After the approval of the Export-Import Bank extension before Christmas, there were two more major pieces of good trade news this week.
Despite a divided Congress grappling with the impeachment of President Trump, the U.S.-Mexico-Canada Agreement (USMCA) was approved by an overwhelming bipartisan majority, revamping the 26-year-old North American Free Trade Agreement (NAFTA). USMCA aims at re-balancing U.S. ties with its major trading partners. Above all, it demonstrates that America is still very much “open for business.”
Some of the key highlights of the bill include creating a more level playing field for American workers while modernizing and strengthening food and agriculture trade in North America.
The U.S. Chamber of Commerce CEO Thomas J. Donohue praised the bill stating that, “This agreement guarantees American workers and farmers full access to our largest export markets for yours to come, and it restores certainty to trade ties that support 12 million American jobs.” Even Mexican President Andres Manuel Lopez Obrador called the deal good news for the Mexican economy, as he was hopeful that it would jump start new investments. Canada’s Prime Minister Justin Trudeau stated that, “the implanting legislation will be a top priority when Parliament resumes later this month.” He also expressed his wish for parliament to support a “swift” passage of the bill.
This legislation is crucial because Canada and Mexico are valuable export markets to the U.S. Furthermore, more than twelve million American jobs depend on trade with one or two of these countries. These countries are also the top two export destinations for U.S. small and medium-sized businesses, and as if it couldn’t get any better, these exports will enter the markets tariff-free.
The U.S. Chamber was disappointed to see that the USMCA does not address intellectual property, however it’s updated rules on digital trade, non-tariff barriers, services, and other areas provide hope.
President Trump will sign the bill this week and Canada is expected to approve after it’s Parliament reconvenes later this month.
USMCA was not the only victory this week. After months of trade tensions and negotiations, the Phase One Agreement have been approved. For business leaders, these changes are expected to encourage healthy trade environments and open trade among the United States and various global partners.
Intended for encouraging and promoting American exportation, the Phase One Agreement opens Chinese markets for business. China will be required to purchase $200 billion of US goods and in return, the United States will reduce tariffs from 15% to 7.5% on Chinese products. President Trump believes this is a right step in the direction for “a future toward fair and reciprocal trade”. However, non-tariff trade barriers, subsidies, and billions of dollars in tariffs are still a few of the concerns for U.S. officials. In order to get to phase two of the agreement, the concerns must be addressed and resolved. The Upstate Chamber Coalition stands with the U.S Chamber’s decision to support this deal – viewing it as an opportunity to rebuild relations with the Chinese and a sensible move in the interest of tariff reduction.
We collectively support the implementation and enforcement of both of the agreements.