Congress should ratify ‘revolutionary' free trade agreement
Washington, DC, July 10, 2019
In 1994, the North American Free Trade Agreement, or NAFTA, went into effect, becoming one of the world’s most comprehensive free trade agreements. The document dictated how the United States would trade with our neighbor to the north, Canada, and the south, Mexico.
The world has changed a lot since 1994, and after 25 years, we’ve seen rapid technological advancement and a changing global economy. It’s time our trade agreement matched our modern world.
In late 2018, leadership of the United States, Canada and Mexico announced an agreement to update NAFTA — the U.S.-Mexico-Canada trade agreement, or USMCA. This modern trade agreement is aimed to protect the American innovative spirit, our farmers, factory workers and small business owners where NAFTA may have come up short.
Having a free and fair trade agreement between two of America’s top three trade partners is crucial, and it’s time for Congress to ratify the USMCA.
Canada and Mexico have long been America’s top trading partners, and more importantly Mexico and Canada are Texas’ top trading partners, exchanging billions of dollars in goods back and forth across our borders. Our partnership with Mexico and Canada has a rich history and is vital to the success of all three nations, and to Texas.
The USMCA agreement seeks to bring our trade into the 21st century and give yet another boost to America’s already blossoming economy.
Currently, trade with Mexico and Canada supports 12 million American jobs. The USMCA would add another 176,000 jobs and over $68 billion in new economic growth. The agreement will deliver key economic wins in the auto manufacturing, agricultural and digital commerce industry, which are crucial to Texas’ economy.
The auto industry is a fundamental pillar of our nation and state’s economies. In fact, Texas ranks sixth in the nation in auto manufacturing and second in value of auto industry exports.
Under NAFTA, automakers were required to use 62.5% of American parts in vehicles to be imported tax free. The updated USMCA will gradually require at least 75% of all parts to originate in the United States for imports to be duty free. This update will incentivize the use of American made products in vehicles, ensuring steady American jobs and demand.
Ultimately, five years after ratification, the USMCA will add $34 billion in new auto manufacturing investment in America and add 76,000 American auto jobs. But the auto industry isn’t the only beneficiary of the USMCA.
The agriculture industry will also see a boost. With about one in seven Texans employed in an agricultural job, and one-third of all U.S. agricultural exports going to Mexico or Canada, the USMCA will reduce trade barriers that are currently stifling American farmers and ranchers. Under NAFTA, Canada restricts imports on U.S. products to protect domestic producers, but the USMCA will reduce these trade barriers to allow U.S. agriculture to fairly compete.
Here in the Austin area, tech and digital commerce are important to our economy, but NAFTA fails to address either area. In fact, our existing trade agreement was negotiated before the internet became a major sales platform. Since then, more than 3 million U.S. jobs are supported by e-commerce.
Unlike NAFTA, the USMCA contains a modern digital trade chapter, and is the first free trade agreement to include digital commerce. These provisions enable American companies of all sizes to compete by prohibiting customs duties on electronically transmitted products, safeguarding cross-border data flows, and prohibiting forced data localization requirements.
With more than $120 billion in exports to Canada and Mexico, Texas is positioned to be one of the biggest winners of the USMCA, so I urge my colleagues to support it. This free and fair trade deal will expand the progress made under NAFTA while benefiting American workers, businesses, consumers and the economy.
It is time to ratify this revolutionary free trade agreement.
Rep. Carter represents Texas District 31, which includes Fort Hood, the largest active duty armored military installation in the free world. He serves as Chairman of the Homeland Security Subcommittee on Appropriations, co-chairman of the Congressional Army Caucus, is on the Subcommittee for Commerce, Justice and Science and the Defense Appropriations Subcommittee.