What is USMCA?
The United
States-Mexico-Canada Agreement (USMCA) is a proposed new trade agreement between
the U.S. chemical industry’s top two trading partners. This agreement builds
upon the success of the North American Free Trade Agreement (NAFTA) while
modernizing the current trade pact to address 21st-century trade
issues like regulatory
cooperation.
Why now?
As
ACC’s new President and CEO Chris Jahn wrote in the Washington Examiner, USMCA needs to be passed as soon as
possible in order to provide trade and economic certainty to U.S. chemicals
manufacturers and the broader manufacturing industry. Uncertainty over the
future of North American free trade continues to put announced U.S. chemical
industry investments at risk.
Since 2010, chemical manufacturers have announced
approximately $201 billion of investment in new or expanded chemicals and
plastics production capacity in the United States. More than 60 percent of that
capacity stems from foreign direct investment. Delaying USMCA passage could
have a negative impact on growth, innovation, and the American jobs that depend
on tariff-free trade relationship with Canada and Mexico.
Why is USMCA important?
Free trade agreements have enabled the business of chemistry
to grow and innovate across borders over the last 25 years. In 2018, the U.S.
trade surplus in industrial chemicals was $31 billion and is projected to grow
to around $61 billion by 2024. This is made possible in part by trilateral free
trade with the U.S. chemical industry’s top two export destinations: Canada
($23 billion) and Mexico ($23 billion).
More than 30
percent of chemistry-related jobs are export dependent. In fact, chemical
exports in the United States accounted for 10 percent ($140 billion) of all
American goods exports in 2018. USMCA would strengthen NAFTA’s legacy by
maintaining duty-free trade, helping remove barriers to trade, and keeping
North American manufacturing costs low.
More
than 96 percent of all manufactured goods are touched by the business of
chemistry, and our industry supports 25 percent of the United States’ GDP.
By boosting U.S. chemical industry growth and exports, USMCA will also help our
customer industries grow and create jobs.
USMCA Provisions that Benefit the Business of Chemistry
ACC supports USMCA for several reasons:
- USMCA would prevent any new tariffs on North
American chemicals trade. Tariffs otherwise would reduce demand for American
made chemicals and threaten recently announced investments. - USMCA’s final Sectoral Annex for Chemical
Substances outlines specific areas of regulatory cooperation where regulators
could create efficiencies that reduce costs while maintaining high levels of
protection for human health and safety and the environment. - USMCA would facilitate digital trade by ensuring
that chemical industry data can flow freely and securely across North American
borders all
while implementing best-in-class intellectual property rules that will help
protect the full range of U.S. manufacturing inventions and innovations. - USMCA would modernize chemicals rules of origin
by offering companies a clear and simple menu of options for documenting the
origin of their products.
It is important for our industry and our country’s
economy that Congress pass USMCA as soon possible. Please send a letter to your
member of congress telling them to vote on USMCA using the Take Action box above!
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