While it’s possible that elements of this long-sought trilateral trade deal could change as negotiations continue and industry reviews of the details remain ongoing, automotive executives are cautiously optimistic that the pending U.S.-Mexico-Canada Agreement will ultimately be beneficial to the automotive sector.
The USMCA, also known as “NAFTA 2.0” or “the new NAFTA,” is slated to replace the North American Free Trade Agreement in 2020 upon official ratification by the legislative bodies of the United States, Canada and Mexico. It’s already been tentatively signed-off upon by the top individual leaders of the respective three nations.
As a 1,809-page tome of doorstop-like proportions containing 34 chapters and 14 side letters, at least a few slight alterations in the complexities of the text are anticipated during an extended period of debate among American, Mexican and Canadian policymakers throughout the approval processes.
Yet given that President Donald Trump is no fan of NAFTA -- having repeatedly threatened to unilaterally terminate “the catastrophe known as NAFTA” over what he considers to be highly unfavorable conditions for the U.S. -- the mere existence of the USMCA’s updated approach is a significant accomplishment for the auto industry’s cross-continental automotive interests.
“We’re very pleased that there’s an agreement,” says Ann Wilson, senior vice president of government affairs for the Motor & Equipment Manufacturers Association (MEMA). “It’s very important for us to have some sort of agreement between the three countries; the North American supply chain depends on the ability to move goods through all three countries,” she adds.
“Suppliers operate in a global economy that depends on a on a strong North American trading economy and a worldwide network of suppliers and customers for continued viability and growth,” Wilson points out. “Our industry’s 19 percent job growth can be attributed, in part, to the NAFTA model. NAFTA-enabled ‘near-shoring’ of an interconnected supply chain between the U.S., Canada and Mexico has provided opportunities for U.S. manufacturers to compete with the rest of the world.”
Wilson explains to Aftermarket Business World that “we’re supporting the agreement and we’re working through the details” to identify any aspects in need of revision. “There will be constant back and forth on this.”
MEMA is committed to keeping everyone informed as the USMCA wends its way toward passage. “We will continue to have briefings for the industry,” she says.
Just as the USMCA negotiations were hard-fought on the continental diplomatic level; Congressional approval is expected to be contentious as well. “I think personally that this is going to be a long process, and this will work out through this whole year. So don’t think if you see the agreement go up (to the House or Senate) that we’ll be able to finalize a vote on this relatively shortly,” says Wilson. “There are a lot of serious concerns from both Republicans and Democrats, and there’s going to be a lot of debate on this as we move forward.”