If you’ve been on a rural highway in the Midwest lately, you possibly have seen a 25-foot RV with the logo “Farmers for Free Trade,” along with #MotorcadeForTrade and a number to text members of Congress to urge passage of the United States-Mexico-Canada Agreement.
The RV, which started in Pennsylvania on its way to Fair Oaks, Indiana; Woodstock, Illinois; and La Crosse, Wisconsin and points west, is a reminder that free trade is important to our region – and that the USMCA deserves congressional action. Representatives of Farmers for Free Trade, a bipartisan group, are meeting with farmers, elected officials and others to mobilize support for the accord.
The USMCA would replace the North American Free Trade Agreement, the 1994 deal that removed most tariffs and other trade barriers between the three countries. NAFTA was a major achievement, but in need of updating, because the world has changed a lot since the days before smartphones, Netflix and autonomous vehicles. President Donald Trump was determined to get some big changes in what he reviled as “perhaps the worst trade deal ever made.”
The negotiations with Mexico and Canada bore fruit last year in a new pact that made mostly small changes. Trump, with his usual exaggeration, called it “the largest, most significant, modern, and balanced trade agreement in history.” It’s not, but it does represent progress. Congress, however, has shown no eagerness to approve it.
Maybe a new analysis by the International Trade Commission, an independent federal body, will prod lawmakers into cooperating. Its 379-page report concluded that, “if fully implemented and enforced, the USMCA would have a positive impact on U.S. real gross domestic product and employment” – encompassing “all broad industry sectors within the U.S. economy.” Specifically, it estimated the deal would boost GDP by $68.2 billion and add 176,000 jobs.
These are not large numbers in a $20 trillion economy that lately has been creating an average of 180,000 jobs per month. But the accord makes some welcome changes. It strengthens protections for intellectual property, modernizes rules on digital trade, makes it easier for U.S. dairy, poultry and egg farmers to ship to the Canadian market and facilitates access in both Mexico and Canada for U.S. services, including broadcasting, telecommunications and commercial banking.
The deal has its flaws. New rules on domestic content and wages in the auto sector, the ITC notes, could mean more jobs in the U.S. auto industry but higher prices for consumers. The Peterson Institute for International Economics laments “costly new regulations and requirements that discourage investment, especially in the auto sector.” But the ITC analysis indicates the good outweighs the bad.
Midwestern farmers are among those who stand to gain, as the motorcade is meant to publicize. Since NAFTA came into force, U.S. agricultural exports to Mexico and Canada have quadrupled. Mexico is the biggest market for U.S. corn and the second biggest for soybeans – crops that are mainstays of the Illinois farm economy. Our farmers also sell a lot of beef and pork there.
In all, Mexico and Canada purchase $2.8 billion worth of agricultural products from Illinois. The new accord is valuable mostly because it preserves the duty-free commerce that has been so good for American farmers.
But the progress the USMCA ensures won’t occur unless Congress acts. Doing nothing is not a better option. Adam Nielsen, national legislative director of the Illinois Farm Bureau, worries that if USMCA goes nowhere on Capitol Hill, the president might elect to withdraw from NAFTA. That would not be good for Midwestern farmers – or the American economy.
NAFTA was a valuable change in the U.S. trade order. USMCA would be better yet. Congress should waste no more time pursuing the benefits it offers. Members, pass this legislation.