What is NAFTA?
NAFTA was established in 1994 and created a free trade zone in North America by lifting tariffs on a majority of goods produced in the U.S., Mexico, and Canada. According to the U.S. Customs and Border Protection, NAFTA "calls for the gradual elimination, over a period of 15 years, of most remaining barriers to cross-border investment and to the movement of goods and services among the three countries." The agreement also encourages fair competition and protection of intellectual property rights. Even though there is free trade among these countries, they still have to abide by each other's laws regarding trade and the movement of goods. Since Trump's inauguration, he has supported modifying NAFTA in order to benefit the American people. For the full report of NAFTA and its regulations, visit the NAFTA Secretariat, a joint source between the U.S., Mexico and Canada that contains "information on the dispute settlement proceedings, legal texts and panel decisions and reports respecting the NAFTA." Also visit the Office of the U.S. Trade Representative for more material concerning the trade negotiations of NAFTA and the history behind this trilateral trade agreement.
What is this new trade agreement?
After a year of negotiations, the United States, Mexico, and Canada agreed to revise NAFTA. Even though the countries acknowledged the terms of the new agreement, it must pass through Congress. According to the Washington Post article, "U.S., Canada and Mexico just reached a sweeping new NAFTA deal. Here's what's in it," USMCA "won't go into effect right away. Most of the key provisions don't start until 2020 because leaders from the three countries have to sign it and then Congress and the legislatures in Canada and Mexico have to approve it, a process that is expected to take months." Initially, president Trump sought to eliminate NAFTA and just have a trade agreement with Mexico. This worried many companies that conducted business with Canada. However, Canada was eventually incorporated into the trade agreement.
The U.S.-Mexico-Canada Agreement (USMCA) is supposed to benefit American workers and consumers. The Washington Post article, "President Trump hails new USMCA Trade Deal with Mexico and Canada as historic news for our nation and indeed for the world," states that "fixing NAFTA means increasing the paychecks of American workers, delivering real, enforceable labor standards, ensuring fairness for American agriculture, and recognizing the connection between economic growth and environmental problems." Although, many changes have been made, there is still room for improvement. Environmental groups are dissatisfied with USMCA because they fear environmental issues will be made worse. These groups were not fans of NAFTA to begin with, because it encouraged companies to move their operations to Mexico, polluting the environment. Mexico has the most lenient laws concerning sustainability issues, and thus resulted in little monitoring of the effect businesses had on nature. Under USMCA, corporations will be limited to what environmental regulations they can override, except for the oil and gas industries. Many worry that this omission will allow these industries to take advantage of the regulations and abuse the environment.
What is the Office of the U.S. Trade Representative?
All of these agreements are under the Office of the U.S. Trade Representative which "negotiates directly with foreign governments to create trade agreements, to resolve disputes, and to participate in global trade policy organizations." The website provides information on various trade agreements, countries and regions in which the United States trades with, and issue areas regarding trade negotiations.
What changes are in the USMCA?
The new trade agreement enables U.S. manufacturers to compete globally, particularly domestic automotive companies. USMCA advocates for more car parts being manufactured in North America. The agreement also states that 30% of the work done on cars must be completed by an employee earning at least $16/hour. This is a significantly higher pay than Mexican automotive workers.
Canada had high tariffs on U.S. dairy products and restricted how much Canadian dairy farmers could produce, along with monitoring how much foreign dairy could be imported. Whitehouse.gov states that "Canada will eliminate its "Class 7" program that allows low-priced dairy ingredients to undersell American dairy products." The new trade agreement allows the U.S. a greater market share to the dairy farmers. The trade agreement is also suppose to benefit American farmers, ranchers, and agribusiness.
Lastly, the agreement is to be reviewed after six years to determine if any revisions want to be made. With fluctuating economies, it is paramount to analyze the agreement to ascertain that the treaty still provides economic advantages. The country holds its breath as we wait to see Congress' decision. The USMCA could be the next step in our future regarding international trade.
See the OSU Library for databases that can be used to find articles for research on these agreements.
~Emily Hancz
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