Rep. Michael McCaul: We can't afford to delay passage of USMCA trade deal
By Rep. Michael McCaul
July 8, 2019
President Trump gave his lawfully required 30-day notice that he intends to submit the United States-Mexico-Canada (USMCA) trade deal to Congress for ratification. This action brought us one step closer to implementing a strong trilateral agreement that will significantly improve commerce between our countries. Mexico has already ratified the deal and Canada is well on its way to doing so.
The USMCA modernizes and rebalances the 25-year-old North American Free Trade Agreement (NAFTA). Texas has been the biggest beneficiary of NAFTA in the U.S., accounting for almost a quarter of all NAFTA trade last year, including more than $120 billion in exports to Canada and Mexico. USMCA presents an opportunity to build on this success by bringing continental trade into the 21st century.
A recent report by the U.S. International Trade Commission (USITC) found that USMCA will generate tens of billions of dollars, bolster domestic employment by more than 175,000 jobs, and raise wages for American workers. It would also reduce the U.S. trade deficit with Mexico. The USMCA is expected to add 76,000 jobs to the U.S. automotive sector alone. In addition, USMCA will give American farmers greater access to the Mexican and Canadian markets.
Importantly, the agreement includes modern issues that NAFTA did not cover, such as digital trade — an area where Texas is a world leader. When Congress approved NAFTA in 1993, the prevalence of the Internet was so low in the United States that the Census Bureau didn’t even record statistics on usage. Today, almost 90 percent of Americans are online. When the USMCA is ratified, online commerce could grow further, helping to boost our economy and create more American jobs.
The USMCA also locks in historic reforms to Mexico’s energy sector, where NAFTA explicitly excluded foreign investment. Thanks to the USMCA, Texas companies will have long-term certainty to invest in Mexico’s oil, gas and power sectors. And after years of declining production and underinvestment, Mexico can benefit from American technology, experience and expertise to enable it to bolster output. This will deepen North American energy integration, enabling the U.S., Mexico and Canada to reduce our reliance on Middle East oil and other unstable sources of energy.
The agreement will raise standards in other areas, like intellectual property rights, labor and environment, agriculture, and automotives. These new standards don’t just matter for North American trade — our trade agreements become reference points for other trading blocs. As the Trump administration prepares to formally launch trade talks with other trading partners, such as the European Union, it is critical that Congress passes the USMCA to bolster the president’s negotiating position.
Democrats have raised concerns about Mexico’s labor market and drug prices, in what appears to be an attempt to delay passage of the deal. Here are the facts: under the agreement, Mexico is required to raise its labor standards, which will discourage U.S. companies from moving operations south of the Rio Grande. In fact, unlike NAFTA, the USMCA incorporated labor protections and agreements into the core text of the agreement. Under the USMCA, almost half of all auto content must be made by workers earning at least $16 per hour in order to receive duty-free treatment, which is more than three times higher than Mexico’s minimum wage. With regards to drug prices, the USITC did not find any impact on the cost of medicines due to the USMCA agreement.
China would love nothing more than for Congress to kill the USMCA and stall future trade agreements, so it can promote its own low standards and coercive economic agenda with other countries. The United States has a strategic interest in writing the future rules for trade that support U.S. competitiveness and opens markets to our goods, services and values. Passing the USMCA would kickstart a wave of bipartisan trade wins for the United States that would grow our economy and advance our interests and national security
McCaul is ranking member of the House Foreign Affairs Committee. He has served Texas's 10th district since 2005.