OBHOF: It’s Time To Ratify The Canada-Mexico Trade Agreement

Larry Obhof | President, Ohio Senate

President Trump has made good on one of his most significant campaign promises: to renegotiate the North American Free Trade Agreement (NAFTA) and replace it with a more balanced approach that is beneficial to both the United States and its trading partners. The new United States-Canada-Mexico Agreement (USMCA) modernizes our trade policy and makes key improvements over NAFTA, while maintaining the policies that were working. Congress should ratify USMCA as soon as possible.

USMCA would benefit all three countries involved. It will increase market access for U.S. goods, will lead to economic growth, and will create jobs in the U.S. These points aren’t seriously disputed by anyone.

Recent analysis shows that USMCA would increase both domestic GDP and employment. According to a report from the International Trade Commission, USMCA will add $68.2 billion to the U.S. economy. It will spur 176,000 new jobs, including 76,000 jobs in the U.S. auto industry. That is great news, particularly for states like my home state of Ohio. For years we have seen auto manufacturing jobs cut in working-class cities like Mansfield, Lorain, and much more recently, Lordstown.

So why isn’t Congress doing everything in its power to ratify USMCA now? It seems that partisan politics is getting in the way of good public policy. Perhaps some presidential candidates, including current members of Congress, think that criticizing Donald Trump is better than working with him to solve problems. But now is the time for real leadership. Instead of campaigning across the country talking about the auto industry, our Representatives can actually do something about it. They should demand a vote on USMCA and unleash its benefits for the U.S. economy.

USMCA has a lot of upside for both workers and employers. Updated “rules of origin” encourage the production of more goods in the U.S. USMCA strengthens labor standards and wages among our trading partners. The agreement provides for effective protection and enforcement of intellectual property rights. USMCA has an entire chapter dedicated to small and medium-sized enterprises (SMEs), so that small businesses can cut through red tape and tap into foreign markets.

These changes are significant. A few provisions are particularly worth highlighting because of the effect they will have on the domestic economy and, more specifically, U.S. manufacturing. USMCA’s updated rules of origin ensure that the benefits of trade flow to North American workers. For example, USMCA requires that 75 percent of auto content be made in North America. This encourages both investment in U.S. manufacturing and regional economic growth.    

These rules of origin, combined with better labor standards and higher wages in Mexico, will boost domestic jobs. In the auto industry, for example, USMCA requires that at least 40-45 percent of auto content be made by workers earning at least $16 per hour. This is good for workers in both countries. It raises wages and improves labor conditions in Mexico. It also helps U.S. workers by removing the wage-based incentive to outsource jobs. Indeed, these provisions are a major reason why USMCA will add 76,000 jobs to the U.S. auto industry. Those jobs will spark new life in Midwestern communities that have seen their manufacturing base dwindle in recent decades.  

USMCA is too important to fall victim to partisan games. It is time for congressional leaders to put people ahead of politics. It is time for Congress to ratify USMCA and let American workers thrive once more.

Larry Obhof (@LarryObhofis president of the Ohio Senate. He also serves on the Intergovernmental Policy Advisory Committee on Trade (IGPAC), which provides advice to the U.S. Trade Representative on trade and development issues that have a significant relationship to the affairs of state and local governments.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.

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