JAKARTA (TheInsiderStories) – United States (US) President Donald Trump signed a revised North American trade pact on Wednesday (01/29). The deal also known US – Mexico – Canada Agreement (USMCA) was created for years through negotiations between the three countries to replace the 1994 North American Free Trade Agreement (NAFTA).
Mexico has ratified the new agreement on Dec. 10, while Canada will follow suit in the coming weeks. As reported, Trump has been campaigning for a long time against NAFTA, which he says only makes a lot of US jobs taken by foreign workers.
For Trump, USMCA “colossal victory” matches the message of the “American First” campaign ahead of the battle in the upcoming November elections. While currently he is facing an impeachment trial.
“Two decades of politicians running to replace NAFTA. And today, we’re finally ending the NAFTA nightmare and signing into law the brand-new US – Mexico – Canada Agreement. Very special. Very, very special,” he told government officials, members of parliament, trade union representatives who gathered at the White House yesterday.
According to him, as quoted from an official statement, The USMCA is the largest, fairest, most balanced, and modern trade agreement ever achieved by America. The USMCA, he adds, is estimated to add another 1.2 percent to US’ GDP and create countless new American jobs.
Trump rated, After NAFTA’ adoption more than 25 years ago, US lost nearly one-fourth of all of its manufacturing jobs, including more than one in five vehicle manufacturing jobs. Then, he said, thousands of factories were shuttered, millions of manufacturing jobs were destroyed, and entire communities were devastated.
“It will grow annual exports to our neighbors by an estimated US$315 million. Poultry exports to Canada are expected to rise by at least 50 percent, and egg export could increase by 500 percent. Very importantly, Canada will finally give fair treatment to American-grown wheat,” the head of state claimed.
USMCA, Trump said, will give hopes that multilateral trade system remains the mainstay amid escalating trade war. This is a positive development for market, who are nervous with the escalation tit-for-tat trade tariffs between the US, China and the European Union.
He continued, the 24-year-old NAFTA was outdated and unbalanced, hurting American jobs and businesses. Many Americans have been hurt by closed factories, exported jobs, and broken political promises resulting from the old pact.
So far, NAFTA has contributed to US’ ballooning annual goods trade deficit, which grew from $115 billion in 1993, the year before NAFTA’s implementation, to nearly $800 billion in 2017. The US went from a $1.6 billion goods trade surplus with Mexico to a $70 billion goods trade deficit during that same time period.
Trump explained, the old NAFTA includes many outdated provisions that have not been updated to reflect modern standards, new technologies, or the 21st century global economy.
He continued, American auto manufacturers and workers will benefit from new rules of origin requiring 75 percent of auto content to be produced in North America. The new agreement also will incentivize billions of dollars in additional US vehicle and auto parts production, added by Trump.
Workers will also benefit from rules that will incentivize the use of high-wage manufacturing labor in the auto sector, supporting better jobs for American workers. Furthermore, he stated, Canada will eliminate its “Class 7” program that allows low-priced dairy ingredients to undersell American dairy products. And, Canada will provide new access for American dairy products, eggs, and poultry.
USMCA also contains the strongest measures on digital trade of any agreement. This includes rules to ensure data can be transferred cross-border and to minimize limits on where data can be stored.