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- President Donald Trump fulfilled a top legislative goal last week as Democrats said they would get behind plans to implement the United States-Mexico-Canada Agreement.
- The only issue? The new trade deal doesn’t promote free trade, in the view of one Republican senator.
- “It is the only trade pact ever meant to diminish trade,” Sen. Pat Toomey of Pennsylvania wrote in an op-ed article published in The Wall Street Journal.
- Visit Business Insider’s homepage for more stories.
President Donald Trump fulfilled a top legislative goal last week as Democrats said they would get behind plans to implement his signature overhaul of the 25-year-old North American Free Trade Agreement after more than a year of negotiations.
The only issue? It doesn’t promote free trade, at least in the view of one Republican senator.
Sen. Pat Toomey of Pennsylvania lambasted the United States-Mexico-Canada Agreement late Wednesday, saying that it advanced protectionist values and that he would vote against it early next year.
“The USMCA’s many flaws arise from its unprecedented intent,” Toomey wrote in an op-ed article published in The Wall Street Journal. “It is the only trade pact ever meant to diminish trade.”
House Democrats announced last week that they were able to reach a compromise with the Trump administration after more than a year of negotiations on the USMCA, which now includes tighter labor and environmental protections.
It also increased the percentage of car parts that needed to be made domestically, ramped up enforcement of trade rules, and shot down a provision that would have extended select patents for the pharmaceutical industry.
“Since Nafta’s implementation, American exports to Mexico have grown more than fivefold,” Toomey wrote. “But imports grew even more, widening the trade deficit. The Trump administration finds this unacceptable, even though the trade deficit is mostly meaningless. Hence USMCA has a myriad of provisions to warm the hearts of protectionists.”
A recent study from the Washington-based Peterson Institute of International Economics predicted that USMCA would actually dampen growth in the US. A congressionally mandated International Trade Commission report reached a similar conclusion in April.
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Under the new agreement, 75% of car components must be made in Canada, Mexico, or the United States. While an increase from the previous requirement of 62.5% was meant to bolster the sector, it could actually raise input costs and slow activity.
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