One of President Trump’s most adamant positions is his opposition to the North American Free Trade Agreement (NAFTA) deal signed by former President Bill Clinton in 1993, which created a zone of free trade between the United States, Canada and Mexico by lowering tariffs and other economic barriers. Trump has repeatedly advocated to modify or possibly repeal the agreement, and as of Sept. 30, the administration is taking significant steps towards delivering on that promise.
The United States-Mexico-Canada Agreement (USMCA) is the new trilateral trade deal that serves as a modernized version of NAFTA.
The most prominent aspects of the agreement are its changes to labor standards, automobile tariffs and dairy tariffs. According to Vox.com, in order to qualify for zero tariffs, the USMCA requires automobile companies to manufacture 75 percent of their components in Mexico, with 40 to 45 percent of those materials being made by workers who earn $16 an hour.
The Mexican government plans to achieve these wages by 2023, as well as other labor goals such as union representation, protections for migrant workers and anti-discrimination protections for women.
The ability of the Mexican government to deliver on these promises is unclear; however, the threat of sanctions for labor violations could promote more effective reform. Despite this tentative win for labor unions, the new regulations evoke concern for automobile manufacturers. The USMCA retains the steel and aluminum tariffs on Canada, Mexico, and the EU, which threatens to stall manufacturing growth. According to Marketplace.org, the costs incurred to adhere to industry regulations could increase the prices of cars while driving down selection options. Without cheap labor and cheap steel, car companies fear their capability to mass produce will be hindered, and they will be forced to compensate by increasing prices.
The deal also details copyright policy. As stated by Michaelgeist.ca, these provisions extend the terms of copyright by 20 years and extend data protection for biological drugs (drugs produced from living organisms) to 10 years (instead of the eight years established by the Trans-Pacific Partnership).
The deal is expected to take effect in 2020, and has received support from Senate and House Majority Whips, John Cornyn and Steve Scalise.
“I am encouraged that the United States, Mexico, and Canada have successfully come to a trilateral agreement to modernize NAFTA,” Cornyn said in a statement. “This agreement is a positive step toward a strong, unified North American economy.”
The Minority Whip, Nancy Pelosi, however, urges further analysis of the proposal.
“Democrats will closely scrutinize the text of the Trump Administration’s NAFTA proposal, and look forward to further analyses and conversations with stakeholders,” Pelosi said in her statement.
By: Trinity Casimir, Staff Writer