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USMCA Free Trade Deal on Track for Ratification by U.S. in Early 2020

After more than a year of deadlock, the U.S.-Mexico-Canada Agreement (USMCA) has passed in the U.S. House of Representatives. The USMCA is a revamp of the North American Free Trade Agreement (NAFTA), which eliminated most tariffs and reduced other barriers to trade and investment between the three countries.

Under the first twenty years of NAFTA regional trade between the U.S., Mexico and Canada increased sharply from $290 billion dollars in 1993 to more than $1.1 trillion dollars in 2016.

After the three member nations signed the USCMA in November 2018, it was sent back to each country’s legislature for ratification, promptly stalling as U.S. Democrats with a majority in the House demanded changes before bringing it to the floor for a vote. After months of negotiations, last week House Democrats and U.S. President Trump reached a compromise. Democrats wanted better enforcement of labor standards, environmental protections, removal of 10-year intellectual property rights provisions for pharmaceutical companies and strengthening of dispute settlements that were ineffective under NAFTA.

 “We are so proud of the distance that we have come from where we started with the administration on this legislation,” said Congresswoman Nancy Pelosi. “This victory for America’s workers is one we take great pride in advancing.”

After initial excitement for the signing of the USMCA at the end of 2018, the delays in ratification caused a chill in manufacturing and international trade. Expansion plans were paused, victories and defeats in new or changing provisions littered the headlines on a daily basis, and industry groups vied to protect themselves in the new trade deal.

“Though the delays caused some international manufacturers to pause their expansion plans, we always knew it would ultimately have to move forward,” said Denisse Martinez, Marketing Director for Co-Production International, a binational firm who helps manufacturers set up manufacturing operations in Mexico. “Over the last twenty years our economies have become complimentary and collaborative; there’s just too much money on the table to keep delaying the USMCA,” she added.

The U.S. House of Representatives passed the new USMCA the week before Christmas and the U.S. Senate is expected to debate and vote on it at the end of January 2020. The new changes this week have the support of most Mexican senators and is expected to be ratified once it comes to the floor for a vote.

“It also strengthens cooperation for development and allows us to better address social problems, such as migration,” said Mexican President Andres Manuel Lopez Obrador. “By guaranteeing growth, employment and well-being in our most marginalized regions, we’re facing the migratory phenomenon in a different way.”

Canada also approved of the new changes agreed to by House Democrats and President Trump, though a vote has not been calendared in Canadian Parliament.

“Every single one of the changes is in Canada’s national interest—every single one,” said Chrystia Freeland, Deputy Prime Minister of Canada.

Sources: CNN, The Wall Street Journal, PBS, Council on Foreign Relations

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