BUSINESS + ECONOMY

Live Mic: Lawmakers have signed off on USMCA. What is it?

Dec 12, 2019, 6:41 AM
Farmers...
Farmers might be getting new technology but that won't take care of all the responsibilities on a farm. (Photo credit: Getty Images)
(Photo credit: Getty Images)

SALT LAKE CITY — Let’s start with the name. The USMCA is short for the U.S.-Mexico-Canada Agreement. It’s a trade agreement that replaces the North American Free Trade Agreement, or NAFTA.

This week, Democrats in the House said they would support the passage of the USMCA. House Speaker Nancy Pelosi described the deal as a “victory for American workers.”

Automotive and agriculture are big winners

In particular, a victory for American auto workers as the USMCA incentivizes a $23 billion increase in U.S. annual parts and sales. The agreement increases the requirement of parts that are manufactured in North America to 75%. The agreement assures U.S. auto workers will earn at least $16.00 per hour.

But there’s another winner, too. American agriculture.

Ron Gibson is the president of the American Farm Bureau joined KSL NewsRadio’s newest show “Live Mic” with Lee Lonsberry Thursday to talk about what this means for farmers, and in turn, for everybody that relies on farmers.

According to the U.S. Census Bureau, Canada and Mexico are consistently the largest trading partners for the United States.

“Right now,” Gibson told KSL NewsRadio, “we have $19 billion in trade with Mexico, annually, and $22 billion with Canada. We expect that number to go up between $2 and $5 billion, collectively, with those two countries.”

Gibson said that with the lasting uncertainty with China, and China trade, stability with our closest and largest trading partners will be a welcome change for American farmers.

Other benefits for American food producers include better market access and a vast reduction in tariffs.

What about American consumers?

How the USMCA will shake out for consumers is yet to be seen. But Gibson says there’s no question that the USMCA will benefit consumers.

“Good news for the farmer is good news for the consumer,” Gibson said. Especially in the light of the popularity of consuming food that is grown close to home.

The local food trend has been on the upswing since at least 2008. Business Insider reports that local food sales increased by $7 billion between 2008 and 2014. The same source predicted that local food sales would increase to $20 billion by 2019.

Beyond a smaller price for food at the grocery store, Gibson says the value of American farmers to American consumers reaches deep into their psyche. He cites the 40,000 visitors to his farm during Halloween. He says they came to see the corn maze and the pumpkin patch, and he says most of them take the time to tell him that they need open spaces like his farm.

“They say, ‘well my grandpa had a farm,’ and yes farmers are less than one percent of the population now, those of us in production agriculture,” Gibson said, “but everybody wants to tie back to their roots on the farm.”

Next steps

The U.S.-Mexico-Canada Agreement, or USMCA, still has a few legislative steps to go before it becomes law.  It must be voted on by the House Ways and Means Committee before it is sent to the House floor. Then it must be voted on in the House, where lawmakers said on Tuesday they are confident the bill can be approved by the end of 2019.

Mexico’s governing body must approve the modified deal. And in Canada, the agreement must still be approved by both the elected House of Commons and the appointed Senate.

A chance to work together

On the USMCA, Utah commerce officials had this to say. “This is the rare political dodo bird,” said Derick Miller, President, and CEO of the Salt Lake Chamber of Commerce, “we thought it was extinct. Turns out it’s not, and that is bipartisan agreement on something.”

Speaking on Live Mic with Lee Lonsberry, Miller said it’s an agreement that will be good for the United States and even better for Utah, a landlocked state.

“Trade contributes almost $15 billion to our economy.  Over 35-hundred companies in Utah are involved in exporting, making things in Utah and selling them around the world,” Miller said. “And with regard to Canada and Mexico, they are two of our top trading partners … to the tune of over $3 billion in exports from Utah.”

And that number is only expected to grow.

Union concerns

Despite an agreement in the House of Representatives, there are groups who’ve opposed passage of USMCA. These include the leaders of 12 American labor unions who have told Congress that the treaty doesn’t meet the needs of working people. Specifically they have asked for a structurally sound enforcement provision.

Union leaders have also voiced concern about the ability to inspect labor programs in Mexico. One of their top concerns about any treaty that replaced NAFTA has been what they call the outsourcing of hundreds of thousands of jobs to Mexico.

 

 

 

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Live Mic: Lawmakers have signed off on USMCA. What is it?