North America should use the USMCA trade agreement to leverage influence around the world
The USA-Mexico-Canada agreement celebrated its first birthday on July 7th with a joint ministerial meeting in Mexico City. It’s hard to believe that just under four years ago, the North American free trade agreement was formally renegotiated in Washington under a dark cloud of uncertainty about the future of a 25-year partnership that is transforming the region’s global balance of production, trade and investment .
Just as the successful conclusion of the arduous negotiations was a much-needed shot in the arm for those advocating rules-based international trade and upholding the gains made by NAFTA, last week confirmed the three governments reaffirmation of the political commitment of the three governments to the USMCA Implementation is good news for North America’s immediate economic recovery from the pandemic as well as its long-term competitiveness and growth.
In their joint statement, the three leading trade representatives recognized North America’s position as the most dynamic economic bloc in the world and pledged to work together to strengthen regional supply chains.
The message from US Trade Representative Katherine Tai at her Mexico City meeting highlighted those innovative elements of the USMCA that NAFTA lacked and that received the most applause from its critics. They include provisions on working conditions, the environment and intellectual property; more robust dispute settlement mechanism; and a more inclusive approach towards stakeholders who may benefit more from the agreement, such as small and medium-sized enterprises (SMEs).
Texas is a heavyweight in North American trade and a microcosm of the USMCA’s promises and dangers. According to USA Trade Online figures, the state was the No. 1 exporter and the No. 2 importer in the country in 2019. Mexico and Canada are Texas’s two largest export markets, and in 2016 SMEs accounted for 43% of exports. With the 8% increase in world trade volume forecast for 2021 by the World Trade Organization in a current annual report, Texas will benefit greatly from the rapid implementation of the new USMCA regulations on e-commerce, customs and trade facilitation.
As a major energy and agro-food exporter, Texas also has a direct stake in the credibility of an agreement that addresses current and future differences between the three countries, including concerns about Mexico’s energy policy or access to Canada’s dairy market.
The implementation and management of the agreement should understandably draw the attention of the three governments. When NAFTA was threatened, they had to strive to build pressure groups in Washington and across the country to support their survival and meaningful modernization. At USMCA, it is important to apply the lessons learned taking into account the initial 16-year lifespan, which will be jointly reviewed on the sixth anniversary of its entry into force. Tai is well aware of this challenge with her experience as the House Ways and Means Committee’s chief attorney and a key player in gaining strong bipartisan support in Congress, unions and the business community.
In addition to these immediate missions, the agreement also provides Canada, Mexico and the United States with a unique opportunity to act strategically, stepping into the wider geopolitical playing field together and in partnership to build a strong North American narrative of a high standard, including trade deals .
These efforts could include initiatives such as coordinated joint outreach in Asia and Europe to attract productive investments in priority manufacturing sectors. It could include a dialogue with our Central American neighbors on how their trade agreements can converge with the North American framework to support much-needed economic development. And the reach could be extended to Africa, with technical assistance and best practice sharing, as the continent seeks to implement its recently established African continental free trade area.
If the post-pandemic world finds its base, effective management of the inevitable frictions that can arise from a complex, trillion-dollar trade relationship and a coordinated, strategic approach to boosting the competitiveness of the North American economy can bring tangible benefits to all three societies bring. At the same time, it could strengthen North America’s global position by sending a strong message on inclusiveness and sustainability through the example of the USMCA. It’s an opportunity that shouldn’t be wasted.
Julián Ventura was Mexico’s Deputy Foreign Minister from December 2018 to January 2021. He wrote this column for the Dallas Morning News.
Do you have an opinion on this subject? Send a letter to the editor and you might get published.
[ad_1]
