While the United States-Mexico-Canada Agreement (USMCA) is far from a done deal, the Trump administration is touting that the North American Free Trade Agreement (NAFTA) replacement could create 76,000 jobs within five years. The jobs would stem from automakers investing $34 billion in new plants to comply with the new agreement. The figures, released by the U.S. Trade Representative agency (USTR) runs contrary to what some economists have projected, believing that USMCA will provide few gains, if any gains, in U.S. manufacturing.
One of U.S. President Donald Trump’s key campaign promises during the 2016 presidential race was either adjusting NAFTA in favor of the U.S.A, or eliminating it altogether. Trump has touted the agreement as detrimental to the U.S. economy and to American workers. Back in October, the Trump administration succeeded in getting Canada and Mexico to sign onto a new trade agreement, termed USMCA. While the respective leaders of each country support the new deal, final approval will come from each country’s respective legislatures. The U.S. Congress is due to vote on the issue later this year.
All that makes this report from the USTR rather noteworthy. The administration’s expectations for the USMCA agreement to create 76,000 jobs come ahead of an independent trade panel’s analysis of the NAFTA replacement. To build support for the bill, U.S. Trade Representative Robert Lighthizer met with the United Automobile Workers union last month, but the organization’s officials seemed unimpressed with the deal, calling for an even stronger agreement. Doing so, however, would require opening up the USMCA to new negotiations, which would threaten the existence of the current deal.
The $34 billion in new auto investments is based on information provided by automakers to the USTR. The new trade agreement would require 75 percent of the content for a vehicle sold in the North American region to be produced in North America, with 40-45 percent of that content required to be produced by high-wage workers. The U.S. Trade Representative agency also told reporters that no automaker that currently produces vehicles in North America would opt out of the agreement.
If all three North American legislatures approve the NAFTA replacement, it would be a political win for Trump, who promised an influx of new manufacturing jobs across the country – something that isn’t happening yet as General Motors and others automakers brace for a downturn in auto sales.