Representatives of the automotive, agricultural, software and financial services sectors voiced a positive tone on the U.S.-Mexico-Canada Agreement (USMCA) during a panel discussion Thursday.
The generally supportive sentiments came in response to a question posed by former International Trade Commission member Daniel Pearson during a Washington International Trade Association (WITA) event about whether industry should lobby Congress to prevent President Donald Trump from withdrawing from NAFTA or to lobby Congress to promote entry into force of USMCA.
“The [USMCA automotive] rules of origin are very complex so we need to review, but our intent is to encourage Congress to pass the USMCA,” American Automotive Policy Council President Matt Blunt said during the discussion. “We think there are some improvements in the agreement and that it will ensure that we have an agreement going forward that allows North America to be a cohesive platform to produce automobiles.”
The U.S. automotive industry was concerned during the early stages of negotiations that the U.S. would stick to its initial pitch that 50 percent of a car’s content must originate in the United States and 85 percent must originate in North America in order for those products to qualify for tariff benefits.
Negotiating parties eventually agreed to a 75 percent North American value content requirement, no U.S. domestic content requirement and to a provision that would require 40 percent of the work on a vehicle to be done by workers making at least $16 an hour starting in 2023, language that is expected to affect production in Mexico more than in the two other NAFTA member states.
While the NAFTA renegotiation yielded modest agricultural gains, largely in the form of additional market access for U.S. dairy and poultry products in Canada, “you will, I think, see strong support from the ag sector for those changes,” said Joe Glauber, senior research fellow for the International food Policy Research Institute.
Increased market access for U.S. dairy and poultry into Canada took the form of raised tariff-rate quotas (TRQs) and the elimination of a discriminatory Canadian system that priced U.S. milk products out of its market, but Canada didn’t agree to reduce its tariffs on these products, Glauber said.
“On those protected commodities, it would’ve been much better to have seen some true tariff reduction, rather than TRQ access,” he said. “The TRQ access was pretty minimal.”
Glauber also mentioned that the U.S. agreed in USMCA to allow more market access for imports of peanuts and sugar.
Citi Global Government Affairs Director Kimberley Claman and Victoria Espinel, CEO of BSA | The Software Alliance, also voiced support for USMCA.
“We think the USMCA’s a win for digital trade,” Espinel said. “So we have been supportive of negotiations that have been ongoing, and we’re supportive of it as it ended up.”
Claman lamented the fact that USMCA left NAFTA’s Chapter 20 state-to-state dispute settlement system intact and didn’t adopt a more modernized framework, such the Trans-Pacific Partnership (TPP), which includes safeguards against unilateral blockage of panel formation. NAFTA Chapter 20 doesn’t include such measures.
Claman said, “Despite the shortcomings … I think many in the financial sector really believe these are good outcomes for the sector in the USMCA.”