MIDVALE — A new trade treaty could be very beneficial for Utah firms involved in international commerce between the United States and its two closest neighbors, officials say.
On July 1, the United States-Mexico-Canada Agreement, or USMCA, officially took effect as a revamped free-trade agreement between the three nations designed to be the successor to the oft-criticized NAFTA. Numerous terms and conditions from NAFTA were incorporated into the latest trade compact.
The North American Free Trade Agreement was enacted in 1994 to create a free-trade zone between Canada, Mexico and the United States, according to the International Trade Administration. In January 2008, the trilateral treaty also eliminated all tariffs and quotas on U.S. exports to Mexico and Canada.
Key USMCA enhancements included provisions that protect intellectual property, digital trade, financial services and the environment, as well as thresholds to determine what lower-value goods can be shipped tax- and tariff-free over international borders or using regular customs forms.
Speaking Tuesday at a news conference in Midvale, Rep. Ben McAdams, D-Utah, touted the economic advantages of the new deal for Utah companies and their trading partners north and south of the border.
“USMCA is a major win for Utah farmers and ranchers, transportation and machinery suppliers, e-commerce companies and the thousands of Utahns they employ. Mexico and Canada are key trading partners and the economic relationship between Utah and those countries supports more than 120,000 Utah jobs,” he said. “At a time when Utah’s economy is struggling with ongoing effects of COVID-19, the certainty of this trade agreement gives employers a clear path forward to serve international markets and customers and keep employees on the payroll.”
Speaking from his company’s Midvale headquarters, Kirk Aubry, president and CEO of Savage — a global supply chain and logistics service provider — highlighted the importance of the new deal.
“We do supply chain, we run trucks, we run trains, we run boats all over the world,” he said. “We’re involved in the grain ag sector business in Mexico. We’re also importing or exporting finished fuel products as well — gasoline, diesel, those kinds of things into Mexico.”
He said because of the focus Savage has in growth in Mexico, it’s important to know what the nature of the relationship is going to be over time. He said the new trade agreement provides the kind of long-term certainty that businesses need to operate most effectively.
“So far, we have not had any interruptions (due to the pandemic). We run 100 cars, that’s a full train set a day, every day across that (southern) border,” Aubry said. “You would have thought that you could have some issues, but we have not had issues with disruption.”
McAdams noted that Savage, a 75-year-old, Utah-based family-owned company with nearly 4,500 employees, is an example of a local firm that conducts business with clients in Canada and Mexico. At a time when the coronavirus pandemic has some countries discussing closing their borders, any disruption to the global supply chain potentially harms economies and threatens jobs for many U.S. companies, he said.
McAdams said final negotiations on the trade deal last year resulted in stronger enforcement provisions on labor and environmental standards, ensuring U.S. companies are not undercut by weaker standards in other countries.
“This is an agreement that makes sure that American companies are treated fairly in the global marketplace with Canada and Mexico,” he said. “
World Trade Center Utah President and CEO Miles Hansen said the USMCA will be critical to the growth of Utah’s economy and jobs in the state.
“What USMCA does is open up new market opportunities, particularly in Canada, and it reduces the inefficiencies of doing trade, whether it’s exporting to Mexico or Canada,” he explained. “That creates new opportunities for Utah farmers that can make it easier for them to export to Mexico and some areas — particularly in dairy, where they now can export competitively into Canada — where under NAFTA, that wasn’t the case.”
NAFTA overwhelmingly helped support the U.S. economy, Hansen said, but there were certain industries that saw jobs being moved away from the United States. The new trade agreement provides more protections for American businesses and also allows for fair trade opportunities for all three nations involved in the partnership.
“What’s important here is that the agreement has been renegotiated. It’s good for American companies, and now they have a certainty that they can go forward and that trade disputes can be settled expeditiously and in a favorable way,” McAdams said.