Industry Pushes for USMCA Passage Amid Political Volatility
Date: Thursday, August 22, 2019
Source: Sourcing Journal
Observers feel that under more normal circumstances, the “NAFTA2.0” trade pact would pass with bilateral support, but given the political acrimony, its future is uncertain.
Nicole Bivens Collinson, president of international trade and government relations at Sandler, Travis & Rosenberg, noted in a recent “Two Minutes in Trade” podcast, that the USMCA did not get introduced before the summer recess and that “reports from the Hill indicate that the initial statement of administrative action sent from the President was not sufficient or comprehensive enough for [Democrats] to even consider it.”
The Democrat Working Group has met with U.S. Trade Representative Robert Lighthizer seeking resolution to issues involving labor, environment and drug pricing. The group issued a report to House Speaker Nancy Pelosi, Collinson said, “saying basically ‘the ball is in the President’s court.’” In other words, they communicated their needs to get the agreement passed and “now USTR has to present them with the language to address their concerns,” she explained.
Lobbying for a bilateral effort to bring the USMCA through, U.S. textile executives participated in a roundtable hosted by Milliken & Company at its headquarters in Spartanburg, S.C., on Wednesday with Rep. Tom Rice (R-S.C.), a member of the House Ways & Means Trade Subcommittee, where they discussed USMCA’s importance to the U.S. textile industry.
“U.S. textile exports to Mexico and Canada totaled $12 billion last year, underscoring the importance of our Western Hemisphere supply chain,” Kim Glas, president and CEO of the National Council of Textile Organization (NCTO), said. “This key supply chain has helped drive the $20 billion in investment by the industry over the past decade and has also helped support investment and nearly 25,000 direct textile jobs in South Carolina alone.”
The USMCA makes several key updates to the North American Free Trade Agreement that, according to Jeff Price, executive vice president of Milliken Operations, “will enable our trilateral trade to become stronger, which benefits this key industry in South Carolina.”
USCMA would update and replace the 25-year-old NAFTA accord. NCTO said the NAFTA supply chain drives roughly $20 billion in annual trilateral textile and apparel trade, up from just $7 billion prior to NAFTA, and is important to the continued growth of the industry. Among the updated provisions that the USMCA makes are stronger rules or origin for sewing thread, pocketing, narrow elastics and certain coating fabrics. It also ensures stronger customs enforcement.
“Congressional passage of the USMCA trade agreement is one of our top legislative priorities this year,” Leib Oehmig, chairman of NCTO and CEO of Glen Raven, said. “We look forward to continuing to work with Congressman Rice to help get this trade agreement over the finish line.”
For his part, Rice said, “Modernizing outdated trade agreements to reflect our 21st century economy will support American manufacturers and enhance our global competitiveness. I will bring the valuable input I received today back to Washington as I continue working to advance the USMCA and keep our economy booming.”
In June, after Mexico’s Senate ratified the USMCA, Lighthizer said, “The USMCA is the strongest and most advanced trade agreement ever negotiated. It is good for the United States, Mexico and Canada in a way that truly benefits our workers, farmers and businesses. The USMCA’s ratification by Mexico is a crucial step forward.”
Last month, the American Apparel & Footwear Association joined a coalition of business and agriculture organizations and chambers of commerce from across the U.S. in writing a letter to Congress urging support for USMCA, calling it “critical to our economic future because it will preserve and strengthen U.S. trade ties to Canada and Mexico.”
The groups said more than 12 million American jobs depend on trade with Canada and Mexico, and that U.S. manufacturers export more Made-in-America manufactured goods to Mexico and Canada than they do to the next 11 largest export markets combined.
“Approval of USMCA will ensure that U.S. manufacturers, farmers and service providers can continue to access the Canadian and Mexican markets,” the letter noted. “The new pact guarantees that virtually all U.S. exports will enter these markets tariff-free.”
Collinson said it’s likely there will need to be an amendment to the agreement, and if President Trump tries to force the bill through without that, Pelosi will block it from being presented. In turn, Trump has threatened to withdraw from NAFTA, leaving no agreement in place.
“If the President takes the NAFTA hostage and pulls the trigger on withdrawal, the Democrats are likely to let the hostage die,” Collinson said.