North America Should Use USMCA Trade Agreement To Exert Influence In The World
The United States-Mexico-Canada Agreement celebrated its first anniversary on July 7 with joint ministerial meetings in Mexico City. It’s hard to believe that just under four years ago, the formal renegotiation of the North American Free Trade Agreement began in Washington amid a dark cloud of uncertainty over the future of a 25-year partnership that has had a transformational impact on the region’s global manufacturing, trade and investment footprint.
Just as the successful conclusion of the torturous negotiations was a much needed boost for those struggling for rules-based international trade and to preserve the gains made through NAFTA, last week’s reaffirmation of the political commitment of the United States. three governments to the USMCA implementation is good news for both North America’s immediate post-pandemic economic recovery and for its competitiveness and long-term growth.
In their joint statement, the three senior trade officials recognized North America’s position as the world’s most dynamic economic bloc and pledged to work together to strengthen regional supply chains.
US Trade Representative Katherine Tai’s message to her meetings in Mexico highlighted the innovative elements of the USMCA that were absent from NAFTA and resonated most with its detractors. They include provisions relating to labor, the environment and intellectual property; stronger dispute settlement mechanism; and a more inclusive approach vis-à-vis stakeholders who can derive greater benefits from the agreement, such as small and medium-sized enterprises (SMEs).
Texas is a North American trade heavyweight and a microcosm of the promises and perils of the USMCA. According to US Commerce Online figures, in 2019, the state was the country’s top exporter and second-largest importer. Mexico and Canada are Texas’ two largest export markets, and in 2016 SMEs accounted for 43% of its exports. With the 8% increase in the volume of world merchandise trade forecast for 2021 by the World Trade Organization in a recent annual report, Texas has a lot to gain from the swift implementation of the new USMCA provisions in e-commerce, customs and trade facilitation.
As a major exporter of energy and agri-food products, Texas also has a vested interest in the credibility of an agreement that addresses current and future differences between the three countries, including those related to concerns about the country’s energy policies. Mexico or access to the Canadian dairy market.
The implementation and management of the agreement should naturally attract the attention of the three governments. When NAFTA was threatened, they had to scramble to form coalitions of stakeholders in Washington and across the country to support its survival and meaningful modernization. With the USMCA, it is important to apply lessons learned, taking into account its initial 16-year lifespan, subject to joint review on the sixth anniversary of its entry into force. Tai is keenly aware of this challenge, given her experience as chief counsel for the House Ways and Means Committee and as a key player in securing strong bipartisan support in Congress as well as labor and business. .
Beyond these immediate tasks, the agreement also presents a unique opportunity for Canada, Mexico and the United States to act strategically by engaging in a larger geopolitical playing field, together and as as partners, to build a strong North American discourse on high and inclusive standards. commercial agreements.
This effort could include initiatives such as coordinated joint sensitization in Asia and Europe to attract productive investment in priority manufacturing sectors. This could include a dialogue with our Central American neighbors on how their trade agreements can converge with the North American framework to support much-needed economic development. And awareness could spread to Africa, with technical support and an exchange of best practices as the continent prepares to implement its recently established African Continental Free Trade Area.
As the world regains its post-pandemic balance, effective management of the inevitable frictions that can arise from a complex trillion-dollar trade relationship and a coordinated strategic approach to fostering the competitiveness of the North American economy can offer tangible benefits to the three companies. . At the same time, it could strengthen North America’s global position by sending a powerful message about inclusion and sustainability through the exemplary power of the USMCA. This is an opportunity that should not be missed.
Julián Ventura was Mexico’s Assistant Secretary for External Affairs from December 2018 to January 2021. He wrote this column for The Dallas Morning News.
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