Manufacturing and business groups are welcoming an agreement between President Donald Trump's administration and Democrats on a replacement for the NAFTA trade pact, a move that clears away what had been a major potential roadblock for a deal.
U.S. House of Representative Democrats announced the agreement at a Dec. 10 press conference in Washington, as trade officials from Mexico, Canada and the United States were meeting in Mexico City to sign the revised pact, called the U.S.-Mexico-Canada Agreement.
While the deal still needs legislative approvals, the agreement between Democrats and President Trump was welcomed by business groups because it would seemingly end significant uncertainty they've faced around trade in the North American bloc and deliver on what has been a key political priority for them.
"A ratified USMCA will deliver increased certainty for manufacturers — especially for the 2 million manufacturing workers whose jobs depend on North American trade," Jay Timmons, president and CEO of the National Association of Manufacturers, said. "Manufacturers support the USMCA, and we are encouraged that the administration and House Democrats have forged a path forward, with the support of Canada and Mexico as well."
Plastics associations in all three countries have mounted a joint push for the USMCA, with the Plastics Industry Association in the U.S., Anipac in Mexico and the Canadian Plastics Industry Association working together. Chemical industry groups forged similar common positions.
In general, those groups had as their bottom line preserving tariff-free trade between the three countries in the current North American Free Trade Agreement and adding to that with updated provisions in USMCA, such as new rules of origin around chemicals, digital trade and regulatory cooperation.
Plastics Industry Association President and CEO Tony Radoszewski welcomed the announcement.
"We expect this trade deal will have a positive impact on American consumers and businesses and are glad to see the path toward ratification coming into focus," he said. "We look forward to reviewing the agreement's final text and working with Congress to move the USMCA forward."
American Chemistry Council President and CEO Chris Jahn said he was "strongly encouraged" by the deal and said ACC looks forward to reviewing the detailed legislative language.
"We strongly urge both sides to build on the momentum of this announcement by swiftly finalizing implementing legislation that the House and Senate could vote on before the holiday recess," Jahn said.
He also said a new agreement could make the three North American countries more competitive with other parts of the world, including China.
"U.S. chemical manufacturers can strengthen our competitiveness and win with countries like China when we are free to innovate across borders and take advantage of integrated supply chains with our two largest trading partners in Canada and Mexico," Jahn said.
He also noted enhanced regulatory cooperation provisions under the USMCA that he said, would "reduce unnecessary regulatory barriers to trade while continuing to protect human health and the environment."
Mexico and Canada are the two largest trading partners for the U.S. plastics industry, and the U.S. plastics sector maintains its single-largest trade surplus with any country with Mexico, at $11.1 billion in 2018.
That, plus the tightly linked supply chains between the three countries, meant that plastics groups and companies had generally opposed the Trump administration's early suggestions of broad tariffs on trade with Mexico, and reacted with muted alarm in April when President Trump suggested closing the U.S.-Mexico border.
In their press conference, House Democrats said they gained stronger provisions around enforcement, environmental protections and trade in prescription drugs compared with the version of the USMCA signed by leaders of the three countries in late 2018. They said it had stronger inspection and workers' rights provisions.
"There is no question this trade agreement is better than NAFTA," said House Speaker Nancy Pelosi, D-Calif., noting that her caucus was in close consultation with AFL-CIO President Richard Trumka during the negotiations with the White House.
"Globalization is a reality, it is not going away," Pelosi said, adding that Democrats wanted the deal to become a template for future trade pacts.