Time for USMCA ratification

By Mike Kastner, NTEA managing director

This article was published in the July 2019 edition of NTEA News

The United States-Mexico-Canada Agreement (USMCA) — sometimes known as NAFTA 2.0 — was successfully negotiated between the three countries last year but awaits final ratification by each nation. Implementation would benefit North America’s work truck industry by helping create a stable and predictable trade and investment framework.

USMCA is a trilateral trade agreement signed by leaders of all three countries in September 2018. If ratified by each national legislature, it will supersede the North American Free Trade Agreement (NAFTA) that has been in force since January 1994. Until then, NAFTA remains the framework governing trade and investment in North America.

Each country began its respective legislative approval process in June.

While far from perfect, trade and investment in North America grew under NAFTA, but times have changed. The emergence of new technologies and industries, as well as codes, standards and practices, since 1994 means NAFTA became outdated in certain areas. USMCA modernizes NAFTA, reflecting best practices and new standards in the global trading system. The agreement shows the growing importance of new areas of business, such as e-commerce and the service economy. As the work truck industry continues to evolve and digital technologies play a greater role, we will be better served by a modernized trade agreement.

Additionally, the industry relies on free and open borders to facilitate legitimate movement of goods, services and labor. Many NTEA member companies have suppliers, customers or employees on both sides of the respective borders. Chapter 7 of USMCA (Customs and Trade Facilitation) contains provisions to reduce administrative delays in cross-border trade and minimize transaction costs. When sending goods across the border, time is money.

USMCA will also serve to strengthen regulatory cooperation between all three countries. Through its government relations offices in Washington, DC, and Ottawa, Ontario, NTEA works on behalf of members to engage officials on a regular basis and advocate for harmonized regulations affecting the industry. Given the high level of interconnectedness between the countries’ respective economies, enhanced regulatory cooperation is a benefit we hope to see through the new agreement. The chapter on Good Regulatory Practices aims to reduce unnecessary duplication of regulations, while preserving or enhancing national standards of public health, safety and environmental protection.

On May 17, 2019, President Trump announced a deal was reached to lift steel and aluminum tariffs on Canada and Mexico, which had always been opposed by NTEA. This is a positive step that helps bolster prospects for USMCA ratification. However, until the agreement is ratified, uncertainty hangs over the business community. When it was initially signed last year, all three leaders agreed it would strengthen the North American economic partnership. Thus, USMCA provides a stepping stone for North American firms to focus on how best to compete with the rest of the world, rather than each other.

For more legislative and regulatory information, visit ntea.com/advocacy.