Sarah Chamberlain | One Year Later, It’s Time To Vote On USMCA

by Sarah Chamberlain

Remember Aesop’s fable about the grasshopper and the ant? While the ant worked hard to store food, the grasshopper sang and played, believing the current time of plenty would still be there in the future. While our economy enjoys a year of low unemployment, low energy prices, slight inflation, record setting stock markets, and corresponding growth in retirement portfolios, we may be tempted like the grasshopper to think this plentiful trend will continue forever. But it won’t. Even in times of plenty, the thoughtful person (and the ant) should always have an eye on preparing for a not so plentiful future.

Congress is behaving like the grasshopper now, spending its time gleefully dancing and singing partisan political songs. In the meantime, the people wish they were preparing for a future to stave off any crisis. Over the past few months manufacturing numbers in some sectors have flattened out. This is the time to be passing legislation to strengthen manufacturing. Watching any news, however, you would think the only thing that mattered inside the beltway is vicious partisan warfare.

The US Canada Mexico Trade Agreement (USMCA) is now coming up on its one-year anniversary. But so far Congress has failed to act on it. The North America Free Trade Agreement is over 25 years old, and needs to be updated. That is where Congress should be working. NAFTA was negotiated by President George HW Bush and implemented by President Bill Clinton. It received bipartisan support in the democratically controlled Senate and House when passed in 1993. NAFTA has its share of supporters and detractors since. Supporters say it increased US trade, created five million US jobs and increased wages. Other benefits included protection of intellectual property, opening up Mexico for US small business opportunities, and several trillion dollars in increased US trade.

NAFTA detractors claim, however, manufacturing jobs were lost in the US, particularly in the automotive industries, US wages were stifled as companies “threatened” to move to Mexico, and immigration increased as Mexican workers crossed the border in search of better USA wages. At the time, Mexican workers were viewed as suppressing US wages as they were willing to take US jobs in construction, manufacturing and agriculture at lower levels than US workers, because even those lower wages were preferable to Mexican wages. While automotive sector jobs did grow in Mexico, many US automotive jobs were actually replaced by automation, while imported parts from China grew.

In the quarter century since NAFTA, the world has changed. China now is the largest manufacturer in the world. The lower costs of Chinese made goods have made it necessary for many US companies to close domestic manufacturing further eroding US jobs. European nations now are joining together to negotiate their own trade agreements, with the increased clout of their multi country strength. Immigration from Mexico and Central America into the USA continues to rise as workers seek better paying jobs. Several areas of trade agreements are out of date including intellectual property protection, tariffs and markets across the US, Mexico and Canada. Keeping NAFTA as is, does not meet the demands of the current global economy.

Click here to read Sarah Chamberlain's entire article on Forbes.Com