Industry groups cheer US House vote on US-Mexico-Canada agreement

The US House of Representatives voted to pass the United States-Mexico-Canada Agreement (USMCA) on Thursday December 19, a move widely praised by steel, aluminium and other industry groups.

The House passed the revised agreement with a 385-41 vote on Thursday, more than one year after the North American countries first announced and signed a preliminary deal in October and November 2018.

“House passage of the USMCA with such huge bipartisan support is a major milestone,” US Trade Representative (USTR) Robert Lighthizer said in a statement following the vote. “The USMCA is expected to create between 176,000 and 589,000 new American jobs and substantially increase economic growth.”

According to American Trucking Associations president and chief executive officer Chris Spear, “cross-border trade with our neighbors has become a cornerstone of the American economy. Strengthening this relationship as USMCA does helps secure our economy’s foundation and ensures we will remain competitive in the global marketplace for decades to come.”

Trade associations representing the US steel, aluminium and scrap industries also spoke favorably of the agreement, which is expected to benefit their constituents – mainly via strengthened automotive content rules and trade enforcement.

“Increased cooperation between the three countries, as is called for in the agreement, will help us address the repeated surges of dumped and subsidized imports of steel products that have injured North American steelmakers in recent years,” American Iron and Steel Institute president and CEO Thomas Gibson said on December 19.

“More than 160,000 US recycling industry jobs dependent on trade and more than $7.7 billion of US scrap imports and exports are bolstered by key components of the agreement,” the Institute of Scrap Recycling Industries (ISRI) said in a member alert on Thursday.

The recycling institute pointed to four features of the deal, namely: “maintained tariff-free access in Mexico (US and Canada are already tariff-free); improved and accelerated customs clearances; indirect recognition of the ISRI specifications as industry standards; and increased demand for scrap through enhanced auto rules of origin requirements.”

Auto industry support

One week ahead of the House vote, the Aluminum Association voiced its support of the deal and called for “[vigilance] to ensure that unfairly traded aluminium does not enter the region,” according to the association’s vice president for policy and international trade, Lauren Wilk.

“We will continue to work with Congress and the administration to ensure the implementation of USMCA, and particularly the automotive rules of origin provisions,” Wilk added.

Under the new agreement, which replaces the North American Free Trade Agreement, each North American-built vehicle must contain at least 75% North American-manufactured automotive parts, and 40-50% of automotive content must be made by workers earning at least $16 per hour. 

Those rules aim to “help to preserve and re-shore vehicle and parts production in the United States,” to “incentivize new vehicle and parts investments in the United States [and to] encourage more investment by auto companies in research and development in the region,” the office of the USTR said.

“This modernized trade deal between our North American trading partners will strengthen the US auto industry and the auto manufacturing supply chain,” Matt Blunt, president of the American Automotive Policy Council and former governor of Missouri, said in a statement.

According to the Motor and Equipment Manufacturers Association, “the USMCA will provide economic certainty, [which] is essential to preserve and enhance vital North American supply chains for the US automotive sector.”

The USMCA still requires final ratification by the US Senate, which is expected to hold a vote on the pact in early January 2020, ISRI said. The Canadian Parliament is expected to ratify the agreement in early 2020 and the Mexican Senate has already ratified the deal, ISRI noted.