Q: How will USMCA improve trade between the United States, Mexico and Canada?
A: The updated trilateral trade agreement between our three countries modernizes the North American Free Trade Agreement (NAFTA) that for 24 years has governed cross border trade and investment between the United States and our northern and southern neighbors. NAFTA established a landmark framework to resolve trade disputes and expand market access for goods and services, particularly agriculture, textiles and manufacturing among the three countries.
Since its adoption in 1994, NAFTA has accelerated integration and growth among our three economies. In fact, U.S. exports to Canada and Mexico account for one-third of America’s international trade and U.S. workers earn more from export-related jobs. President Trump campaigned on a promise that America could do better. For the last year, the Trump administration has worked to secure a better deal that would protect intellectual property, restore America’s manufacturing jobs, tear down non-tariff trade barriers for American agriculture and grow U.S. wages.
Despite widespread skepticism, the Trump administration has successfully renegotiated two international trade agreements. The re-named United States-Mexico-Canada Agreement (USMCA) creates new rules of origin standards for the auto industry, expands access to Canada’s tightly regulated dairy market, applies stronger protections for intellectual property (IP) rights and adds digital commerce measures. Specifically, USMCA requires 75 percent of each vehicle to originate in the member countries, a 12.5 percent increase from NAFTA, to qualify for zero tariffs. It also requires at least 40 percent of auto parts must come from factories that pay on average $16/hour by 2023. And new IP provisions expand patent and trademark protections for biotech and financial services. It also increases copyright protections to 75 years. The USMCA requires a review every six years, with a 16-year sunset clause that would require the three countries to adopt a new agreement at that time. The USMCA requires ratification by all three governments. The U.S. Congress has 60 days to consider and vote up or down on the USMCA.
Q: What does the USMCA
mean for Iowa?
A: As a member of the Senate Finance Committee, I will be taking a deep dive into the details of this agreement over the next few months. At first glance, the USMCA strengthens a vital economic bloc in the Western Hemisphere that encompasses more than $1.2 trillion worth of trade. Iowa’s economy is export-dependent and this agreement will expand market access for our dairy, eggs and poultry producers. Notably, it addresses trade distorting practices that have long protected dairy producers in Canada. These concessions will open new markets for U.S. dairy farmers and processors.
The trade agreement also provides a dose of certainty for farm country in the middle of harvest season. During my county meetings across the state, I hear a lot of uncertainty from Iowans concerned about low commodity prices and retaliatory tariffs on American agriculture. President Trump’s ability to secure this trilateral trade agreement will help quell some of the anxiety in Rural America. It shows the president is able to deliver on his promises. As an advocate for free and fair trade, I will continue supporting trade agreements that lower trade barriers and deliver the promise of prosperity and opportunity for U.S. farmers, workers and job creators.
I want to enable more consumers around the world to buy Iowa’s homegrown eggs, pork, beef, corn and soybeans; Iowa-manufactured equipment; and other goods and services. The free marketplace unleashes competition to deliver the best products and innovation at the lowest price for consumers. Since World War II, this economic principle has helped reduce poverty and raise living standards around the world. USMCA is a good step in the right direction. It also sends a signal to the rest of the world. As the world’s largest economy, America stands ready to do business and negotiate trade agreements that create mutual economic growth and a level playing field that ensures our trading partners play by the rules to honor the integrity of U.S. intellectual property and trade secrets.