At the end of 2018, the Trump administration finalized the renegotiated North American Free Trade Agreement, resulting in a new trade deal now called the United States-Mexico-Canada Agreement. This milestone is good news and a big win for the United States and its North American allies.
The new agreement not only modernizes a quarter-century-old trade in an era of significant technological advancements such as e-commerce, but also renews and strengthens the positive impacts NAFTA has on U.S. businesses, manufacturing, jobs, and the economy. According to the U.S. International Trade Commission, the USMCA would increase U.S. exports to Canada and Mexico by $19.1 billion (5.9%) and $14.2 billion (6.7%), respectively.
The U.S. vinyl industry has prospered and grown due to the demand created from trade with our neighbors through NAFTA, and we expect further economic development under USMCA. As the new trade deal is being considered for passage, it is essential that there be limited disruptions to global supply chains that would harm U.S. businesses. Entire industries have developed under the current trade rules, and any disruptions are likely to affect the supply chains of these industries.
U.S. vinyl resin manufacturers are net exporters to America’s largest trading partners, contributing to an industry trade surplus with Canada, Mexico, and China. This speaks volumes to the demand for our product. Sixteen billion pounds of vinyl resin is produced in the U.S. annually. About 1/3 of the vinyl polymer produced in the U.S is exported to foreign trading partners. According to the U.S. International Trade Commission, in 2018, U.S. domestic vinyl manufacturers exported 17% to Canada and 8% to Mexico. U.S. vinyl resin exports are expected to grow by more than 4.9% by 2022 and access to the two markets closest to home gives vinyl manufacturers a clear advantage not only by location but positions us trilaterally in a united economic front in negotiations. These exports to Canada and Mexico are creating jobs here in the U.S. These factors must be given careful consideration as the Trump administration and Congress work to reset various trade relationships.
The USMCA also refreshes our countries’ responsibilities for sustainable development in modern trade agreements. With abundant supplies of our two main feedstocks — salt and natural gas — vinyl products are among the most sustainable exports produced in the U.S. With environmentally and socially preferred domestic manufacturing technology and a near-endless supply of raw materials, the U.S. is positioned to be a significant polyvinyl chloride net export leader for many years to come. The vinyl industry is committed to addressing sustainability across our industry, and by expanding exports through favorable trade policies, the U.S. will develop a more sustainable society.
The Vinyl Institute supports USMCA passage and looks forward to working with Congress and the administration to guarantee this deal is implemented in a way that strengthens American companies and American workers. The trade pact will increase certainty among our trade partners while opening markets to U.S. exports. Meanwhile, it is imperative that the U.S. continue its membership in NAFTA until the USMCA is implemented. The U.S. must ensure any legislative efforts do no harm to mature industries that rely on the agreement and the continued access to North American markets. American jobs are at stake.
Dick Heinle serves as the chairman of the Vinyl Institute and is Vice President and General Manager of Formosa’s Vinyl Division of Formosa Plastics Corporation, U.S.A.
