A new report on the economic impact of the United-States-Mexico-Canada-Trade Agreement may not be sufficient enough to sway Democratic lawmaker reservations.
The International Trade Commission report released Thursday found that the USMCA that President Trump reached with this Canadian and Mexican counterparts would increase U.S. GDP by a slim margin of $68.2 billion, or 0.35%.
The ITC was required to prepare the report per the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 which mandates that the Commission provide lawmakers with a detailed report of a trade deal before they vote on it.
“This report confirms what has been clear since this deal was announced – Donald Trump’s NAFTA represents at best a minor update to NAFTA, which will only offer limited benefits to U.S. workers,” said Sen. Ron Wyden in a statement. The Democratic senator from Oregon who serves on the Senate Finance Committee refrained from mentioning the President’s proposed USMCA deal.
Republican Sen. Chuck Grassley who serves as chairman of the committee, applauded the ITC’s report.
“I’m glad to see the report recognized USMCA’s new economic benefits,” he said in a statement. The Iowa senator also added that the USMCA’s update to rules on intellectual property will be “valuable to many American farmers and businesses, even though their impact on GDP has historically been inherently difficult for economists to measure.”
The trade deal faces an uphill battle. House Speaker Nancy Pelosi earlier in the month said that she would not support USMCA until after Mexico passes and puts in place labor law reforms. “Unless you do this, we can’t even consider it.”
In a sector assessment, the ITC calculates that the U.S. manufacturing industry would benefit the most for the ratification of USMCA. The industry would experience the largest percentage increase in employment equal to 0.37% and real wages of 0.50%.
Of the $19.1 billion increase in exports to Canada as a result of USMCA, the report finds that manufacturing and mining would account for nearly 80%. In Mexico, manufacturing and mining account for approximately 94% of the total increase in exports.
As for the automotive industry, the report states that USMCA “would lead to an increase in U.S. automotive parts production, partly offset by a small decline in U.S. vehicle production.” The report also estimates an increase of U.S. investment of $683 million per year towards increased domestic vehicle production. However due to price increases of the vehicles produced in the U.S., the number of cars purchased would decline by 140,000.
Hours before the release of the ITC’s report, the U.S. Trade Representative’s office, which unlike the ITC does not work independently from the Trump administration, released its own estimates. The USTR reported that USMCA would create 76,000 automotive jobs within five years and induce $34 billion worth of investments to expand car production facilities.