With little but bad economic news recently, Midwest farmers finally have something to cheer them.
So too do manufacturing plants and their workers, as well as all of the companies that rely on trade to buoy their bottom lines.
That’s because House Democrats and the White House announced recently they had made a deal to replace NAFTA, passed in 1994, with the United States-Mexico-Canada Agreement, which is expected to be signed into law soon.
That the bipartisan agreement has come amid impeachment proceedings and a sharply divided government is somewhat surprising. But there were plenty of reasons for both sides in Washington to get the pact in place. No one wanted to go into this fall’s campaign season with a key trade agreement with our neighbors left undone, and lawmakers on both sides of the aisle know the deal will benefit the economy and their constituents.
As with any trade deal there are parts not to like in USMCA. But there is much more to like.
And one problematic provision in the original draft of USMCA was fortunately removed in final negotiations. American drug companies had originally gotten a provision inserted that would allow them to keep patents on certain drugs they sell to Mexico and Canada for 10 years, something that would have increased drug prices. Removal of the provision is a win for consumers and a rare loss for big pharma.
Democrats also were able to include more environmental and worker protections in the final agreement.
USMCA, also signed by Mexico’s then-President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau, isn’t the “most significant” trade deal in history as President Donald Trump claimed. But its impact will be large.
The independent International Trade Commission last spring determined the benefits of having USMCA in place will be felt broadly in the United States.
The commission estimates USMCA will raise U.S. real GDP by $68 billion and U.S. employment by 176,000 jobs.
American exports to Canada and Mexico will increase by $19 billion and $14 billion respectively. And U.S. imports from Canada and Mexico should increase by about the same amount — a win for all three countries.
Midwest farmers, manufacturers and consumers still face the most serious economic hardship from the ongoing trade war and tariffs with China. But having an agreement in place with our large trading partners on the boarders brings some stability and will boost the economy.