SAN DIEGO, Calif. – The Border Trade Alliance has joined Congressman Henry Cuellar in welcoming a new report that shows U.S. gross domestic product and jobs increasing under the U.S.-Mexico-Canada Trade Agreement.

The 375-page report is titled “U.S.-Mexico-Canada Trade Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors.” It was released by the U.S. International Trade Commission and requested by the Trade Promotion Authority.

“The report released by the ITC shows that USMCA will have a positive impact on a broad range of industries and on the U.S. economy,” Cuellar said. “Specifically, the report states that the new trade agreement will increase economic activity by 0.35 percent and create 176,000 new jobs.”

U.S. Rep. Henry Cuellar

Cuellar, D-Laredo, said it is “essential that we ratify this trilateral trade agreement, so that we may continue to capitalize on the economic benefits NAFTA has facilitated for over two decades.”

Cuellar said that as a representative of the border, “I know firsthand the impacts that this deal will have on border communities.” He urged a speedy ratification by Congress “so that we are able to build on NAFTA’s successes, bringing certainty back to businesses in Texas and beyond.”

The Border Trade Alliance (BTA) has served as a grassroots, non-profit organization since 1986. With a network of public and private sector representatives from the U.S., Mexico and Canada, the group provides a forum for discussion and advocacy on issues pertaining to border development and quality of life and trade in the Americas. Click here to view its board of directors.

Paola Avila

BTA says the U.S. International Trade Commission’s new report provides “compelling evidence” for lawmakers to swiftly ratify the successor agreement to NAFTA. It points out that USMCA is poised to raise U.S. real GDP by $68.2 billion, or 0.35 percent, and it will result in an estimated 176,000 new U.S. jobs.

“This new report confirms what those of us in the cross-border trade community have known all along: the USMCA will make the U.S. economy more competitive and create jobs,” BTA Chair Paola Avila said. 

“The ITC’s finding are all the more impressive considering that they are compared against the current NAFTA, in which trade already is conducted almost 100 percent tariff-free. That the U.S. economy is projected to enjoy such strong growth under the USMCA is a testament to the job growth we have already seen with NAFTA.”

Britton Clarke, president of the Border Trade Alliance.

Avila said completion of the assessment marks an important milestone on the path to the USMCA’s adoption because leaders on Capitol Hill said legislation to fully enact the USMCA would not be formally introduced until the ITC completed its analysis and Congress could review it.

“After assessing the USMCA’s positive economic impacts, we continue to believe that members of Congress from both parties will strongly support the new pact,” BTA President Britton Clarke said. “This ITC report makes a persuasive case for the USMCA’s speedy adoption, which will lead to job growth and greater prosperity. Let’s not wait. The time for the USMCA’s adoption is now.”

Here are highlights from the ITC report:

The Commission used a combination of detailed quantitative and qualitative industry analyses and an economy-wide computable general equilibrium model to assess the likely impact of USMCA on the U.S. economy and industry sectors. The model estimates that, if fully implemented and enforced, USMCA would have a positive impact on U.S. real GDP and employment. 

The elements of the agreement that would have the most significant effects on the U.S. economy are (1) provisions that reduce policy uncertainty about digital trade and (2) certain new rules of origin applicable to the automotive sector. Of interest to stakeholders in many sectors, particularly services industries, are USMCA’s new international data transfer provisions, including provisions that largely prohibit forced localization of computing facilities and restrictions on cross-border data flows. Industry representatives consider these provisions to be a crucial aspect of this agreement in terms of changing certain rules of trade across industry sectors, especially given the lack of similar provisions in the North American Free Trade Agreement (NAFTA). 

Because NAFTA has already eliminated duties on most qualifying goods and significantly reduced nontariff measures, USMCA’s emphasis is on reducing remaining nontariff measures on trade and the U.S. economy; addressing other issues that affect trade, such as workers’ rights; harmonizing regulations from country to country; and deterring certain potential future trade and investment barriers. 

USMCA would strengthen and add complexity to the rules of origin requirements in the automotive sector by increasing regional value content (RVC) requirements and adding other requirements. USMCA’s requirements are estimated to increase U.S. production of automotive parts and employment in the sector, but also to lead to a small increase in the prices and small decrease in the consumption of vehicles in the United States. 

The agreement would establish commitments to open flows of data, which would positively impact a wide range of industries that rely on international data transfers. USMCA would reduce the scope of the investor-state dispute settlement (ISDS) mechanism, a change that, based on modeling results, would reduce U.S. investment in Mexico and would lead to a small increase in U.S. domestic investment and output in the manufacturing and mining sectors. The agreement, if enforced, would strengthen labor standards and rights, including those related to collective bargaining in Mexico, which would promote higher wages and better labor conditions in that country. New intellectual property rights provisions would increase protections for U.S. firms that rely on intellectual property. These changes are estimated to increase U.S. trade in certain industries. 

The Commission’s model estimates that USMCA would raise U.S. real GDP by $68.2 billion (0.35 percent) and U.S. employment by 176,000 jobs (0.12 percent). The model estimates that USMCA would likely have a positive impact on U.S. trade, both with USMCA partners and with the rest of the world. U.S. exports to Canada and Mexico would increase by $19.1 billion (5.9 percent) and $14.2 billion (6.7 percent), respectively. U.S. imports from Canada and Mexico would increase by $19.1 billion (4.8 percent) and $12.4 billion (3.8 percent), respectively. The model estimates that the agreement would likely have a positive impact on all broad industry sectors within the U.S. economy. Manufacturing would experience the largest percentage gains in output, exports, wages, and employment, while in absolute terms, services would experience the largest gains in output and employment. 

Editor’s Note: The main image accompanying the above news story shows Paola Avila, chair of the Border Trade Alliance.