U.S. Senate Approves New North American Free Trade DealOn Thursday, the U.S. Senate overwhelmingly approved the new free-trade agreement between Canada, the United States and Mexico. The deal, which covers the biggest free-trade zone in the world, should boost the economies of all three countries.
On Wednesday, all eyes were on the signing of the “Phase One”accord between the United States and China on Wednesday. This important event overshadowed the ratification of another trade deal, as the U.S. Senate ratified a new free-trade agreement between the U.S., Canada and Mexico.
The Senate voted on Thursday to overwhelmingly approve the deal, by a vote of 89-10. The accord now goes to President Trump, who is expected to sign it into law next week. The United States-Mexico-Canada Agreement (USMCA), revises the North American Free Trade Agreement (NAFTA), which the three countries signed back in 1993.
The NAFTA agreement has worked quite well, boosting the economies of all three nations. The USMCA leaves much of NAFTA intact, but there are some changes, which appear to benefit the United States. President Trump attacked NAFTA as being responsible for millions of manufacturing jobs to low-wage factories in Mexico. Although USMCA will not restore millions of jobs, it contains provisions that will reduce the incentive for American companies to relocate south of the border into Mexico. First, more vehicles will be produced in plants where workers are earning a minimum of $16 per hour. Further, Mexico has committed to enacting legislation which makes it easier for workers to form unions, which should improve the wages and conditions of Mexican employees.
The North American market is the biggest in the world, and the freshly minted USMCA should lead to economic gains for all three partners. In an era when global trade wars have intensified and countries have resorted to punishing tariffs, such as in the case of the U.S. and China, free-trade zones are especially important – for the players involved, as well as the global economy.