How the USMCA trade deal differs from NAFTA — and how it doesn’t

How the USMCA trade deal differs from NAFTA — and how it doesn’t


JUDY WOODRUFF: We were just talking about
the USMCA, as it’s called. Let’s break down this trade agreement further
and examine what was agreed to and what it means. Amna Nawaz has that part of the story for
us. REP. NANCY PELOSI (D-CA): It’s a victory for America’s
workers. AMNA NAWAZ: Today’s agreement would replace
the 25-year-old North American Free Trade Agreement first signed into law and hailed
by President Bill Clinton. BILL CLINTON, Former President of the United
States: NAFTA will tear down trade barriers between our three nations. It will create the world’s largest trade zone
and create 200,000 jobs in this country by 1995 alone. AMNA NAWAZ: Politicians and economists have
long debated NAFTA’s impact on economic growth and jobs in this country. But many workers, labor unions and political
leaders say the deal made it too easy for Mexico to lure manufacturing jobs and factories
out of the U.S. President Trump has long pledged to either get rid of NAFTA or substantially
rewrite it. It was a crucial promise of his campaign. DONALD TRUMP, President of the United States:
I’m going to renegotiate NAFTA, one of the worst trade deals ever signed in the history
of our country. (CHEERING AND APPLAUSE) AMNA NAWAZ: NAFTA won’t exactly be eliminated. Many of its provisions governing trade between
Mexico, Canada and the U.S. will still be intact. But the new deal has provisions aimed at increasing
manufacturing here. Specifically, a greater percentage of a car
and its components will have to be produced in North America, and by workers who get better
wages. The Trump administration, Democrats and labor
unions all say USMCA will provide tougher labor enforcement, including some inspections
in Mexican factories. It also includes a loss for the pharmaceutical
industry by stripping out a rule that would have protected expensive biological drugs
from generic competitors for 10 years. Meanwhile, today in Mexico City, U.S. trade
Representative Robert Lighthizer signed the deal with his Mexican and Canadian counterparts. ROBERT LIGHTHIZER, U.S. Trade Representative:
The result, I think, is the best trade agreement in history. AMNA NAWAZ: Mr. Trump has indicated he will
sign the USMCA once it is passed by Congress. For a closer look at some of the provisions
in this new deal and what their impact will be, I’m joined by Christopher Wilson, who
closely follows NAFTA and Mexico for the nonpartisan Wilson Center. Welcome to the “NewsHour.” CHRISTOPHER WILSON, Wilson Center: Thanks
a lot for having me. AMNA NAWAZ: So, let’s take a step back here. Some of the provisions from the previous NAFTA
deal do remain in this new deal. How substantially different is this new USMCA
from the old NAFTA? CHRISTOPHER WILSON, The Wilson Center: Yes,
I would say the new USMCA is really 90 percent NAFTA. And that’s actually the most important thing
here is that what happened is that this cloud of uncertainty about the future of NAFTA,
the possibility that the president might withdraw from NAFTA, goes away with the agreement around
the completion of the USMCA. That matters because companies have invested
billions of dollars in the creation of a North American system of manufacturing production. So we have now not just sort of regular trade
of finished goods happening between the United States, Mexico, and Canada. We’re actually building things together. And so all of those products, all of that
trillion dollars of trade was put at risk. Now investors, companies that are involved
in the trade can sort of breathe a sigh of relief and continue doing business. That said, there were, of course, some important
changes as well. AMNA NAWAZ: Important changes, important updates,
too. Why were those necessary? CHRISTOPHER WILSON: Well, that’s matter of
huge debate, whether those were necessary or not. And I think, in certain areas, different people
would sort of have different opinions. So, on labor, for example, the idea that there
was a need for changes to Mexican labor law, Mexico agreed to a major labor reform through
the USMCA, that, in my opinion, was absolutely necessary. Workers in Mexico were not well-represented
previously, are not currently well-represented, but under the new labor reform, they will
have real unions that represent the workers, instead of employer-dominated unions that
have probably artificially suppressed wages to a certain extent in Mexico previously. So, hopefully, that will change for the better
following this agreement. AMNA NAWAZ: There’s also been sort of a rebalancing,
right? There was this big push to try to bring back
those manufacturing jobs to the U.S., protect the wages here. Will this deal have a significant impact on
that front? CHRISTOPHER WILSON: I mean, I think the reality
is that most of those jobs in manufacturing that have been lost in the United States were
lost due to automation, technological change, robots on the factory floor, things like that. So we shouldn’t expect any major changes. I mean, the reality is, in my opinion, NAFTA
wasn’t the main problem there. So changes to NAFTA can’t solve that big problem. That said, there are some specific areas where
there are important changes. And the auto industry was one that was mentioned,
right? So there will now be rules that say, a larger
portion of what goes into an automobile needs to be made in — somewhere in North America. That’s going to bring some auto jobs back
to the United States. But it’s going to come at a cost, because
cars will be a little bit more expensive. And this is what the ITC, the International
Trade Commission, of the U.S. government found when they did a study on the change from NAFTA
to the USMCA. They said, there will be jobs gained and sort
of production gained in the U.S. auto industry, but there’s actually a larger loss in the
rest of the economy, because it takes money and new investments to meet these new rules. AMNA NAWAZ: So, we could see car prices go
up. I want to ask you, from the American farmer’s
perspective, because the auto industry gets a lot of attention when it comes to this. Mexico’s a huge purchaser when it comes to
American wheat. And barley farmers have had a lot of uncertainty,
not just with this deal, but also under the trade tariffs. What does this deal do for them? What does it give them today? CHRISTOPHER WILSON: Yes. And this is sort of back to that first message. It gives them back certainty about their market. And Canada and Mexico are incredibly important
markets for our agricultural community in the United States. There’s, of course, huge challenges right
now because of the trade war going on with China as well. Whenever there’s a trade war, agriculture
is the place in the United States that gets hit first. China will respond with tariffs on agriculture
in the United States. Mexico and Canada responded when there were
steel and aluminum tariffs being fought over last year with tariffs on U.S. agricultural
exports. And that’s because they’re politically sensitive. People know, other countries know that, if
they hit agriculture in the United States, it’s a way of exerting political influence
on Congress in the United States. And so this deal just gets us back to having
certainty. It also provides a little bit of new access
to the Canadian dairy market. There’s a few extra good things in there for
agriculture. But it gives them a platform on which they
can continue to do business. AMNA NAWAZ: And we mentioned the stripping
away of protection for drug companies against generic competitors. Does this mean prices could come down? CHRISTOPHER WILSON: Well, we will have to
see what happens in the future there, because the — what we have is, this is specifically
about biologic drugs, a specific set of sort of pretty expensive, cutting-edge types of
drugs generally. In the United States right now, there’s 12
years of intellectual property protection for those drugs. Under the USMCA before, there had been a commitment
to 10 years of protections for them. Democrats might like to lower that level from
12 years to something lower than 10 years, possibly in the future. And now, with the update to this, the agreement
that they just negotiated, they will be able to do that if they want to. But this is all going to depend on what happens
in the 2020 elections in the United States. But maybe sometime in the future, there will
be a change on that specific set of drugs. AMNA NAWAZ: Like a lot of things, it’s going
to depend on what happens in the 2020 election. CHRISTOPHER WILSON: Absolutely. AMNA NAWAZ: Christopher Wilson of the Mexico
Institute at the Wilson Center, thanks so much for being here. CHRISTOPHER WILSON: Thank you, Amna.

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