More trade deals like USMCA will counter China, champion American businesses and workers, Senate hearing demonstrates

May 24, 2021

More trade deals like USMCA will counter China, champion American businesses and workers, Senate hearing demonstrates.

Last week, the U.S. Trade Representative, Ambassador Katherine Tai, appeared before the Senate Finance Committee to testify on the status of President Biden’s 2021 trade agenda. Although there were a variety of trade policy interests from the Senators, one point was obvious: The U.S. needs additional trade deals like the United States-Mexico-Canada (USMCA) trade agreement. Here are the takeaways from that hearing:

  1. Labor Laws: USMCA included new labor law requirements, including strong enforcement mechanisms to first ensure that all three countries were in compliance, and second to encourage a fair playing field for U.S. workers to compete with those south of the border. Even though USMCA is still in its infancy, the U.S. has already been able to secure labor sector wins by utilizing the trade agreement. In fact, earlier this spring, the U.S. used the trade agreement to secure an agreement from Mexico to investigate facilities that were not in compliance with Mexico labor laws or USMCA. As a result, a General Motors plant located in Mexico was forced to recast union votes after discrepancies arose.

These very labor enforcement tools are absent from other trade agreements. As Tai explained, “the U.S. long overlooked the impact trade agreements have on individual labor.” For USMCA, that was a big change. More importantly, as Tai argues, is that the U.S. government needs additional tools like those included in USMCA to protect American workers and U.S. jobs from others, like China and India.

  • Fair Trade: USCMA accomplished what other trade deals, including NAFTA, have failed to capture – fair trade. As experienced by many American workers, NAFTA was a flawed deal that tilted opportunities away from the U.S. and instead favored Mexico and Canada, resulting in over 800,000 good U.S. jobs being shipped abroad. USMCA, on the other hand, was able to rebalance the playing field and create new opportunities for U.S. jobs, and may actually add 500,000 new jobs.

That’s not the case for most other trade deals. As Tai argues, trade tools like Section 201 or 232 tariffs are some of the only options the U.S. has for countering China’s trade abuses, for example. However, those tools often lack flexibility, and are primarily used to address national security needs or temporary import relief to an industry. They were not designed to permanently protect the American worker like USMCA.

  • Free trade: USMCA was remarkable in that it promoted free trade. After establishing a new set of rules and leveling the playing field for American workers, the agreement actually removed trade barriers. Today, more products (especially agriculture) flow tariff and duty free across the southern and northern border than ever before. Yet, this is all done within a fair and enforceable set of rules – that first prioritize workers.

This Senate hearing demonstrates the clear appetite that remains for promoting free and fair trade and countering the unfair practices in China, while also holding the rest of the world accountable. But as Tai might admit, the U.S. must first pass groundbreaking trade deals like USMCA in order to accomplish it.