President Trump's well-timed victory
(Baonghean) - The US Senate has officially approved the revised North American trade agreement with an overwhelming majority in a vote considered a rare moment of bipartisan cooperation and consensus. Thus, another victory marks the fulfillment of an important campaign promise, officially going to Donald Trump, amidst the legislative process as impeachment proceedings against the President are underway.
Victory after victory
The U.S.-Mexico-Canada Agreement, or USMCA for short, was approved by the U.S. Senate with 89 votes in favor and 10 against. This trade agreement, signed by President Trump in November 2018, also received a similar approval vote in the House of Representatives last month.
According to a statement from the White House press secretary, the measure is “another trade victory for American workers,” replacing the old agreement that “caused job losses and was a major failure, NAFTA.”
The statement asserts: “The USMCA, successfully negotiated by the President more than a year ago, rebalances trade between the three countries and will lead to significant economic growth and jobs in the United States.”
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| Senate Majority Leader Mitch McConnell arrives at Capitol Hill on January 16. (Getty Image) |
Individual US senators also praised the benefits of the new agreement for their constituents, with Senate Majority Leader Mitch McConnell, for example, calling it "a great victory for Kentucky and all 50 states." Speaking at the Senate building on January 15, he added that the agreement was "a great victory for the country. A great victory for the Trump administration."
President Trump can now claim to have fulfilled his campaign promise to take a tough stance on trade.
The USMCA aims to replace the North American Free Trade Agreement, which was negotiated by President George H.W. Bush in the 1990s and pushed through Congress by President Bill Clinton.
With the renegotiated trade agreements with Mexico and Canada, and the signing of a preliminary trade deal with China on January 15th to end the protracted and troublesome trade war, Trump can now claim to have fulfilled his campaign promise to take a tough stance on trade, while discarding the "bad deals" made by his predecessors.
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| The US-Mexico-Canada Agreement is seen as a victory for President Trump. |
Senator Richard Shelby tweeted that the agreement would boost trade across the state and serve the interests of “farmers, producers, and businesses.” Senator Shelley Moore Capito, meanwhile, offered more praise, saying the agreement “provides a 21st-century update to our trade policies with Mexico and Canada.”
Meanwhile, Trump's re-election campaign also seized the opportunity to attack his opponent, Senator Bernie Sanders, one of the 10 lawmakers who voted against the USMCA.
In an email sent to supporters on January 16, the Trump campaign wrote: “Socialist Bernie Sanders has proudly voted against new jobs and higher wages for American workers. Sanders is willing to sacrifice blue-collar jobs and improved wages, even if it means flying on fossil fuel private jets almost daily.”
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| President Trump at a campaign rally in Michigan on December 18. Photo: AFP |
New bottle, new wine?
Many economists argue that NAFTA was a major boost to North American economies because it removed trade barriers, reduced tariffs, and increased foreign investment, particularly in Mexico. But critics, including Trump and many Republicans, say that NAFTA pushed American jobs across the border. The U.S. president has frequently stated that NAFTA is “probably the worst trade deal ever.”
In reality, NAFTA did not cause significant job losses or generate substantial economic benefits.
A 2017 report by the nonpartisan Congressional Research Service concluded that the impact of NAFTA over the past quarter century is difficult to separate.
The report states: “A major challenge in evaluating NAFTA is separating the effects of the agreement from other factors. U.S. trade with Mexico and Canada was growing before NAFTA and likely would have continued even without the agreement. In fact, NAFTA did not cause the massive job losses that critics feared, nor did it generate the enormous economic benefits that its supporters predicted.”
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| Leaders of Mexico, the United States, and Canada at the USMCA signing ceremony in Argentina in November 2018. Photo: AP |
The new agreement does offer some modest benefits compared to its predecessor. According to a 2019 report by the U.S. International Trade Commission (ITC), the USMCA would boost gross national product (GDP) by 0.35% after inflation, or $68.2 billion, and create 175,700 new jobs over six years—less than the average monthly job creation rate of the U.S. economy.
According to this report, U.S. exports to Canada and Mexico will increase by $19.1 billion (5.9%) and 14.2% (6.7%), respectively. U.S. imports from Canada and Mexico will increase by $19.1 billion (4.8%) and $12.4 billion (3.8%), respectively.
One key point is that the percentage of vehicle parts required to be manufactured in North America to avoid tariffs will increase from 62.5% under NAFTA to 75% under USMCA. The new agreement will also require that the majority of these parts be produced by workers paid a minimum of $16 per hour – a provision aimed at addressing Mexico's cheap labor. According to the ITC, these changes will lead to a slight increase in retail vehicle prices.
The White House also negotiated a reduction in Canadian tariffs on U.S. dairy products, including milk powder and infant formula. But Canada has finalized one of its top priorities: retaining Chapter 19, a dispute resolution mechanism that allows any country to challenge another country's trade restrictions before an intermediary court.
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| Trucks lined up in a long queue to travel from Tijuana, Mexico to the United States in December 2019. Photo: AFP |
The new agreement also includes provisions to protect the ozone layer, the marine environment, and air quality, and establishes a fisheries management system to prevent overfishing in North American waters. But that's still not enough to satisfy environmental groups. In a statement last month, several groups urged their members to oppose the USMCA.
They argue the new agreement is insufficient and “will encourage the outsourcing of pollution and jobs, create opportunities for notorious polluting corporations, and prolong Trump’s pollution legacy for years to come.” Whether this agreement fails to address, identify, and resolve the climate crisis, and may even contribute to making it worse, remains to be seen for environmentalists.
