The US Senate approved the new United States-Mexico-Canada Agreement or USMCA that is set to replace the North American Free Trade Agreement. The USCMA is now waiting to be signed by President Donald Trump after getting an overwhelming vote of 89-10.
Under the USMCA, farmers in the U.S. will have a better means of buying Canadian dairy products. At the same time, the agreement strictly requires cars to have at least 40% of the parts made in facilities where workers are paid at a minimum of $16 an hour. The USMCA also clarify grey areas on digital trade and copyright rules.
Proponents of the USMCA said the new deal could boost economic growth and employment. For instance, the U.S. International Trade Commission could increase GDP by 0.35% and can open new jobs to as many as 176,000.
To compare, the AFL-CIO union federation said about 851,700 U.S. jobs were lost when NAFTA was in effect. The union represents an estimated 12.5 million workers across the U.S.
More so, the US goods trade deficit with Mexico was $80.7 billion in 2018 from the $1.7 billion surpluses in 1993. The trade surplus ballooned in the time when trade was governed by NAFTA.
Officials from respective countries have been going back and forths about the USMCA for more than 14 months now. The Trump administration banner-issue was that NAFTA failed in acceptable labor and environmental standards. The proponents of the new USMCA seemed to have chosen the right argument because this was also the aspect that won them the majority vote from the Senate.
The problem now is that the signing of the USMCA conflicts with the start of Trump's impeachment trial next week. The House has already filed an impeachment case on Trump on allegations of abuse of power and obstruction of Congress. The impeachment may take months and nothing is clear yet at this point on how it could affect the USMCA approval.
In the instant that Trump signed the new deal ahead of his impeachment, the business sector will then await Canada's approval since USMCA is a three-nation deal. The problem is that Canada's parliament will return to session on January 27.
Nevertheless, observers said USMCA has little to no objections from Canadian officials.
Meanwhile, Mexican President Andres Manual Lopez Obrador received news about the USMCA passing with optimism. He said the development is good news for the Mexican economy and he looks forward to starting new investments with Canada and the US.
