Credit:  Gary Raynaldo /  (Left to Right):    Charles Boustany Jr., Partner, Capitol Counsel, LLC;   Jennifer Hillman, Senior Fellow for Trade and International Political Economy, Council on Foreign Relations ;  Stephanie Murphy, U.S. Representative from Florida, U.S. House of Representatives (D), and moderator  Douglas Rediker Chairman, International Capital Strategies; Non-Resident Senior Fellow, Brookings Institution, participate in a  Council on Foreign Relations panel discussion: The USMCA: A New Paradigm For Trade Agreements? in  Washington D.C.   Feb. 27, 2020. 

By Gary Raynaldo        DIPLOMATIC  TIMES

WASHINGTON – The  recently enacted United States-Mexico-Canada trade agreement was truly revolutionary in terms of the unusual bipartisan cooperation between Republicans and Democrats.  It has been called a “breakthrough” a  genuine milestone.  But will this groundbreaking agreement restore bipartisanship to U.S. trade policy with a new paradigm?   The Council on Foreign Relations held a panel discussion February 27 titled: ‘The USMCA: A New Paradigm For Trade Agreements?’   that took place in  Washington D.C.  Speakers discuss the recently enacted United States-Mexico-Canada trade agreement, including what is in the agreement that allowed it to pass with historically large bipartisan support and what it means for the U.S. economy and future trade agreements. It was also discussed that the agreement could open the door to future  trade agreements including U.S. – United Kingdom and U.S.- European Union.    Charles Boustany Jr., Partner, Capitol Counsel, LLC;   Jennifer Hillman, Senior Fellow for Trade and International Political Economy, Council on Foreign Relations ;  Stephanie Murphy, U.S. Representative from Florida, U.S. House of Representatives (D), participated in the discussion that was moderated  by Douglas Rediker Chairman, International Capital Strategies; Non-Resident Senior Fellow, Brookings Institution, at the CFR’s office in Washington D.C. 

USMCA Is Unique:  Jennifer Hillman 

Credit:  Gary Raynaldo /  (Left to Right):   Jennifer Hillman, Senior Fellow for Trade and International Political Economy, Council on Foreign Relations, and  Stephanie Murphy, U.S. Representative from Florida, U.S. House of Representatives (D),  CFR panel discussion on USMCA  Washington D.C.   Feb. 27, 2020. 

“USMCA did a number of things that are really quite unique,”  Jennifer Hillman, Senior Fellow for Trade and International Political Economy, Council on Foreign Relations, said. “First, it added into a new set of rules of origin with respect to autos. The concept that you could add in a specific minimum wage of $16/hour that is linked to saying 40 to 45 percent of the content of auto output and auto parts had to come from a facility or plant that paid $16/hour.  Second is a rapid response mechanism with respect to labor provisions.  The rapid response mechanism is unique where we go directly into a company or plant to see whether it is to be found violating labor laws; and if so, to ban goods from coming into that facility. Third it is good for foreign investment. It takes away investment state dispute settlements from Canada and Mexico. The USMCA also takes away a pharmaceutical provision, and it adds a Sunset Clause of 16 years.”

Congress Had An Opportunity To Engage In The Trade Policy:  Rep. Murphy  (Florida -D)

Credit: Gary Raynaldo  / ©Diplomatic Times  /   Stephanie Murphy, U.S. Representative from Florida, U.S. House of Representatives (D),  CFR panel discussion on USMCA  Washington D.C.   Feb. 27, 2020. 

“The idea that were were able to pass a comprehensive trade deal in a bipartisan way. The good thing is we as congress had an opportunity to engage in making the agreement work and build bipartisan support. The way it was done is outside the norm. The dynamics of our trade policy is today is one in which the Democratic party has outsourced trade policy to organized labor.  In the case of the USMCA, we then exported it to Mexico. The ability of this (Trump) administration to completely get total loyalty to accept whatever irrespective of how it affects individual constituencies is really unusual. Republicans all fell in line, and we on the Democratic side were able to give broad support.”

-Stephanie Murphy, U.S. Representative from Florida, U.S. House of Representatives (D)

However, the Florida Congresswoman cautioned that she has mixed feelings about using USMCA a model for  future trade agreements. “I’m not sure if we want to exactly replicate this trade model. Some would argue this was more about restricting trade than about expanding trade,”  Congresswoman Murphy said.   Regarding future trade agreements,  Murphy said Congress must be actively engaged in trade negotiations for example with U.S. – U.K., or U.S. – United Kingdom.

Some in the audience characterized the USMCA as the “TRUMP  PARADIGM” – or ‘Coercion approach’ 

Credit:  Gary  Raynaldo /   Charles Boustany Jr., Partner, Capitol Counsel, LLC, and former U.S. Rep. Louisiana (R) speaks at CFR Trade panel Feb 27, 2020  Washington D.C.

But what should be the future U.S. