Michigan’s economy depends on healthy and strong trade relationships with our partners around the world, especially with our neighbors, Canada and Mexico. As Congress prepares to take up the United States-Mexico-Canada Agreement (USMCA) after the August recess, Michigan’s farmers and small business owners urge our elected leaders to ratify the trade deal without delay.
USMCA builds on the strong foundation of trade with our neighbors by granting unlimited market access to our north and south and opening new opportunities for our economy to grow. The American agricultural sector saw its exports to Canada grow an exponential 289% under NAFTA and 311% to Mexico. Those two countries together take nearly 30% of America’s total agricultural exports, which in 2018 totaled $41 billion.
With USMCA being an upgrade to NAFTA and improving the limitations under the current framework, these numbers could be expected to increase. Michigan’s agricultural interests would be granted unrestricted access into these markets through USMCA passage, with the most noticeable improvements to dairy, poultry and wheat. Moreover, agriculture will continue supporting more than 325,000 jobs and even more will be created with new opportunities for growth.
Small businesses also benefit greatly from free and fair trade. In Michigan, small businesses employ half of our workforce. Across the country, 59.9% of businesses exporting to Canada and 57.7% exporting to Mexico have fewer than 20 employees.
Securing the guarantees in trade under USMCA is crucial for small businesses across the country, and here in Michigan, to continue their growth and expand their operations to meet the trade demand. Since NAFTA’s ratification in 1993, the number of companies exporting to Canada grew by 81% and to Mexico by 365%. Delayed passage of the USMCA puts this growth at risk, something our federal and local economies cannot afford.
USMCA cuts a lot of the red tape that oftentimes hurts small businesses and prevents even greater growth. In fact, USMCA establishes a specific small business committee whose sole purpose is to help small business explore new markets, take advantage of access and grow their exports.
The deal goes even further and establishes protections for specific small businesses, such as those in the digital field, and protects their intellectual property rights. The framework is designed for a 21st-century economy, and it is exactly what our small businesses need to compete, especially in quickly evolving sectors.
The agreement’s impact on the United States economy as a whole is a win for America. The deal is expected to create 176,000 new jobs, according to the International Trade Commission. The same group forecasts USMCA to grow our gross domestic product (GDP) by $68 billion.
Industries across the board that rely on exporting their products across our borders will see growth. The energy sector will lock in tariff-free energy exports, 54% of which went to Canada and Mexico; these countries imported more energy products from the U.S. than any other country in the world.
Michigan’s auto industry will see a $60 billion boost, and our state’s dairy farmers can expect a $227 million boost in exports to Canada. Both of these industries are a significant core of Michigan’s economy and underscore why ratification of this deal is so important for our state.
Supporting USMCA shouldn’t be a partisan issue. A new report from the left-leaning Progressive Policy Institute (PPI) said that USMCA “would be good for the United States and its neighbors because the new deal would both preserve NAFTA’s essential core and add significant new provisions.”
The PPI warns that terminating NAFTA would reduce U.S. exports by 5%, reduce U.S. GDP by 1.2% and put 3.6 million American jobs at risk. Given these risks, thought leaders across the political spectrum agree that passing USMCA and securing a free and fair trade deal is critical.
Finalizing USMCA also is critical for future trade agreements. USMCA serves as a model framework for addressing biotechnology, sanitary and phytosanitary standards, and other modernizations in agriculture.
Timely USMCA approval will send a strong signal to the international community that we are invested in free but fair trade and are a reliable partner. We must continue to look for new and improved opportunities, whether it be Japan, the European Union, China or elsewhere.
Upon return from the August recess, Michigan’s elected representatives in Congress need to prioritize USMCA passage without delay. Our industries cannot afford the risk of losing the opportunity to reap the benefits of an updated trade framework that grants us unrestricted access to crucial markets and builds upon the success farmers and small businesses have seen since 1993.
Michigan’s economy and thousands of everyday Michiganders would benefit by Congress’ unconditional support for USMCA when House leadership calls a vote this fall.
Brian Calley is president of the Small Business Association of Michigan. Carl Bednarski is president of the Michigan Farm Bureau.