Now that President Trump has revised the North American Free Trade Agreement into something that seems familiar to economic experts – and run a victory lap to celebrate – folks around here should see the glass as half full. There will be trade peace with our close partner, Canada.
Happily, Trump’s relationship with Canadian Prime Minister Justin Trudeau appears to have improved, to the relief of those who depend upon cross-border trade, including all of Western New York. Canada, as a whole, may be less forgiving. The president has also settled at least some disagreements with Mexico.
Following months of threats and talk of increased tariffs, the president has rolled out an updated NAFTA. It will be called the United States-Mexico-Canada Agreement. USMCA does not exactly roll off the tongue, but the nation will get used to it.
The revision builds upon the Republican-maligned Trans-Pacific Partnership, said Robert Lighthizer, U.S. trade representative and presidential adviser. Trump, who was harshly critical of TPP, withdrew from the agreement last year.
The USMCA offers this much: Canada will ease long-standing protections on its dairy market, something farmers in this area should welcome. It will provide access greater than what the United States gained through the TPP.
The revision also includes a series of changes to intellectual property and the digital economy, including protections for patents and domain names. NAFTA is, after all, 25 years old, and in that respect far behind in addressing the digital age.
Trump’s administration touts regulations governing automobile manufacturing, adding that the changes would bring more car production back to the United States. That’s because under the agreement, a greater percentage of vehicle components would have to be made in North America to qualify for zero tariffs. However, the same requirement is also likely to mean higher prices for consumers, because of increased manufacturing costs, Edmunds analyst Ivan Drury was quoted in CBS News.
Moreover, a significant portion of the vehicles would also have to be assembled by workers earning at least $16 an hour. The theory here is that the wage floor would increase jobs in the United States and Canada, where wages are higher than in Mexico. To answer criticism that inflation will erode wage protection over a period of time, officials point out that the tax terms could be reviewed every six years.
United Steelworkers make a good point. The administration’s steel and aluminum tariffs have not been lifted as part of the deal. Commerce Secretary Wilbur Ross sees those as “separate issues.” But it should be noted that Senate Minority Leader Charles E. Schumer, D-N.Y., offered cautionary praise. He recounted how he voted against NAFTA and “opposed it for many years; I knew it needed fixing. The president deserves praise for taking large steps to improve it.” But he cautioned that “any final agreement must be judged on how it benefits and protects middle-class families and working people in our country.”
Anthony H. Gioia, who was a member of President George W. Bush’s International Trade Advisory Council from 2006 to 2008 wrote in an Oct. 4 Another Voice: “I was not an original Trump supporter, but I cannot be blind to the validity of his position on trade.”
Trump promised to address the North American Free Trade Agreement. He did just that, and although to mixed reviews, it offers some measure of relief, depending on how Congress responds. Counterparts in Mexico and Canada, also have to sign off on the deal.
Next up on the trade front: China.