Senate Is Expected To Pass USMCA With Bipartisan Support
DAVID GREENE, HOST:
Right now as the impeachment trial moves forward in the Senate, there are also some big developments on the trade front. The U.S.-Mexico-Canada Agreement, or the USMCA as it's known, is on its way to becoming law. The Senate's expected to pass the North American trade pact today with bipartisan support, sending it to President Trump's desk. This comes just a day after a phase one trade agreement between the United States and China was signed at the White House.
I want to start with NPR chief economics correspondent Scott Horsley. Hi, Scott.
SCOTT HORSLEY, BYLINE: Good morning, David.
GREENE: Do you mind, if you can, just giving us a sense of what is in this new agreement that - it's being dubbed as NAFTA 2.0?
HORSLEY: Yeah, the USMCA updates the original NAFTA to cover things like digital commerce that barely existed when the deal was first signed a quarter-century ago. At the insistence of House Democrats, it will also include stronger protections for labor and the environment, especially in Mexico. The biggest change to NAFTA, though, is in the automobile sector, where this deal requires cars and trucks to include more North American content in order to qualify for duty-free status. And it also sets a wage standard that could result in some auto production shifting from Mexico back to the United States.
GREENE: Well, Scott, stick with us, if you don't mind. I want to bring in another voice here - it's Neil Bradley - to talk about the impact this could have on the U.S. economy. He's the executive vice president and the chief policy officer at the U.S. Chamber of Commerce.
Thanks for being here this morning.
NEIL BRADLEY: Thanks for having me, David.
GREENE: Does the Chamber think this is a good deal for American businesses?
BRADLEY: It is - for the reasons that Scott outlined. It makes significant improvements on things like digital trade that didn't exist before. For the first time ever, it has a chapter on small businesses. There's 120,000 small businesses in America who send goods and services to Canada and Mexico, so this is good for them. Most importantly, however, there are 12 million American jobs that are in part supported by trade between our three countries. And getting this deal done - passing it through the Senate today, getting it signed by the president - provides certainty for those 12 million Americans.
GREENE: Is there anything that businesses might lose with the end of NAFTA since this is now going to be replacing that agreement?
BRADLEY: Well, I don't know that there's so much we lose. There are some changes. And you know, no deal is perfect. This isn't the deal that the U.S. Chamber would have written. But on balance, it's one that enjoys bipartisan support, and perhaps that's the most important aspect about it. We've had political conflict between the two parties, between business and labor over NAFTA literally since the ink was dry back in the early 1990s. This removes that uncertainty. Labor, business, Democrats, Republicans, we're all bought in. We're all supportive of this new agreement. And you know, that's something that we don't see very often in Washington anymore. And that's something that our economy and American workers deserve to have, which is that bipartisan buy-in in Washington.
GREENE: Speaking of uncertainty, I want to ask you about this new phase one trade agreement with China. We've been hearing, already, some doubts about whether China is actually going to buy these billions of dollars more in American goods as they've committed. The government is leaving some doubts about that. Are you confident? And if they don't follow through on that, could that hurt American businesses in terms of what they were expecting here?
BRADLEY: Well, certainly. And it's important that everyone live up to their commitments and especially important that the Chinese live up to their commitments in this phase one deal. Equally or, in fact, even more important than the purchases - and that's good for American farmers and manufacturers - is resolving some of our longstanding trade tensions with China - intellectual property theft, forced technology transfers, state subsidies that make - that disadvantage American businesses. This phase one deal begins to tackle some of those problems - not all of them. That's why we need a phase two deal. So it's especially important that, in this time, the Chinese live up to all of their commitments that they've made as part of this deal.
GREENE: Just stepping back over the last few years of trade policy under the Trump administration, all that's come with it - scrapping deals, igniting trade disputes, drawn-out renegotiations - on the whole, do you think these new deals are worth the pain that businesses, manufacturers, farmers, workers have felt?
BRADLEY: I think you have to look at each one individually. The president deserves credit for tackling longstanding problems with China. People can disagree with the tactics that got us to this point, but it is really important that we finally address this - these problems with, you know, the world's No. 2 largest economy.
You know, I think NAFTA - USMCA is a little bit different. I think we could have gotten to where we've gotten today maybe without a little bit of the turmoil. We'd like to see less turmoil, less uncertainty in our trading relationships with Europe. But part of that's on both sides of the Atlantic. The Europeans are doing some things that are currently disadvantaging American businesses.
GREENE: Neil Bradley is executive vice president and chief policy officer at the U.S. Chamber of Commerce. Thanks so much for your time.
BRADLEY: Thanks for having me.
GREENE: And I want to bring back NPR's Scott Horsley.
Scott, sounds pretty optimistic there - the view from the Chamber. Does that reflect what you're hearing? I mean, is optimism widespread among American businesses and elsewhere?
HORSLEY: You know, David, the USMCA is going to make some modest changes to NAFTA, and so it's expected to give a modest boost to the U.S. economy. By most forecasts, it's supposed to up GDP by maybe one-third of 1%. But the biggest sigh of relief you're hearing is that the president didn't scrap NAFTA with nothing to replace it, as he had threatened to do. And that's the certainty that Mr. Bradley's talking about.
Likewise, the phase one China deal - you know, it avoids some of the disruption to trans-Pacific trade that the trade war has brought. But it still leaves steep tariffs in place on about two-thirds of the stuff we buy from China. Historically, free trade deals have been about lowering trade barriers. In the Trump era, there's also a pretty good dose of protectionism.
GREENE: NPR's Scott Horsley. Scott, thanks so much.
HORSLEY: You're welcome, David. Transcript provided by NPR, Copyright NPR.