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PPI Statement on NAFTA Reform Announcement

  • October 2, 2018
  • Ed Gerwin

“President Trump has called the new USMCA ‘the most important trade deal that we’ve ever made, by far.’ To the extent that the Administration is backing away from Trump’s earlier threats to blow up or emasculate NAFTA, that may be true. To the extent that the USMCA is largely an elaborate rebranding exercise, it seems that the Administration could have accomplished that—and usefully modernized NAFTA—without repeatedly threatening the very foundations of North American trade.

“At first glance, the USMCA hardly seems groundbreaking. It would modernize NAFTA by adding provisions derived from the Trans Pacific Partnership deal that the President abandoned, and would increase U.S. access to Canada’s dairy sector. But it’s far from clear whether its highly complex rules of origin for autos and other sectors would have the transformative economic effects that the Administration claims.

“It’s noteworthy that the new agreement doesn’t eliminate U.S. ‘national security’ tariffs on aluminum and steel from Canada or Mexico—or the retaliatory tariffs that those countries continue to impose on American manufacturers and farmers. And the Agreement’s reliance on the threat of ‘national security’ tariffs on Canadian and Mexican cars is a particular concern. As it reviews the new deal, Congress needs to push back against these and other abusive efforts by the Administration to restrict trade and hijack trade powers that are vested by the Constitution in Congress.”

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