Reducing uncertainty in trade with Mexico and Canada
American businesses face enormous challenges right now. The ebb and flow of the trade war with China is roiling supply chains. A simmering tariff war with the European Union could soon boil over.
This swirl of uncertainty is threatening to hold back U.S. economic growth and has lowered global forecasts. More than six in 10 CEOs say that trade disputes have hurt their businesses. Many have shelved expansion plans as they adopt a “wait-and-see” approach.
Congress doesn’t have the power to resolve trade disputes with China or the EU. But there are steps that lawmakers can take in the coming months to offer greater certainty to businesses — including by approving the United States-Mexico-Canada Agreement (USMCA). The deal would give American companies a higher level of confidence that at least trade with Canada and Mexico will not be disrupted.
USMCA would replace NAFTA, the free trade agreement implemented in 1994. As former Acting and Deputy U.S. Trade Representative under President Obama, I saw firsthand how NAFTA boosted the economies of all three countries. Today, Mexico and Canada are our two largest trading partners. U.S. businesses sold more than $650 billion worth of goods and services to Canada and Mexico last year alone. This trilateral trade supports over 12 million U.S. jobs.
But NAFTA hasn’t kept pace with the digital revolution or other important issues we now seek to cover in U.S. trade agreements. When that deal was negotiated in the early 1990s, e-commerce barely existed. Most people didn’t own computers or cell phones, and Amazon was just a small bookstore operating out of Jeff Bezos’ garage.
USMCA takes NAFTA’s basic framework and modernizes it for the 21st century.
USMCA, for example, establishes a comprehensive set of intellectual property protections for technology. The deal bans trading partners from imposing customs duties on videos, e-books, games, apps, and music. It lengthens copyright terms for these digital products. And it lengthens intellectual property protections for “biologic” medicines, a class of advanced drugs that barely existed in the early 1990s and has led now to breakthrough treatments for patients.
Such provisions will help American companies — large and small — expand their business with Canada and Mexico, as well as make the standards among all three countries more uniform.
USMCA’s emphasis on intellectual property reflects the reality of today’s economy. IP-intensive industries already support over 45 million American jobs, account for 52 percent of U.S. exports, and contribute $6.6 trillion to the U.S. GDP.
House Speaker Nancy Pelosi has not yet scheduled a vote on the pact but has signaled that the House is on “a path to yes.” Her team and the administration are working to address several issues, including ensuring strong, workable enforcement provisions in a number of areas.
USMCA is not perfect but no deal ever is. But USMCA is worth passing. Not only would it cement our extremely close trading relationships with Canada and Mexico, but it would also offer U.S. businesses more certainty in a tumultuous time.
Ambassador Miriam Sapiro is a senior adviser to the Pass USMCA Coalition, a group of trade associations and businesses advocating for the passage of the United States-Mexico-Canada Agreement, and served as acting and deputy U.S. trade representative during the Obama administration.