U.S.-Mexico-Canada Trade Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors

9 December 2019 Heather Dailey Author avatar
United States International Trade Commission April 2019 Reference: https://www.usitc.gov/announcements/041819/us_mexico_canada_trade_agreement_likely_impact_us.htm This report, prepared by the U.S. International Trade Commission (Commission or USITC), assesses the likely impact of the U.S.-Mexico-Canada Agreement (USMCA or the agreement) on the U.S. economy as a whole and on specific industry sectors. As required, this assessment includes the impact of the agreement on the U.S. gross domestic product (GDP), exports and imports, aggregate employment and employment opportunities, the production, employment, and competitive position of U.S. industries likely to be significantly affected by the agreement, and the interests of U.S. consumers. USMCA is a broad trade and investment agreement. Because NAFTA eliminated tariffs in most sectors, USMCA largely involves rule changes that impact a number of industries. Some rule changes are industry specific, such as the increase in tariff-rate quotas (TRQs) above levels currently established by NAFTA for dairy, poultry, eggs, and egg-containing products.  It is estimated that this rule change would offer the United States additional market access into Canada. Rules governing trade, including new or revised provisions on ROOs, digital trade, IPRs, government procurement, customs facilitation, sanitary and phytosanitary measures, technical barriers to trade, and labor and environmental standards, reflect commitments to refrain from making current trade and investment regulatory practices more restrictive. These provisions will likely benefit U.S. businesses by reducing business uncertainty, potentially lowering trade costs for businesses. The Commission used a variety of analyses to assess the impact of the agreement. The Commission has quantified the impact of the key provisions on respective industries, and then applied these estimates in an economy-wide model to estimate the impact of USMCA on the U.S. economy and industry sectors, and includes assessments based on interviews by Commission staff, testimony and written submissions related to the Commission’s hearing and overall investigation, and Commission staff industry expertise. The model estimates that, if fully implemented and enforced, USMCA would have a positive impact on U.S. real GDP and employment.

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