USMCA Approval Promises Certainty for North American Trade

On January 16, after more than a year of negotiations with Canada and Mexico and many additional months of talks between the Administration and Congress, the U.S. Senate passed the implementing bill for the U.S.-Mexico-Canada Agreement, which preserves and strengthens our economic ties with Mexico and Canada—our top two export markets—and guarantees that virtually all U.S. exports enter these markets tariff free.

As the Chamber’s Key Vote letter to the Senate explained, the case for USMCA comes down to three big themes:

First, it would strengthen U.S. trade ties with Canada and Mexico, which are by far our most important export markets. More than 12 million American jobs—in sectors from agriculture and manufacturing to services and technology—depend on trade with our two North American neighbors. They are also the top two export destinations for U.S. small and medium-size businesses, more than 120,000 of which sell their goods and services to Canada and Mexico.

Second, USMCA would modernize North American trade rules. When the North American Free Trade Agreement was negotiated a quarter of a century ago, there was no e-commerce, to give one example; consequently, the agreement did not address this sector. While USMCA falls short in several areas—including in intellectual property, which should not be considered a template for future agreements—its updated rules on digital trade, non-tariff barriers, services, and other areas promise substantial benefits.

Third, USMCA would restore certainty to these vital trade relationships. Tariffs and the threat of tariffs—applied to steel and aluminum, autos and auto parts, or applied to pursue non-trade objectives—have imposed real costs on the U.S. economy and dampened investment. Enactment of this new trade agreement would turn the page on this chapter and afford the business community the confidence it needs to invest and hire.

At the U.S. Chamber, we know how vital USMCA is for the economic health of American manufacturers, farmers, ranchers, businesses, and workers – and that is why it has been our top legislative priority this year. In 2019 alone, we held over 1,000 meetings with members of Congress or their staff to encourage passage of the deal. We built a coalition of more than 600 business groups and marshalled an army of advocates on Capitol Hill and in state legislatures across the country to make the case for USMCA.

Here is a snapshot on the U.S. Chamber’s push for passage of USMCA:

• 1,000+: Meetings with members of Congress or their staff
• 517: Companies and associations from every sector of the U.S. economy that are part of the USMCA Coalition
• 32,518: Unique page views of USMCACoalition.org since it launched in late February
• 120: Fact sheets, blog posts, and statements of support
• 1 billion: Potential audience reach on Twitter of our #USMCAnow hashtag
• 510: Meetings or events with Members of Congress and their staff in their districts/states
• 503: Briefings to state and local chambers of commerce and associations, many of which have joined the USMCA Coalition
• 36: Fly-ins to Washington, D.C. by state and local chambers
• 420,000+ #USMCAnow social posts

U.S. trade with our North American neighbors has quadrupled in the past 25 years. In fact, a whopping 49 U.S. states count Canada and Mexico as one of their top three merchandise export markets. American farmers, ranchers, manufacturers, service providers, and workers are counting on it.

Here are the key elements in USMCA:

1. Modernizes trade for the digital economy: USMCA creates best-in-class rules to foster U.S. growth in the digital economy for firms of all sectors and sizes. For example, the agreement guarantees the freedom to move data across borders and prohibits the forced localization of data, thereby ensuring continued growth for a dynamic area of international commerce.
2. Protects some forms of intellectual property: The agreement advances protections for copyrights, trademarks, and trade secrets in key respects, and contains strong enforcement tools to guard against counterfeiting and piracy. In other areas, however, such as patent protections for biologics and market access for creative content, intellectual property provisions ultimately fell far short of the standard in U.S. law. The Chamber insists that these changes cannot be a precedent going forward.
3. Removes regulatory and technical barriers: USMCA promotes regulatory compatibility and best regulatory practices for ICT products, pharmaceuticals, medical devices, cosmetics, chemicals, and other products, while also improving rules prohibiting discriminatory technical barriers to trade.
4. Creates customs efficiencies: In USMCA, customs procedures are modernized with regard to advanced rulings, simplified entry, risk management, single window, e-signatures, and self-certification of origin.
5. Updates agriculture trade standards: Canada and Mexico account for nearly one-third of U.S. agricultural exports. In addition to securing the market access for American farmers, USMCA establishes modern, science-based sanitary and phytosanitary standards that are the strongest achieved in any trade agreement. It provides transparency and information sharing on measures impacting trade in biotechnology products.
6. Enables greater financial services trade: USMCA ensures a level playing field for U.S. financial institutions, investors, and investments in financial institutions as well as cross-border trade in financial services on a nondiscriminatory basis.
7. Maintains critical market access: Approval of USMCA will ensure U.S. farmers, manufacturers, and service providers can continue to access Canadian and Mexican markets and guarantees that virtually all U.S. exports will enter these markets tariff-free. For Canada, it eliminates some remaining barriers facing U.S. dairy and poultry exports. It also prohibits import restrictions on remanufactured goods.
8. Ensures fair competition: The agreement establishes rules to ensure that central government state-owned enterprises (SOE) do not distort competition in the marketplace by guaranteeing regulatory impartiality. USMCA requires that SOE decisions be commercially motivated. It also ensures that antitrust investigations are fair, transparent, and based on sound economic analysis.

To learn more about the benefits of USMCA for American farmers, manufacturers, businesses, and workers, visit here.

About the authors

Kelly Rosenblatt

Kelly Rosenblatt is the former Social Media and Digital Operations Project Manager at the U.S. Chamber.