The U.S. Senate on Thursday (Jan. 16) voted to approve the U.S.-Mexico-Canada Trade Agreement (USMCA), which sends the far-reaching new trade rules to President Donald Trump for his signature. The USMCA will replace the more than 25-year old North American Free Trade Agreement (NAFTA).
With a few exceptions related primarily to the environment and labor issues, replacing NAFTA has been supported by most members of both parties. The 89-10 vote in the Senate follows a 385-41 vote held mid-December in the U.S. House of Representatives.
Canada and Mexico are Arkansas’ and the United States’ two largest agricultural trading partners, totaling a combined $40 billion in 2018. The new deal is estimated to boost U.S. GDP by $70 billion a year, and add 800,000 jobs on the U.S. economy.
In Arkansas, the USMCA will support $2.1 billion in exports shipped from Arkansas to Canada and Mexico every year, open Canada’s market to sell dairy, wheat, chicken, eggs, and turkey from Arkansas farmers, modernize intellectual property (IP) protections; and ensure tariff-free trade for Arkansas manufacturers which could have faced up to $225 million in extra taxes without USMCA.
The USMCA also includes a 16-year expiration date and a provision that requires a review of the deal every six years, when it can be extended. It further updates the dispute settlement process. NAFTA’s dispute-settlement system, which allows member countries to bring grievances against other members over allegations of unfair trading practices, will remain the same. (Link here for more details about provisions in the new agreement.)
U.S. Sen. John Boozman, R-Ark., said the new trade deal will support 120,000 Arkansas jobs.
“Passage of USMCA ensures Arkansas agricultural producers, manufacturers and small businesses have a level playing field to compete in the global market. This deal with our state’s top two trading partners will support economic growth, enhance market access, create jobs and increase economic opportunity. For too long, Arkansans have asked Congress to act on this modernized trade deal. Fortunately, the Senate worked promptly to move this historic agreement through to the finish line. I’m pleased we are able to deliver this economic accomplishment for hardworking Americans,” Boozman said in a statement.
Melvin Torres, director of Western Hemisphere trade at World Trade Center Arkansas, also praised the deal that now awaits the president’s signature.
“After 26 years of consistent growth in exports from Arkansas to Canada and Mexico, long-term statistical data has shown that this more modern trade agreement will exceedingly propel the state’s economy through our two largest export partners,” Torres said. “This strong symbiotic relationship with both countries is fostered by true partnership, which correlates with quantitative trends showing exports to both markets will continue growing for Arkansas through updates on the new United States-Mexico-Canada Agreement.”
Torres also said Arkansas stands to benefit from the deal because “quantifiable trends” show that Arkansas farmers and businesses export more to Canada and Mexico than the state imports.
Rich Hillman, president of the Arkansas Farm Bureau, said agriculture provides more than $20 billion annually to Arkansas’ gross state product, with roughly one-third of Arkansas agri products entering the export market.
“It’s about time we have this agreement ratified,” Hillman said. “Passage of USMCA will help stabilize the marketplace and will allow the United States to focus efforts on other important trade agreements around the world. … On the heels of the U.S-China trade agreement signed on Wednesday, this marks consecutive agreements that will benefit Arkansas farmers and ranchers.”