The proposed U.S.-Mexico-Canada Agreement on trade will result in 76,000 new jobs in the U.S. auto industry, the Trump administration claimed in a report Thursday. The report also promised $34 billion in new investments in the industry.
The deal is intended to replace the 1993 North American Free Trade Agreement. The Trump administration is trying to bolster support for the deal’s approval by Congress and get it passed by this summer. House Speaker Nancy Pelosi, D-Calif., has been noncommittal about bringing it up for a vote, however, and many Democrats have argued the administration should re-open talks with Canada and Mexico.
Thursday’s analysis, produced by the Office of the U.S. Trade Representative, comes as the International Trade Commission, an independent federal agency, is expected to release a study on the agreement’s overall economic impact in the next few days.
The U.S. Trade Representative report touted the deal’s benefits to economy by arguing that it would shift more auto production to the U.S.
[Related: White House working feverishly to pass USMCA despite Trump seeming to undermine it]
“[A]ll automakers with a presence in North America have indicated to USTR that they will be able to meet the requirements of the new rules — and that they intend to do so [rather than forego preferential tariff treatment],” the analysis said.
A senior administration official told reporters that the deal would achieve gains for the industry thanks to a requirement that 40 percent of a car’s parts be produced by workers making at least $16 an hour. This would largely eliminate the competitive advantage Mexico has from its cheaper labor, the official argued.
The deal would also eliminate a loophole that broadened what auto parts could “deemed originating” from North America, and therefore duty-free, the official said.
“Mexico is increasingly being used as a platform by Asian and German automakers, many of which are from countries that have their own free-trade agreements with Mexico, to serve the U.S. market oftentimes with cars assembled in Mexico but with substantial parts from outside north America,” the official said.
