WASHINGTON, D.C. – Chris Wilson, deputy director of the Wilson Center’s Mexico Institute, was a guest on PBS News Hour on the day Speaker Nancy Pelosi announced a breakthrough on ratifying USMCA.
Interviewed by award-winning journalist Amna Nawaz, Wilson said the most important thing is that investors will now have certainty.
“I would say that the new USMCA is 90 percent NAFTA. And that, actually, is the most important thing. What happened here is this cloud of uncertainty about the future of NAFTA, the possibility that the president might withdraw from NAFTA, goes away with the agreement around the completion of the USMCA,” Wilson said.
“That matters because companies have invested billions of dollars in the creation of a North American system of manufacturing production. So, we have not just regular trade of finished goods happening between the United States, Mexico and Canada, we are actually building things together. All of those products, all of that trillions of dollars of trade was put at risk. Now investors, companies that are involved in that trade can breathe a sigh of relief and continue doing business.”
USMCA stands for the United States-Mexico-Canada Agreement. It is a successor to the North American Free Trade Agreement, which President Trump derided during the 2016 presidential election campaign. Upon winning the presidency, Trump asked negotiators to update NAFTA.
Asked what important updates are contained in USMCA, Wilson said:
“It is a matter for huge debate whether those were necessary or not. I think in certain areas, people would have different opinions. On labor, for example, the idea that there was a need for changes in labor law, Mexico agreed to a major labor reform through the USMCA. That, in my opinion, was absolutely necessary. Workers in Mexico were not well represented previously and are not currently well represented but under the new labor reform they’ll have real unions that represent the workers instead of employer-dominated unions that have probably artificially suppressed wages to a certain extent in Mexico. Hopefully that will change for the better following this agreement.”
Asked if USMCA will ensure manufacturing jobs are brought back to the U.S., Wilson said:
“The reality is most of those jobs in manufacturing that have been lost in the United States were lost due to automation and technological change, robots on the factory floor, things like that. So we should not expect many major changes. The reality, in my opinion, was that NAFTA was not the main problem there so changes to NAFTA can’t solve that big problem.”
That said, there are some specific areas where there are important changes, Wilson noted.
“The auto industry is one that was mentioned. There will now be rules that say a larger portion of what goes into an automobile needs to be made somewhere in North America. That is going to bring some auto jobs back to the United States but it is going to come at a cost because cars will be a little bit more expensive. This is what the ITC, the International Trade Commission of the U.S. government found when they did a study on the change from NAFTA to the USMCA. They said, there will be jobs gained and production gained in the U.S. auto industry but there is actually a larger loss in the rest of the economy because it takes money and new investments to meet these new rules.”
Asked what impact USMCA will have for U.S. farmers, Wilson said:
“It gives them back certainty about their market. Canada and Mexico are incredibly important markets for our agricultural community in the United States. There are, of course, huge challenges right now because of the trade war going on right now with China. Whenever there is a trade war agriculture is the place in the United States that gets hit first. China will respond with tariffs on agriculture in the United States. Mexico and Canada responded when there were steel and aluminum tariffs being fought over last year, with tariffs on U.S. agricultural exports.”
Wilson said it is not surprising U.s. agriculture takes a hit when tariffs on imports are introduced by a U.S. government.
“That is because they are politically sensitive. Other countries know that if they hit agriculture in the United States, it is a way of exerting political influence on Congress in the United States. This deal (USMCA) gets us back to having certainty. It also provides a little bit of new access to the Canadian dairy market. There are a few extra good things in there for agriculture but it gives them a platform on which to continue to do business.”
Editor’s Note: The main image accompanying the above news story shows Christopher Wilson, deputy director of the Wilson Center’s Mexico Institute. (Photo credit: WRVO PUBLIC MEDIA)