USMCA economic impact report reveals improving trade issues

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U.S. food and agricultural exports would increase by $2.2 billion, or 1.1%, with full implementation of the United States-Mexico-Canada Agreement, the successor to NAFTA, said the U.S. International Trade Commission in a 379-page report issued Thursday.

The ITC also concluded that while the USMCA would add roughly 28,000 jobs in the auto industry, it would also cause the price of cars to rise slightly for consumers. For dairy, the ITC expects exports of US dairy products to increase by more than $277 million overall-rising $227.0 million to Canada and $50.6 million to Mexico, respectively. But its critics decried the loss of manufacturing jobs to cheaper locations like Mexico for more profitability among businesses.

A study released last month by researchers at the International Monetary Fund found the new pact would have "negligible" impact on US gross domestic product and lead to a reduction in regional trade.

USTR officials said their analysis was based on plans disclosed by automakers to the trade agency for compliance with the new agreement's tighter rules of origin.

The U.S. Trade Representative's office had prepared a separate analysis of the USMCA's automotive benefits that industry officials had described as a rosier alternative view of USMCA aimed at limiting any potential damage from the ITC report. "Free trade agreements like the USMCA that open markets and lower trade barriers are crucial to continuing the trend of growing USA dairy exports, which leads to jobs and income for Americans".

Many lawmakers have said they won't make up their minds on how they will vote on the USMCA deal until they read the independent agency's report.

The report noted that the USMCA - which has yet to be ratified by Congress - is already helping to stimulate billions of dollars in new auto manufacturing investments in the United States.

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The USMCA would "strengthen and add complexity to" the rules of origin requirements in the automotive sector, the report said, adding that while doing so will increase US production of automotive parts and employment in the sector, it will also result in "a small increase in the prices and small decrease in the consumption of vehicles in the United States".

The estimates include about $15.3 billion investments previously announced by Fiat Chrysler, Ford Motor, General Motors Toyota Volkswagen and battery maker SK Innovation.

The Trump administration anticipated the arrival of the trade commission's unvarnished assessment by launching a new charm offensive to sell the merits of the new free trade pact, and to counter growing skepticism about the economic benefits of the deal.

An independent federal agency finds that President Donald Trump's new North America trade agreement would give the US economy only a modest boost.

Toyota in March added about $3 billion to a USA investment plan announced in January 2017, but the initial plan was already to spend $10 billion over five years.

"These findings validate President Trump's action to withdraw from TPP and renegotiate the disastrous NAFTA", he said.

"Current and threatened tariffs should be removed so the industry can focus on retaining a critical regional trading agreement, while keeping more jobs and innovation in the United States", the group said in a statement. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, insist the president must remove tariffs on steel and aluminum imports from Mexico and Canada before a vote.

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