U.S.-Mexico-Canada Agreement

U.S.-Mexico-Canada Agreement

Swift Passage Can Help Spur Economic Growth

• Trade with Mexico and Canada supports nearly 14 million U.S. jobs.

• Since NAFTA entered into force, trade with Canada and Mexico has nearly quadrupled to $1.23 trillion.

• NAFTA helped U.S. agriculture exports to Canada and Mexico to increase by 350%.

• Canada and Mexico buy more than one-third of U.S. merchandise exports.

Background

The California Chamber of Commerce actively supported the creation of the North American Free Trade Agreement (NAFTA) among the United States, Canada and Mexico, comprising 489.5 million people with combined annual trade with the United States being around $1.23 trillion in 2018. In 2018, goods exports topped $565.2 billion while goods imports totaled nearly $665 billion.

President Donald J. Trump announced his intent to renegotiate NAFTA in May 2017. The negotiations started shortly thereafter, going through many rounds. In August 2018, the U.S. and Mexico reached a preliminary agreement, while the U.S. continued separate negotiations with Canada. In October 2018, Canada and the U.S. came to an agreement right before a self-imposed deadline, reassuring the deal would remain trilateral. The pact was rebranded the United States-Mexico-Canada Agreement (USMCA). The USMCA was signed on November 30, 2018 as President Trump called it the “most modern, up-to-date, and balanced trade agreement in the history of our country”.

2019 Where the Agreement Is Now

Following steps outlined by the Trade Promotion Authority (TPA), the U.S. International Trade Commission released a report on how the new agreement will affect jobs and the economy in April 2019. The report estimated that the USMCA would increase U.S. gross domestic product (GDP) by 0.35% or $68.2 billion and raise employment by 176,000 new jobs. The trade commission report also estimated that the agreement would have a positive impact on all broad industry sectors within the U.S. economy and that manufacturing and services would receive large gains.

In mid-December 2019, an agreement on the USMCA finally was reached in the U.S House of Representatives. The updated deal was signed in Mexico by the three countries on December 10, 2019. The agreement then was voted on in the House on December 19, 2019 and was passed by a vote of 385-41.

In June 2019, Mexico was the first country to ratify the new USMCA deal. However, since updates were made to the USMCA, Mexico had to re-approve the deal. Mexico’s Congress promptly took up the updated agreement, and again passed the USMCA on December 12, 2019. Meanwhile in Canada, the original bill was introduced in Canadian Parliament in May 2019; however, Canada has stated that it will move forward with the ratification process in tandem with the United States.

The USMCA implementing bill will officially repeal NAFTA, while it will only “suspend” the U.S.-Canada Free Trade Agreement in case the USMCA is terminated as part of a sunset review that begins six years after the agreement takes effect.

Benefits and Goals

CalChamber support for the USMCA is based on an assessment that it serves the employment, trading and environmental interests of California, the United States, Mexico and Canada, and is beneficial to the business community and society as a whole.

The objectives of the USMCA are to eliminate barriers to trade, promote conditions of fair competition, increase investment opportunities, provide adequate protection of intellectual property rights, establish effective procedures for implementing and applying the agreements and resolving disputes, and to further trilateral, regional and multilateral cooperation.

Anticipated Action

The USMCA deal is pending in the U.S. Senate where it is expected to pass in early 2020. It is hoped that Canada will join Mexico in approving the USMCA in 2020, making the updated agreement and renewed trilateral partnership official.

CalChamber Position

The CalChamber understands that the original NAFTA was negotiated more than 25 years ago, and, while our economy and businesses have changed considerably over that period, NAFTA has not. We agree with the premise that the United States should seek to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities under the new USMCA.

The provisions of NAFTA with Mexico and Canada have been beneficial for U.S. industries, agricultural enterprises, farmers, ranchers, energy companies and automakers.

The CalChamber originally actively supported the creation of NAFTA among the United States, Canada and Mexico.

The CalChamber’s longstanding support for NAFTA is based upon an assessment that it serves the employment, trading and environmental interests of California and the United States, as well as Canada and Mexico, and is beneficial to the business community and society as a whole. Since 1993, trade among the three NAFTA countries has nearly quadrupled.

Mexico and Canada are California’s largest and second largest export markets. A final approval of the new USMCA will benefit the California economy and jobs.

Recent News

International Bills

Councils

Coalitions

Policy Contact

Susanne-Stirling-2012-300x300Susanne Stirling
Vice President, International Affairs