manufacturer worker checking engineering file on a laptop

The issue

A long-awaited new agreement on North American trade policy has won final U.S. approval.

Legislation to implement the United States-Mexico-Canada Agreement passed the House 385-41 on December 19, 2019, was approved 89-10 by the Senate on January 16, 2020, and was signed into law by President Trump on January 29. The agreement has already been ratified by Mexico but needs approval by the Canadian Parliament before it can take effect.

NRF welcomed the update to the North American Free Trade Agreement as a “meaningful trade victory that will provide benefits for decades to come.” NRF said the USCMA will support “millions of U.S. jobs that depend on free trade with Canada and Mexico.”

Trump has been a longtime critic of NAFTA, a landmark pact that has boosted trade between the United States, Canada and Mexico for a quarter-century. Shortly after taking office in 2017, he launched renegotiation of the agreement. After more than a year of talks with Canada and Mexico, the new USMCA was signed by the three countries in November 2018 but was still subject to approval by Congress, with both Democrats and Republicans voicing objections to various provisions. Trump repeatedly threatened to withdraw from NAFTA in order to put pressure on lawmakers, but NRF said doing so without a replacement in place was “simply not an option.”

Why it matters to retailers

Like other trade agreements that have reduced barriers to international trade, NAFTA has helped retailers provide American families with the products they need at prices they can afford. A 2018 study conducted for NRF and other trade associations found that withdrawing from NAFTA without a replacement would cost consumers $5.3 billion in higher prices because of tariffs that would be imposed on goods from Mexico and Canada. Retailers would see a $10.5 billion hit to their bottom lines, and 128,000 retail-related jobs could be lost over three years.

NRF advocates for a ‘do no harm’ approach to NAFTA

person welding steel

NRF worked to ensure that NAFTA modernization efforts did not harm the underlying agreement. NRF agreed that a number of NAFTA’s provisions needed to be updated to reflect today’s business environment, including issues such as digital trade, for example. But NRF told the Office of the U.S. Trade Representative that the priority in negotiations should be to “do no harm” to the existing pact.

NRF said threats by the White House to withdraw from NAFTA or include a sunset provision “should be a non-starter.” In an op-ed, NRF President and CEO Matthew Shay said an end to NAFTA would cost the United States jobs and harm the economy while resulting in higher prices for consumers and reduced availability of products ranging from apparel and electronics to fresh fruits and vegetables.

NRF has helped lead lobbying visits to Capitol Hill to reinforce the message that the business community supports NAFTA modernization and to win approval of the new agreement.

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