[CTC] Democrats unmoved on NAFTA after USITC report

Fri Apr 19 08:24:58 PDT 2019

Democrats unmoved on USCMA after ITC projects moderate economic gains 

Inside US Trade, 4/18/2019

Following the release of the U.S. International Trade Commission's report on the economic impact of the U.S.-Mexico-Canada Agreement, Democratic lawmakers said the findings did little to alleviate their concerns with the pact.

The ITC on Thursday said if USMCA was fully implemented, the deal would result in a small but positive impact <https://insidetrade.com/node/166292> on U.S. gross domestic product over six years. The Commission’s findings “validate President Trump’s action to withdraw from [the Trans-Pacific Partnership] and renegotiate the disastrous” North American Free Trade Agreement, U.S. Trade Representative Robert Lighthizer said in a statement.

But Senate Finance Committee ranking member Ron Wyden (D-OR) said the report did not project enough economic benefits to satisfy Democrats as they weigh whether to vote for the deal.

“This report confirms what has been clear since this deal was announced – Donald Trump’s NAFTA represents at best a minor update to NAFTA, which will offer only limited benefits to U.S. workers,” Wyden said. “As I’ve said for months, the administration shouldn’t squander the opportunity to lock in real, enforceable labor standards in Mexico and fix the enforcement problems that have plagued NAFTA.”

Before the release of the report, Senate Finance Chairman Chuck Grassley (R-IA) told reporters on Thursday he did not expect the findings to move the needle in Congress, where Democratic support for the pact hinges on various issues, including the enforceability of labor and environmental provisions.

House Ways & Means Committee Chairman Richard Neal (D-MA), citing the ITC's analysis of the labor, environment, enforcement and intellectual property portions in USMCA, said he remained “concerned that these portions of the renegotiated deal are not yet acceptable.”

Neal said it was notable “that the Commission consistently highlights the inclusion of enforcement provisions as the key factor in determining whether labor standards and rights will actually be strengthened in Mexico” and added that he would “continue looking into this report – and any other reports from the Administration on the economic effects of the agreement – with my colleagues in the coming days and weeks.”

Ways & Means trade subcommittee chairman Earl Blumenauer (D-OR) said “Before the release of the ITC report, I believed that the renegotiated NAFTA, as written, needed to be improved before House consideration. Nothing in this report alleviates those concerns.”

“The House requires stronger provisions on labor, the environment, access to medicine and enforcement,” Blumenauer said. “I will continue to work with the committee and Ambassador Lighthizer to address these shortcomings so we get this right.”

On Democrats’ labor concerns, a senior USTR official told reporters on Thursday, “I personally negotiated hard for these provisions so we want to have them be fully enforced.”

Asked how enforceability would be achieved, the official said, “That’s something we’re going to work out with the Congress once we get to the point of working on the implementing legislation with them.” The official added that “we are not going to re-open the agreement; it’s just not something that is possible at this time.”

Grassley had previously suggested <https://insidetrade.com/node/166244> the ITC might not assess novel provisions of the deal, but following its release, Grassley said he was “glad to see the report recognized USMCA’s new economic benefits” and noted that “This is the first time the ITC has analyzed a renegotiated trade deal, let alone one of this size.”

“The USMCA makes critical updates to rules on intellectual property, currency practices, digital trade, customs, state-owned enterprises, sanitary and phytosanitary measures and technical barriers to trade that will be valuable to many American farmers and businesses, even though their impact on GDP has historically been inherently difficult for economists to measure,” Grassley said in a statement.

Grassley added that he would conduct “a thorough and thoughtful review of this and other studies of the economic impact of USMCA in the coming days and will be briefed by ITC officials early next week.”

While the ITC projected that USMCA would boost U.S. GDP by $68.2 billion, add about 176,000 jobs and modestly increase U.S. exports to Canada and Mexico over six years, the Peterson Institute’s Chad Bown said the report relied on reductions in trade uncertainty that might not come to fruition.

“Take, for example, the ITC's analysis of the controversial new auto rules of origin (ROO) requirements. They are estimated to be on net negative for the US economy, resulting in higher costs and prices to consumers that more than offset benefits to auto workers,” Bown said in a tweet <https://twitter.com/ChadBown/status/1118962738536042497>. “But it is important to interpret the USMCA provisions and these results correctly. Much of the gains do not arise through overall improvements to the ‘goods’ side of the economy. Indeed, for autos, there is expected to be a net cost to the U.S. economy of Trump's approach.”

“The gains arise through reductions in policy uncertainty and are largely in non-tariff barriers and services trade,” Bown concludes.

But Brian Kuehl, director of the non-partisan agriculture commodity group Farmers for Free Trade, said “The true benefit that USMCA delivers for American farmers is certainty and stability. Especially right now, American farmers need a victory. USMCA will guarantee that their most important export markets remain open for business and free from red tape.”

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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