious defects: It does not address global warming (also shunted aside by Obama negotiators for fear of losing Republican support for the TPP). The growing crisis is too critical to ignore any longer. At the very least, the USMCA should promote investment and trade in renewable energy resources and other measures to encourage low-carbon emissions. Officials could draw on specific provisions included in the recent EU-Mercosur trade pact promoting “domestic and international carbon markets” and “energy efficiency, low-emission technology and renewable energy” (EU-Mercosur pact, Article 13.6).
Explanation:
