10/18/2018 U.S.-Mexico-Canada Agreement : What’s New in NAFTA 2.0?




Thursday October 18, 2018, WITA discussed the new provisions under the U.S.-Mexico-Canada Agreement.  

U.S.-Mexico-Canada Agreement : What’s New in NAFTA 2.0?:

By Ben Stevens

On Thursday, October 18th, 2018, the Washington International Trade Association hosted an event featuring an expert panel to examine the new USMCA agreement, titled “U.S.-Mexico-Canada Agreement: What’s New in NAFTA 2.0?”. The featured panel discussed the updates that came with the USMCA agreement. The distinguished panelists included Governor Matt Blunt, Kimberley Claman, Victoria Espinel, Joe Glauber, and Barbara Weisel. The focus of the panel was centered on the impacts of the USMCA agreement on the automotive manufacturing, tech and digital services, financial services, and agricultural sectors. Barbara Weisel, a Managing Director at Rock Creek Global Advisors, kicked off the discussion. Weisel provided pertinent background information regarding the uncertainties that accompanied the NAFTA renegotiation efforts before the USMCA deal was reached. Next, she described the activity of trade experts and stakeholders to evaluate the new agreement. She noted that to effectively evaluate the USMCA, a baseline point of comparison must be settled upon. She highlighted three potential approaches for comparison: to the old NAFTA agreement, to the TPP agreement, and to no trade agreement in NAFTA’s place. Finally, she introduced the other panelists and asked for their take on the agreement as well as asking which reference point they compared it to.   Gov. Matt Blunt, President of the American Automotive Policy Council, was the first speak. Some of the most contentious provisions of the agreement revolve around autos and rules of origin. Blunt was able to provide the audience with an automotive industry perspective to how USMCA negotiations impact supply chains of autos. He noted that comparing USMCA to no agreement was his baseline for analysis, stating there is benefit in a “cohesive North America with a platform to manufacture automobiles”. President Blunt argued that the binding currency provision was beneficial and could be a model for future trade agreements, however, he said the language could have been clearer. Discussing the rules of origin requirements, Gov. Blunt said that although the requirements are “extremely complex”, industry leaders feel they can manage them. He lamented the 232 tariffs, positing that it lowers the competitiveness of our nation’s auto industry and that it was his largest issue with the new agreement. Second to speak was Victoria Espinel, President & CEO of BSA | The Software Alliance. Her expertise in the software and digital service field provided an excellent perspective on the original NAFTA’s complete lack of rules around data flows. She noted that for software companies, comparing USMCA to the old NAFTA makes the most sense. Highlighting the importance of data to every sector of the economy, she argued that the provisions that modernized USMCA with respects to data flows are critical to all industries. Espinel highlighted cyber security and data privacy standards as areas of potential improvement, saying “As former trade negotiator I always believe we can make the next trade agreement better”.  She illustrated the difficulties for businesses when there are not “operable and consistent standards or frameworks” with different countries’ digital privacy laws. In her view, the lack of global leader on the issue of privacy standards opens an opportunity for the US to assume that role. Kimberley Claman, Director of International Government Affairs for the CITI Group, was the third speaker. She argued that comparing the USMCA to all other trade agreements made the most sense, stating “the Stability that came with a Trilateral agreement was important to us and our clients”. Like Espinel, she highlighted the benefits that came with modernization around data flows. She noted how heavily CITI Group relies on data, saying “our CEO describes us as a tech company with a banking license”. Claman posited that the biggest benefits besides modernization were provisions that ended data localization for financial service firms. These provisions surrounding data localization were not included in the TPP. Additionally, cross border services like insurance and financial advising are now protected from governments limiting suppliers and have increased protections having to give away their source codes and algorithms to governments. She saw potential issues with enforcement, stating “some updates cannot be taken to the WTO for dispute settlement”.   The last speaker Joe Glauber, a Senior Research Fellow at the International Food Policy Research Institute, rounded out the discussion. He stated there were three main benefits of the new agreement including largely unchanged rules regarding agriculture from NAFTA, increases in dairy trade, and avoiding seasonal tariffs proposed by the Trump Administration. He noted that while he calls the USMCA “the emperor’s new NAFTA”, he is very pleased there is an agreement in place and the agreement is a “relatively low tariff framework”. Arguing for reduction of tariffs as opposed to TRQ increases, Glauber said he feels the impact on the dairy market will be relatively small and “more significant in Canada”. This contrasted to the media’s portrayal of the dairy industry coming away as big winners.  He noted that seasonal tariffs would have harmed both US consumers and producers, as retaliatory tariffs would be the likely result. The panelists produced interesting, in-depth analysis of the benefits and shortcomings of the USMCA agreement. Multiple stakeholders and industry perspectives were represented in the discussion. Overall, it was a robust examination that helped illuminate the more technical provisions of the new agreement.


Gov. Matt Blunt, President, American Automotive Policy Council Kimberley ClamanDirector, International Government Affairs, Citi Victoria A. Espinel, President & CEO, BSA | The Software Alliance Joe Glauber, Senior Research Fellow, International Food Policy Research Institute Moderator: Barbara WeiselManaging Director, Rock Creek Global Advisors  

To view the event details, click here.