USMCA Trade Deal Approved by Senate Committee

The U.S. Senate’s Finance Committee approved the United States–Mexico–Canada Agreement by a 25–3 vote on Jan. 7. USMCA will be sent for a full Senate vote, which may take place later this month, according to trade pundits such as Nicole Bivens Collinson, president, international trade and government relations, for Sandler, Travis & Rosenberg, P.A., a law firm focused on trade, customs and export law.

The trade deal is considered a replacement for the Bill Clinton–era North American Free Trade Agreement, which was passed in 1994. USMCA was a focus of Donald Trump’s 2016 campaign for the presidency. The president and his allies hope to pass and implement the deal before the November presidential election to demonstrate to voters that the president delivered on a campaign promise, Bivens Collinson said. If the deal is passed, some of the terms of the USMCA, such as significant rules of origin changes of where goods are produced, might be enforced one to three years from the time that the agreement goes into effect.

However, a Senate vote on the deal could be slowed down by Trump’s impeachment trial, which is supposed to take precedence over other Senate business, Bivens Collinson said. Also, Canada’s parliament has not yet ratified the agreement, whereas Mexico’s government ratified it on Dec. 19.

Different business groups ranging from agriculture to automotive and e-commerce applauded the Senate Finance Committee’s vote. TechNet, a network of e-commerce and tech executives, said that USMCA would give digital business a boost.

“[It’s] another important step toward bringing U.S. trade policies with Canada and Mexico into the 21st century and propelling all areas of our economy by supporting digital trade,” according to a TechNet statement on Twitter.

Major apparel-trade associations and fashion-retail groups did not release any statements on the Jan. 7 vote. But across the board, fashion trade associations have voiced support for the agreement in the past. When the U.S House of Representatives approved the deal on Dec. 19, the American Apparel & Footwear Association congratulated the vote.

“The passage of USMCA is a positive step for the apparel and footwear industry and one that will strengthen our North American supply chains, which support hundreds of thousands of American jobs,” said Rick Helfenbein, the AAFA’s president and chief executive officer.

The USMCA deal is forecasted to add $68.2 billion and 176,000 new jobs to the U.S. economy, according to a U.S. International Trade Commission study that was released earlier this year. Features of the new deal include protections for businesses manufacturing apparel in America. In order to qualify for the agreement’s protections, manufacturers will have to obey rules-of-origin provisions, which demand that some parts of clothing be produced in one of the countries participating in the treaty. Other provisions of the treaty include new environmental protections as well a call for a stronger enforcement of labor standards. It also expands a ban on forced child labor and establishes a forced-labor enforcement task force, Bivens Collinson said.