Scott Ball / Rivard Report
With Canada now signing on to a revamped trilateral trade deal to replace the North American Free Trade Agreement, San Antonio businesses that depend on trade with Mexico have a framework to base their business plans on after being in limbo for more than a year.
The agreement, known as the United States-Mexico-Canada Agreement, preserves a significant trade pact between the United States, Mexico, and Canada that was signed in San Antonio in 1992 and that negotiators have been working for more than a year to revise and maintain. Real the full text of the agreement here.
“The first thing it means is that the opportunities that have been developed as a result of NAFTA will remain and, if all goes well, will increase,” said Richard Perez, president and CEO of the San Antonio Chamber of Commerce.
“Trade has been increasing since the time we signed NAFTA … to today, and things slowed down or were at least on pause because of the uncertainty surrounding NAFTA. I believe, if it is indeed what I think it is, trade will continue to grow, which is a net positive for San Antonio, for Texas, and the U.S., and for both Mexico and Canada.”
Congress will formally vote on the agreement in 2019. The new agreement includes a 16-year expiration date. There’s no word yet on where leaders would gather for a signing ceremony this time around.
In a statement from the White House, President Donald Trump called the USMCA “a great deal for all three countries,” adding it “solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our farmers and manufacturers, reduces trade barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world.”
Dennis Nixon, chairman and CEO of IBC Bank, is a member of the U.S.-Mexico CEO Dialogue, a group of U.S. and Mexican business leaders whose members address core issues in the bilateral relationship between the two countries.
“USMCA will continue the free-trade benefits that have so positively benefited all three nations over the past 24 years,” he said. “While all parties to the agreement will thrive, Texas had the most to gain from the renewal of NAFTA. This is a major win for Texas that will also keep the United States, Mexico, and Canada economically competitive in an increasingly competitive world.”
In addition to modernizing the agreement to reflect advances in technology and the changing economy, the pact’s negotiators agreed on provisions that affect industries important to San Antonio, including auto manufacturing and agriculture.
At issue in the most recent round of talks were the rules of origin that governed where and how car parts were manufactured and imported. Under NAFTA, at least 62.5 percent of components for cars were to be sourced within the U.S., Canada, and Mexico to qualify for tax and tariff exemptions. The Trump administration was seeking to raise the rules of origin to 80 percent. The new agreement sets the threshold at 75 percent.
“The accord is potentially better for the workers employed in the auto sector, especially those in the U.S. and Canada – and it may help improve wages and trade union-assisted working conditions for those autoworkers in Mexican plants,” said James Creagan, visiting professor of international diplomacy at St. Mary’s University.
“It won’t bring back the steel mills of my memory in the Cleveland area, and it will result in somewhat higher prices for cars – because of the wage floor and the agreement to boost ‘North American content’ in cars. That will hit the smaller vehicles, increasingly manufactured in Mexico.”
Canada also has agreed to eliminate a program that allowed low-priced dairy ingredients to undercut U.S. dairy products, and will provide new access for U.S. dairy, eggs, and poultry.
“USMCA is a win for American farmers, ranchers, and agribusiness as it includes important improvements that will enable food and agriculture to trade more fairly,” the White House statement said.
State and local elected officials, business coalition leaders, and other observers had these reactions to the news Monday:
Eddie Aldrete, senior vice president of IBC Bank:
“The continuation of free trade under USMCA will have a profoundly positive impact on all three nations, but nowhere more so than in Texas and the border region. Before NAFTA, double-digit unemployment was common along the border. The new agreement keeps in place principles that will continue the increasing prosperity we’ve seen since the treaty’s implementation in 1994.”
Sarah Sanchez, executive vice president of global development, San Antonio Economic Development Foundation:
“Canada is one of San Antonio’s largest trading partners and we are enthused by the new trilateral agreement that includes the U.S., Mexico, and Canada. This is an opportunity for our community to build on the over 63,000 export-related jobs in San Antonio and continue fostering strategic trading partnerships with our neighbors to the north and south.”
