NAFTA Trade Deal

Utah Business

NAFTA Trade Deal

New NAFTA Deal Would Bring Stability And Security To Utah Businesses

Several months have passed since President Donald Trump, Canadian Prime Minister Justin Trudeau, and now former Mexican President Enrique Pena Nieto met in Buenos Aires on the sidelines of the Group of 20 Summit to sign a new trade deal. This new agreement―the United States-Mexico-Canada Agreement (USMCA)―would replace the quarter-century-old NAFTA pact, and seeks to bring North American trade into the 21st century.

While it seemed that after months of difficult negotiations we were finally on a path toward a new deal, alarm bells are ringing yet again. Time may be running out for Congress to act on the new North American trade pact before President Trump follows through with his threats to nix NAFTA.

Dismantling NAFTA without passing a revised trade agreement would have devastating impacts on US businesses and the nation’s economy. Thirty-nine US states count Canada or Mexico as their top trading partner, and Utah is no exception. As an export state, Utah’s thriving economy is directly tied to our ability to export what we make, grow, and build. And for years, some of our greatest export partners have been our neighbors to the north and south.

In 2017, Utah exported nearly $1.9 billion in goods to Canada and Mexico. Those numbers, while still being finalized, appear to have increased to over $2.3 billion in 2018. This revenue from abroad also translates into jobs here at home. The latest numbers show trade with NAFTA members supported over 121,000 Utah jobs in 2015. In other words, we need a trade deal in place—whether that’s a new NAFTA or the old NAFTA. There just can’t be no NAFTA.

The original three-nation NAFTA agreement took effect in 1994. By easing trade between 450 million people in three countries, NAFTA resulted in more than $1 trillion in trade annually. Nixing NAFTA without another trade deal in place would jeopardize 1.8 million American jobs. Here in Utah, it would hurt manufacturers, farmers, and the 3,500 other businesses that currently export with Canada and Mexico. It would hit Utah’s economy especially hard because the companies most at risk of higher tariffs are those that produce the states highest exports, including building materials, transportation equipment, and agriculture.

By ratifying the new USMCA pact, we would not only protect our thriving export economy, but we’d get to keep the best of NAFTA while updating it to meet our 21st century needs. Under the new USMCA deal, there is a slew of new rules for strong intellectual property protections and digital trade provisions. Unlike NAFTA, USMCA would work to prevent currency manipulation and would have a sunset clause. If agreed to, USMCA would take effect in 2020,  expire in 2036, and would be reviewed every six years.

USMCA also calls for higher wages for autoworkers. If agreed to, starting in 2020, 30 percent of vehicle production must be done by workers who make at least $16 an hour. That’s about three times the average pay Mexican autoworkers currently make. In 2023, the vehicle production percentage of workers making $16 an hour would increase to 40 percent, which has the potential to result in job production moving from Mexico to the US. The new deal also increases the portion of a car that needs to be produced in the US to 75 percent, in order to avoid tariffs.

Lifting tariffs is another major reason why the USCMA agreement should be ratified sooner rather than later. the tariffs on steel and aluminum imports from Canada and Mexico are supposed to end once USMCA is signed. These tariffs have been a massive hit to our economy, resulting in $15 billion in counter-tariffs on US agricultural and manufactured goods. According to the US Chamber of Commerce, every week that the tariffs remain in place, $500 million in US imports and exports are affected.

Free trade drives economic growth. It increases innovation, enhances efficiency, and creates a greater degree of fairness because it sets the rules of the game. That is especially important to small businesses that don’t have the time, or resources, to negotiate deals on their own. USCMA is by no means perfect, but look what we’re facing to lose without it.