New NAFTA sparks old divisions
WASHINGTON— Depending on which lawmaker you talk to, the proposed U.s.mexico-canada Agreement would be a boon for Ohio’s economy or a disaster that would continue bleeding the state’s manufacturing economy.
Republicans, including Sen. Rob Portman and Reps. Troy Balderson and Bob Gibbs, are enthusiastic about it, saying it offers much-needed updates to the nearly 30-year-old NAFTA.
“We cannot afford USMCA to fail,” said Balderson, of Zanesville. “As a job source for millions of Ohioans, trade with our neighboring nations plays a pivotal role in our economy. With this lucrative deal on the verge, Ohioans are speaking loud and clear: Ratify the USMCA now.”
But Democrats such as Sen. Sherrod Brown and Reps. Marcy Kaptur and Tim Ryan say the new deal is, like NAFTA before it, a stinker. They say the lack of enforcement of updated labor protections would hurt both U.S. and Mexican workers, and they’re outraged by a provision that they say unfairly benefits pharmaceutical companies and would keep drug prices high.
“Just because you change the name doesn’t’ necessarily mean it’s going to improve some of these provisions,” said Ryan of Niles, who is running for president.
In reality, economists say, the deal is not that different from what’s already in place.
The new accord, which has been signed by leaders of all three countries involved but has so far only been ratified by Mexican lawmakers, closely tracks the old one with a few notable exceptions. For example, it requires automobiles to have 75 percent of their components manufactured in Mexico, the U.S. or Canada to qualify for zero tariffs — higher than the 62.5 percent under NAFTA.
It also requires 40 to 45 percent of automobile parts to be made by workers who earn at least $16 an hour by 2023. And it opens up Canada’s dairy market to U.S. farmers.
Plus, it includes provisions aimed at dealing with the new digital economy, such as barring duties on such things as music and e-books. And it extends the period that a pharmaceutical company can be protected from generic competition.
Republicans had hoped to put the deal on the floor before Congress’ August recess. But some Democrats
Rep. Troy Balderson, R-zanesville
have balked, arguing they’re still troubled about a lack of enforcement mechanisms for labor and environmental provisions in the deal.
“What this is, is NAFTA 1.6,” said Brown, saying the bill included “very minor changes” that will nonetheless result in “more cases of jobs shutting down in America and moving to Mexico.”
The senator said he offered suggestions on language that would enforce the labor provisions. “They have chosen not to move in that direction,” he said.
Kaptur, D-toledo, said passage of the original NAFTA was one of her greatest sources of heartbreak in a U.S. House career that began in 1983.
She said the 1994 enactment of NAFTA pushed the U.S., Mexican and Canadian economies together without the appropriate protections for workers, and that Mexican and U.S. workers suffered.
“We crashed our markets into one another,” she said, “and we’ve got all the casualties to show for it.”
She said NAFTA led to manufacturing jobs fleeing her district, contributed to the border crisis as the Mexican economy faltered and may have spurred the opioid crisis when farmers in Mexico began manufacturing drugs as farm jobs disappeared.
The new deal, she said, is largely a carbon copy of the original.
“It basically puts workers in our region who are earning a living wage, sort of, working 10 hours a day, seven days a week … putting them in competition with $2-an-hour labor down in Mexico. Now what’s right about that?” she asked.
Proponents, which include the entire GOP contingent of Ohio’s congressional delegation, say the Buckeye State doesn’t survive without trade.
According to the Ohio Manufacturers Association, more than 3,800 Ohio manufacturers currently export to Canada and Mexico, which receive more than 51 percent of Ohio’s exports.
“Our economy need certainty to thrive and ratifying the USMCA would give that certainty,” said Rep. Steve Stivers, R-upper Arlington. He said the deal would particularly help Ohio manufacturers and farmers.
Portman — a former trade attorney and U.S. trade representative during the George W. Bush administration — thinks it’s high time for NAFTA to be modernized.
“Think about it, back when NAFTA was negotiated there was no digital economy,” Portman said. “We need to have new rules with regard to the digital economy as we do in our more-recent trade agreements.”
Gibbs, a Lakeville Republican, said the new deal is “a heck of a lot better than the current NAFTA.”
Jack Irvin, senior director of state and national policy for the Ohio Farm Bureau Federation, said at a time when farmers are losing market share because of a trade dispute with China and abysmal weather, the new deal would represent a much-needed win.
“I don’t think we could stress enough how important Canada and Mexico are to us,” he said. “No doubt about it — if U.S. agriculture is going to be successful in the long term, they have to have trade partners like Canada and Mexico.”
Ian Sheldon, the Andersons chair in Agricultural Marketing, Trade and Policy at Ohio State University, said economists have a nickname for the deal: “NEWFTA.” That’s because it’s essentially the same deal, he said.
The modest changes, he said, would result in growth of less than 1% to U.S. GDP and a less than 1% increase in employment. Some new provisions might slightly increase the price of automobiles, and any benefits to agriculture, he said, would ultimately be washed out by the Chinese trade dispute.
But all of that is better, he said, than watching NAFTA collapse entirely, which would cost the U.S. about $12 billion in exports.
“The way I view negotiation is we have maintained NAFTA with some new bells and whistles,” he said. “I think on balance the way I look at this is that not destroying NAFTA was the most important thing that came out of this.”