The Senate approval comes a day after Trump signed the “phase one” trade deal with China that marked a milestone in the nearly 2-year-old trade dispute between the world’s two biggest economies.
With the same kind of bipartisan support, USMCA cleared the U.S. House of Representatives, 385 to 41, on Dec. 19. The agreement now heads to Trump’s desk for his signature.
USMCA will replace the 26-year-old North American Free Trade Agreement (NAFTA). It maintains tariff-free access to Mexico for U.S. exporters. And for Canada, it provides tariff-free access for 99 percent of U.S. goods and lifts some non-tariff barriers facing U.S. dairy and poultry exports.
The United States, Canada, and Mexico agreed on the new trade deal in October 2018 after a lengthy and intense negotiation process, and the countries’ leaders signed it on Nov. 30, 2018. The deal, however, was caught up waiting for U.S. congressional approval since then.
Democrats, who control the House, raised issues concerning enforcement, labor, environmental, and pharmaceutical provisions of the agreement. The Trump administration and House Democrats formed a working group to address those issues. After months of negotiations, both sides resolved their differences on the agreement. On Dec. 10, the trade deputies of the three countries signed the modifications to USMCA in Mexico City.
The agreement is composed of 34 chapters and 16 side letters. According to a report by the Congressional Research Service, USMCA maintains most chapters of NAFTA, but makes significant revisions in the areas of market access for autos and agriculture as well as investment, government procurement, intellectual property rights, labor, and the environment. It also addresses new issues such as digital trade, state-owned enterprises, and currency devaluation.
USMCA is estimated to have a significant impact on the U.S. manufacturing sector, particularly automotive. A study by the Office of the U.S. Trade Representative found that the agreement would boost automotive manufacturing investments in the United States by $34 billion over the next five years, adding nearly 76,000 new automotive jobs.
Labor provisions of the agreement hold Mexico accountable for improving workers’ rights, and the agreement grants the United States new enforcement authorities.
It’s also a win for U.S. dairy farmers as it provides increased access to Canadian markets. It has also eliminated Canada’s “Class 7” milk-ingredient pricing program, which the United States has regarded as an unfair system for American dairy exports. In return for market access, Washington expanded import quota levels for dairy and sugar products from Canada.
Eight Democrats, one Republican, and one independent voted against the trade deal. Those who voted against were Senate Minority Leader Chuck Schumer (D-N.Y.), Kamala Harris (D-Calif.), Kirsten Gillibrand (D-N.Y.), Cory Booker (D-N.J.), Ed Markey (D-Mass.), Jack Reed (D-R.I.), Sheldon Whitehouse (D-R.I.), Brian Schatz (D-Hawaii), Pat Toomey (R-Pa.), and Bernie Sanders (I-Vt.)
Schumer said the new deal had strong labor provisions and enforcement mechanisms but fell “far too short” in addressing climate change.
“Despite the improvements Democrats secured to better protect workers: I am voting against USMCA. Because it doesn’t address climate change, the greatest threat facing our planet,” Schumer wrote on Twitter before the Senate vote.
Businesses and farmers throughout the country praised the passage of the agreement in the Senate.
“While no deal is perfect, USMCA’s updated rules on digital trade, non-tariff barriers, and services promise real benefits to American businesses and consumers,” U.S. Chamber of Commerce CEO Thomas Donohue said in a statement.
“Today’s vote sends a powerful message to the world that America remains open for business.”
A study released in April 2019 by the U.S. International Trade Commission showed that the trade pact would raise the United States’ real gross domestic product by $68.2 billion, or 0.35 percent, and create 176,000 new jobs.