PD Editorial: House should pass North American trade pact
California's top trading partners, Mexico and Canada, accounted for more than a quarter of the Golden State's $178.4 billion of exports in 2018.
International trade, including exports and imports, supports nearly 5 million California jobs in everything from agriculture to technology, according to the state Chamber of Commerce.
In short, the state's continued prosperity is dependent on free, fair and predictable markets. However, for most of his tenure, President Donald Trump has waged trade wars that threaten supply chains, exports and, ultimately, the stability of the U.S. economy. Indeed, the federal government has spent more than twice as much money bailing out American farmers shut out of China by tariffs as was spent rescuing U.S. automakers during the Great Recession.
Instead of following through on threats to make North America another battlefield in the trade war, the Trump administration negotiated some modest improvements to the North American Free Trade Agreement, the 1993 treaty governing the multitrillion dollar trade relationships between the U.S., Mexico and Canada. The new deal was announced more than 13 months ago, yet it's still awaiting action in the House and the Senate.
So it was good news last week when Speaker Nancy Pelosi said a deal is near that would clear the way for approval before the House adjourns for the year on Dec. 12.
Trump called NAFTA the worst trade deal ever and, predictably, declared his update the best. In truth, the new agreement is more than anything an update and a rebranding of NAFTA, which is now known as the U.S.-Mexico-Canada Trade Agreement. It makes some improvements on intellectual property and adds language on e-commerce, which wasn't on anyone's radar when NAFTA was negotiated.
The agreement also eliminates some long-standing Canadian import barriers for dairy products and, addressing complaints about NAFTA from Democrats and organized labor, raises minimum wages for auto workers in Mexico and raises the threshold for American- made parts in vehicles imported tariff-free to the United States. It has flaws, including a patent provision that favors pharmaceutical companies over consumers.
On balance, however, this is an improvement over existing rules - and it's unequivocally better than returning to the pre-NAFTA model.
The United States stands to gain $68.2 billion in GDP and 176,000 jobs within six years under the new agreement, according to an analysis by the International Trade Commission. That's a small bump in a $20 trillion economy - but it's big for people who land jobs or build new business that rely on cross-border commerce.
There are immediate benefits, too, beginning with assurance for manufacturers and other employers that they can make medium- and long-term investments without fear that trade rules will be unexpectedly and arbitrarily changed.
Reaffirming a North American free trade zone also would benefit American exporters who have been hurt by new trade barriers in Asia resulting from Trump's trade war and his decision to withdraw from the Trans-Pacific Partnership.
House Democrats have been divided, with some pushing for stronger enforcement provisions, primarily on labor rights, environmental issues and drug prices, and others pushing for ratification. On Thursday, Pelosi said a deal with the Trump administration on some unspecified changes is imminent.
Congress hasn't accomplished much this year, mostly because the Senate has ignored substantive legislation passed by the House. A new North American trade agreement is one of the remaining opportunities for a legislative achievement in 2019. Getting that deal done would provide a needed boost to the U.S. economy and give both parties something to brag about in next year's election.
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