Good Evening
Good Evening

USMCA's trading places

President Donald Trump signs the U.S.-Mexico-Canada Agreement (USMCA)

President Donald Trump signs the U.S.-Mexico-Canada Agreement (USMCA) on the South Lawn of the White House in Washington on Wednesday. Credit: Bloomberg/Andrew Harrer

There aren't many issues that have unified the politics of the United States over the past few years, but the North American Free Trade Agreement is an exception. Democrats and Republicans came to agree that the 25-year-old trade treaty among the United States, Mexico and Canada was badly flawed, and President Donald Trump's promise to tear it up was one of his best-received campaign planks.

When the United States approved NAFTA in 1993, both opposition to the deal and support of it were bipartisan. Cheerleaders believed it would increase U.S. employment and production by opening up Mexico and Canada to American goods and services, while lowering prices for consumers here as less expensive imports flowed in. Detractors argued that factories in Mexico would kill manufacturing jobs because they would be able to pay far lower wages than employers in the United States and because they were free from workplace and environmental regulations.

Both sides were right on aspects of the deal, but the loss of manufacturing jobs was felt more deeply in the United States than lower prices for consumers or larger exports of agricultural goods. The biggest winners were Mexican factory workers, and huge corporations that moved factories south.

The new deal, which received bipartisan support, tightens rules to guarantee that automobiles that can be imported to the United States without tariffs are mostly made in Mexico, rather than imported from a third country, and forces more automobile jobs there to pay at least $16 an hour. It also opens up the Canadian market to U.S. dairy goods and increases intellectual property protections.

The USMCA, as NAFTA is now known, sunsets after 16 years, but is subject to a review every six years. That addresses the biggest failure of NAFTA: there was no easy way to amend it to deal with a changing world.

— The editorial board