Finalizing and passing the U.S.-Mexico-Canada Agreement (USMCA) will be a win for all parties. President Trump famously criticized NAFTA for not sufficiently protecting U.S. interests, which many Democrats had been saying for years. Now, Democratic lawmakers have the unique opportunity to create a new foundation for trade that will be a major step forward for the U.S. and two of our largest trade partners for years to come.
The reasons for finalizing the USMCA are clear. It is the best available vehicle for preserving a $22 trillion North American economy and modernizing provisions that impact labor, the environment, digital commerce, and red tape for small business. Any new trade deal, of course, must be approved by Congress, including the Democratic-controlled House. While the deal was negotiated without Democrats having a seat at the table, they are working diligently with U.S. Trade Representative Ambassador Robert Lighthizer and their counterparts in Mexico and Canada to strengthen the necessary provisions and ultimately get it passed.
Under current conditions, passing the USMCA is complicated to say the least. One can understand why Democrats are reluctant to give the president a win on trade. On the other hand, many Democrats still fear that the lack of a new trade deal could lead to Trump withdrawing from NAFTA and wreaking havoc on the North American market. That’s good for no one, especially when many trade-heavy congressional districts are represented by Democrats and 72 percent of Democrats believe NAFTA has generally been good for America, according to a Pew Research survey. Those factors were just part of the reason 14 House Democrats in July sent a letter to House Speaker Nancy Pelosi urging her to bring the USMCA to a vote by year’s end.
The other obstacles to Democratic support for USMCA? Some Democrats are worried about the lack of enforcement for key labor provisions and need assurances that U.S. trade enforcement is properly funded. This includes requirements that nations adopt core labor standards and prohibit importation of products made by forced and child labor. These concerns have led Ambassador Lighthizer on a mission to win over labor interests, notably the ALF-CIO. Democrats also maintain concerns over the USMCA’s environmental chapter that address air and water quality.
These concerns deserve to be scrutinized and resolved with the goal of getting USMCA passed as soon as possible. A recent Progressive Policy Institute (PPI) report pointed out that Canada is the #1 goods export market for 33 states, while Mexico is the top export destination for seven more, including California and Texas. U.S. exports to Canada and Mexico totaled $563.7 billion in 2018, outpacing combined exports to all other major trading partners, including China, Japan, and the United Kingdom. Over 120,000 American small and medium-sized enterprises export to Canada and Mexico.
But North American nations don’t just sell to one another; we make things together. In fact, a staggering half of America’s goods imports from Canada and Mexico are “intermediate goods” used in the production of final products by American workers in American factories. PPI’s report highlighted a good case study of this high degree of dependency is the beer industry. Mexico is the largest exporter of beer to the United States, accounting for 64 percent of U.S. beer imports by volume last year. Mexican brewers get about three-quarters of their barley and hops from American growers. As a result, workers at Union Pacific Railroad each day transport 100 carloads of beer from Mexico to U.S. markets.
PPI also noted that under NAFTA, the San Diego/Tijuana mega-region has become a $230 billion economy and is now the largest hub of medical device manufacturing in the world. Texas border cities have been transformed by free trade and more than half of all Kansas City regional exports are destined for Canada or Mexico. Many communities nationwide, including in my home state of Louisiana, depend heavily on open North American trade, a commerce superhighway that will only grow in importance if U.S. trade with China continues to sour.
Democrats are right to use their considerable leverage to assure that the USMCA achieves important goals. They should also recognize that signing a new trade deal offers a measure of stability and predictability that American businesses, communities, and workers — and Democrats — will gladly welcome. While there’s a tough road ahead, Speaker Pelosi and other Democratic leaders should work with the administration to resolve outstanding issues—especially the vital need for stronger enforcement—and, ultimately, get USMCA passed.
Charlie Melancon is a former Democratic member of Congress from Louisiana and former Louisiana Secretary of Wildlife and Fisheries.
Note to Readers: Issues & Insights is a new site launched by the seasoned journalists behind the legendary IBD Editorials page. Our mission is to use our decades of experience to provide timely, fact-based reporting and deeply informed analysis on the news of the day.
We’re doing this on a voluntary basis because we think our approach to commentary is sorely lacking both in today’s mainstream media and on the internet. If you like what you see, feel free to click the Tip Jar over on the right sidebar. And be sure to tell your friends!