Published: Sun, April 21, 2019
Global Media | By Garry Long

Commission: New NAFTA would deliver modest economic gains

Commission: New NAFTA would deliver modest economic gains

But the boost to the USA economy "is likely to be moderate", given that most tariffs were already dropped region-wide 25 years ago and because the United States economy is much larger than those of Mexico and Canada, according to the ITC report.

Trade-wise, the USMCA is expected to have a positive impact on U.S. trade, both with regional partners and globally.

Auto industry employment would rise by 30,000 jobs for parts and engine production, but US vehicle assembly would decline.

U.S. President Donald Trump, Canada's Prime Minister Justin Trudeau and Mexico's President Enrique Pena Nieto sign documents during the USMCA signing ceremony before the G20 leaders summit in Buenos Aires, Argentina November 30, 2018.

Trump's new North America trade agreement would give the US economy only a modest boost, an independent federal agency finds. Under NAFTA, at least 62.5 percent of a vehicle had to be made in North America.

Those effects exceeded what's likely from the new deal, including an employment gain of 176,000 jobs, or 0.12 percent, according to the ITC.

The report also said the new trade deal would lead to "small increases in USA exports to Canada of dairy products, poultry, meat, eggs, and egg-containing products, as well as wheat and alcoholic beverages".

The estimates include about $15.3 billion investments previously announced by Fiat Chrysler, Ford Motor, General Motors Toyota Volkswagen and battery maker SK Innovation.

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"In fact, billions of dollars in new United States investments have already been announced", said president Matt Blunt, a former Missouri Republican governor. When the Congressional Budget Office scored the President's first budget in 2017, it said that the administration overestimated future economic growth to the tune of $3.4 trillion in tax revenue over next decade. "So, the ITC report released today doesn't fully capture the economic benefits of trade with Canada and Mexico, nor the improvements to trade rules in USMCA that benefit agriculture".

"These findings validate President Trump's action to withdraw from TPP and renegotiate the disastrous NAFTA".

Provisions in USMCA related to rules of origin in the auto sector are among the hotly debated parts of the agreement. That paper said the USMCA's impact on real GDP would be trivial and could even be a net loss for the United States if Trump's tariffs on steel and aluminum remain in place.

Toyota in March added about $3 billion to a US investment plan announced in January 2017, but the initial plan was already to spend $10 billion over five years.

"Current and threatened tariffs should be removed so the industry can focus on retaining a critical regional trading agreement, while keeping more jobs and innovation in the United States", the group said in a statement.

Republican Senator Chuck Grassley, chairman of the Senate Finance Committee, praised the report for highlighting benefits beyond tariff reductions.

The USTR also highlighted changes on intellectual property rights, comprehensive enforcement provisions, and improvements for US dairy and poultry producers.

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