USMCA (formerly NAFTA)

manufacturer worker checking engineering file on a laptop

The issue

Legislation to implement the United States-Mexico-Canada Agreement was signed into law by President Trump in January 2020. The agreement, which had already been ratified by Mexico, was approved by the Canadian Parliament in March and took effect in July.

NRF welcomed the replacement for the North American Free Trade Agreement, saying it “will bring continued decades of economic prosperity that will benefit American consumers and the millions of U.S. workers whose jobs depend on the free flow of trade with our nation’s two closest trading partners.”

Trump was a longtime critic of NAFTA, a landmark pact that had boosted trade between the United States, Canada and Mexico since 1994. Trump launched a renegotiation of the agreement shortly after taking office in 2017 and the new USMCA was signed by the three countries the next year but was still subject to approval by Congress. 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 helped retailers provide American families with the products they need at prices they can afford. A study conducted for NRF and other trade associations found that withdrawing from NAFTA without a replacement would have cost consumers $5.3 billion in higher prices because of tariffs that would be imposed on goods from Mexico and Canada. Retailers would have seen a $10.5 billion hit to their bottom lines, and 128,000 retail-related jobs could have been lost over three years.

NRF advocates for a ‘do no harm’ approach

person welding steel

NRF worked to ensure that USMCA did not harm the underlying NAFTA 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 and customs facilitation, 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.

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