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Editor's Note: Miriam Sapiro is a senior advisor to the USMCA Pass Coalition and was deputy and interim business representative during the Obama administration. The opinions expressed in this article are exclusively yours.
The chances of Congress ratifying a new trade agreement with Mexico and Canada increased last month when the House of Representatives president, Nancy Pelosi, said: "We are moving forward" and expressed the hope of "a continuous path to yes."
There is no perfect trade agreement. But the United States-Mexico-Canada Agreement (USMCA), which could replace the North American Free Trade Agreement (NAFTA), is better than NAFTA in several respects, especially with regard to the rights of workers and the environment.
Prepared in the early 1990s, NAFTA helped to grow the economy of the United States, as well as that of Canada and Mexico, and strengthened regional integration to an unprecedented level. Today, both countries are the two largest trading partners in the United States, and our three-way trade holds more than 12 million jobs in the United States.
But NAFTA lacks many of the provisions that are now standard in US trade agreements.
READ: Five keys to the US, Canada and Mexico Trade Agreement, USMCA vs. the old NAFTA
Environmental protection was addressed only belatedly in a parallel agreement that included non-binding recommendations, not enforceable obligations. On the contrary, the USMCA incorporates all environmental obligations in the core of the agreement, which makes them enforceable. It includes provisions to combat the trafficking of wildlife, fish and wood; to improve air quality; and to stop marine pollution.
NAFTA also addressed labor rights in a parallel agreement that did not contain binding obligations or standardized protections between Mexico, Canada and the United States. Salaries remained low in Mexico, which for years attracted US companies. Mexico also lacked sufficient incentives to reform its labor laws, not recognizing the right of workers to bargain collectively and join unions.
The USMCA would improve the status quo in several ways. The agreement guarantees Mexican workers the right to organize, demands safe working conditions and prohibits forced labor. It also prohibits employer interference in union activities and requires that Mexico establish independent courts to judge labor disputes.
By increasing wages and benefits in Mexico, such provisions will reduce incentives for US companies to outsource jobs. These stronger labor protections will also help Mexican consumers and small businesses. When workers take home more money and feel more secure in their jobs, they spend more freedom.
The USMCA would also help bring more manufacturing to the United States. The agreement requires that between 40% and 45% of car parts be manufactured by workers who earn at least $ 16 per hour. This salary floor, which American auto companies have supported, would help boost national production by encouraging more auto producers to establish and maintain their headquarters in the United States.
The new agreement also encourages American innovation by strengthening intellectual property protections. The United States has long been a leader in technological advances, but our comparative advantage is eroded, along with the jobs it creates, when piracy, counterfeiting and other types of intellectual property theft by our partners are not controlled. foreign commercials. That is why it is necessary to ensure that our business partners protect and apply intellectual property rights.
Medical innovation, for example, depends on strong intellectual property protection. Billions of dollars can be spent and more than a decade spent taking a drug from the lab to pharmacy shelves. Strong intellectual property laws allow innovators to be compensated for their work, which encourages future investments in research and development that can benefit patients anywhere.
Some Democrats fear that strengthening intellectual property protections abroad may increase drug prices in the United States. They fear that strong intellectual property protection under the USMCA will allow manufacturers to keep drug costs in the United States higher for longer periods. Such concerns are unjustified. In fact, there is nothing in the USMCA that prevents legislators from working to lower drug prices.
The success of any commercial agreement depends on its supervisory and enforcement provisions. Unlike NAFTA, labor and environmental provisions of the USMCA will be as enforceable as other parts of the agreement.
Some legislators are concerned that Mexico does not enforce the labor requirements of the USMCA. To address those concerns, U.S. Trade Representative Robert Lighthizer has been exploring additional mechanisms to verify compliance by Mexico. And Mexico is taking steps to ensure that it will have the technical expertise, personnel and other resources necessary to fully implement the labor reforms it has undertaken.
Some also question whether the dispute resolution provisions between states included in the agreement, which currently allow any of the three countries to block a claim filed by another country, will be agile enough to deal with possible violations. Lighthizer is also examining ways to address this concern.
Pelosi's calls to improve the USMCA and Lighthizer's responsiveness are welcome. In fact, this is not the first time that Pelosi has made improvements to a trade agreement before its approval, as we saw when Congress first reviewed the agreements that President George W. Bush had negotiated with Peru, Korea, Colombia and Panama.
If Congress decides to reject the agreement, there is a real risk that President Trump can withdraw completely from NAFTA. That would alter the supply chains established in the last 25 years and destroy parts of the US economy. Considering that more and more economists predict a slowdown or recession, now is not the time to put millions of jobs in the United States at risk.