San Antonio Mayor Ron Nirenberg:
“I am optimistic that this modernized trade agreement between the United States, Mexico, and Canada will enhance North America’s economic competitiveness in the 21st century. Last month, San Antonio hosted the U.S.-Mexico Border Mayor’s Conference where we affirmed our collective commitment as local leaders to an updated NAFTA and expanding cross-border trade, investment, and commerce.
“The people of San Antonio are major beneficiaries of this partnership, and we will continue to grow our export industries, attract foreign investment, and expand economic opportunity to every resident.”
Rebecca Cedillo, interim president and CEO, San Antonio Hispanic Chamber of Commerce:
Small businesses are the backbone of our economies. Support and promotion of these type of enterprises are key to the future success of our three nations. The San Antonio Hispanic Chamber of Commerce supports Congressional ratification of this agreement. We believe the USMCA will forge ahead as a catalyst for trade, as well as skill and talent expansion including tri-national partnerships, building upon the NAFTA principles established in the early 1990s.”
Richard Perez, president and CEO, San Antonio Chamber of Commerce:
“I’m extremely pleased with the outcome that Canada has joined … so we’re friends again. In my mind, the most important part is that we keep our friends close, and who better to have as close as we can than Canada and Mexico?
“We’re in a world with very smart people, and smart people live in other countries, too. And if they have signed off on this, it is as beneficial to them as it is to us. Now certainly it’s not perfect, but they wouldn’t be signing a deal that hurts their countries. Nor would we. So once the details are worked out, it will be something that’s positive for all three. Retaining NAFTA and growing it is probably the smartest thing we could do, particularly given all the negative things happening with other countries, with trade in particular. So, keeping this relationship between our closest neighbors strong is a good positive sign for us as a country.”
U.S. Rep. Henry Cuellar (D-Laredo):
“I am glad that the Administration and Canada were finally able to come to an agreement on NAFTA. This has reflected what I have said all along – we must solidify a deal that includes Canada, so that we can build upon the successes of NAFTA and strengthen trade relations with both partners.
“A deal that would have left either one of them behind would have created uncertain markets and been detrimental to our businesses. This trilateral deal will continue to spur growth and economic development for all three countries, as it has since its inception over two decades ago. I look forward to reviewing the final agreement in Congress and working with the Administration to solidify this deal.”
Todd Staples, president of the Texas Oil & Gas Association and former Texas Agriculture commissioner:
“We appreciate the President’s diligence in crafting a renewed trade agreement that helps secure our nation’s energy future and are hopeful Congress will approve the USMCA. As the leading oil and natural gas producer, the number one state in many agricultural products, and a major exporter, Texas is home to those who understand the value in strong relationships with our neighboring countries.
“Texas oil and natural gas companies of every industry sector are playing a major role in producing jobs and opportunities for all Americans, and this pact will move us toward North American energy security and continued improved relationships with our closest trading partners.”
Jeff Moseley, president and CEO, Texas Association of Business:
“Texas’ trade partnership with Mexico and Canada creates nearly 1 million jobs with an annual export of over $112 billion to Mexico and Canada. Beyond Texas, trade with these two countries supports almost 14 million U.S. jobs, and nearly 5 million are supported by the increase in trade.
“We look forward to continuing our work with the United States Trade Representative and the Department of Commerce during the ratification of USMCA.”
U.S. Sen. John Cornyn (R-Texas):
“I’m encouraged that the United States, Mexico, and Canada have successfully come to a trilateral agreement to modernize NAFTA. Millions of American jobs are supported by NAFTA, and in Texas, it’s the cornerstone of our economy. This agreement is a positive step toward maintaining a strong, unified North American economy, and I look forward to reviewing the details.”
Colin Robertson, former Canadian diplomat:
“President Trump was determined to scrap NAFTA, but what we have in USMCA is a deal for the digital age – more managed trade in autos, chapters on environment and labor – that still retains key features of NAFTA, notably dispute settlement. It will give investors the confidence they need to invest in North America. No deal is perfect but there is provision for revisions and updates.”