This morning in metals news, an analysis by the U.S. International Trade Commission digs into the details of the pending United States-Mexico-Canada Agreement (USMCA), the Congressional Research Service released a report covering economic growth levels around the world and the chairman of Chile’s Antofagasta says the green revolution will be good for copper.
The United States-Mexico-Canada Agreement (USMCA), the proposed trade deal intended to supersede the 25-year-old North American Free Trade Agreement (NAFTA), has not officially gone into effect just yet.
However, government organizations are conducting analyses to see what kind of impact the proposed agreement might have on commerce among the three countries.
The U.S. International Trade Commission released an analysis of the deal this week, concluding it would have broadly positive impacts.
“The Commission’s model estimates that USMCA would raise U.S. real GDP by $68.2 billion (0.35 percent) and U.S. employment by 176,000 jobs (0.12 percent),” the ITC report, titled “U.S.-Mexico-Canada Trade Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors,” states.
“The model estimates that USMCA would likely have a positive impact on U.S. trade, both with USMCA partners and with the rest of the world. U.S. exports to Canada and Mexico would increase by $19.1 billion (5.9 percent) and $14.2 billion (6.7 percent), respectively. U.S. imports from Canada and Mexico would increase by $19.1 billion (4.8 percent) and $12.4 billion (3.8 percent), respectively. The model estimates that the agreement would likely have a positive impact on all broad industry sectors within the U.S. economy. Manufacturing would experience the largest percentage gains in output, exports, wages, and employment, while in absolute terms, services would experience the largest gains in output and employment.”
The ITC analysis also highlights likely impacts on the automotive sector.
“USMCA would strengthen and add complexity to the rules of origin requirements in the automotive sector by increasing regional value content (RVC) requirements and adding other requirements,” the report states. “USMCA’s requirements are estimated to increase U.S. production of automotive parts and employment in the sector, but also to lead to a small increase in the prices and small decrease in the consumption of vehicles in the United States.”
The USMCA was signed by President Donald Trump, then-Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau during the G20 Summit in Buenos Aires late last year.
The deal must be ratified by each country’s legislature, however, before it can go into effect.
The Office of the United States Trade Representative released its own analysis Thursday, touting the agreement’s potential impacts on the automotive sector.
“One of President Trump’s major priorities in renegotiating and replacing NAFTA was to discourage the outsourcing of American automotive jobs and instead to encourage more investment and manufacturing jobs here in the United States,” United States Trade Representative Robert Lighthizer said in a prepared statement. “Information from all the major auto companies confirms that the new USMCA’s rules of origin will achieve this goal. These much-needed improvements are key to supporting more good-paying manufacturing jobs for American workers.”
The Congressional Research Service released a summary of global growth levels in the years ahead, noting the U.S. — which outpaced other developed economies with a 2.9% growth rate in 2018 — is projected to slow down in 2019 and 2020.
“Some economic indicators suggest the U.S. economy remains comparatively strong, but a deterioration in the economies of major trading partners could negatively affect the U.S. economy and alter these forecasts,” the CRS report states. “Broad financial and economic linkages tie the U.S. and global economies, which means the United States affects and is affected by events in the global economy. These effects are reflected in capital flows, the international exchange value of the dollar, interest rates, and U.S. trade balances.”