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The USMCA: It's Trading Time!

Nick Englehart

Posted on December 11, 2019 16:01

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Wait, the new USMCA deal helps everyone? Here, I take an in-depth look into how that is possible.

Signed by the leaders of Canada, Mexico, and the United States, the USMCA trade bill is on its way to the halls of Congress. Surprisingly it looks like it’s going to pass, and pass quickly. Trump campaigned on a complete rewrite of NAFTA, but doing so would be likely to ruffle some feathers. The USMCA, however, has been well-received by members of both parties even trying to rush its passing. To understand how everyone is benefiting from the agreement politically, we have to dive deeper into the bill.

This bill isn’t anywhere near a complete rewrite of NAFTA: some experts are calling it NAFTA 2.0. The agreement increases some already existing rules in automobile manufacturing and Mexican labor practices. It reinforces intellectual property rights and extends their length of effect. It raises the price of dairy, and, according to Trade Chief Robert E. Lighthizer, will help to bring jobs back to the United States.

Here’s how Trump wins: It appeases many of the groups that will help in a re-election campaign. Pharma wins with intellectual property rights and a provision that offers an advanced class of drugs 10 years of protection, up from 7. He can claim it will help farmers, as both Mexico and Canada have agreed to pay more for U.S products. It will allow him to tell people he’s saved the automotive industry. Finally, these moves likely appease some of the 300 industry representatives that are scheduled to testify in opposition to Trump's proposed 25% tariff on Chinese goods.

Here’s how the Democrats win: Rob Portman remarked of the deal, “Taken as a whole, it looks more like an agreement that would’ve been negotiated under the Obama administration.” The party is arguing that this deal is more progressive than NAFTA and, possibly, the TTP. We also can't ignore impeachment. While this plays well in most Democratic districts, those in swing districts don’t benefit in the same way. Going into the 2020 election they will need something other than impeachment to run on.

It’s the same for moderate Republicans. Though Trump's base will always support him, a few Senators and members of the House require more than traditional support.

The USMCA is an example of some good old-fashioned politics: incremental change that leaves nobody happy and no one angry. Not to mention, Canadians will reportedly spend $411 more a year on groceries.

The USMCA is a deal that anyone can spin for themselves. It distracts from impeachment; it does the bare minimum to solve problems, and somehow leaks a little more power to the pharmaceutical sector. You can say how you helped bring manufacturing back to the U.S, or that you’re committed to bipartisanship in a time of great divisiveness. It’s a tabula rasa -- a blank slate -- and with it, every politician in D.C can write their campaign to victory any way they choose.

Nick Englehart

Posted on December 11, 2019 16:01

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Source: FOX Business

House Speaker Nancy Pelosi wants USMCA to be a "template for future trade agreements."

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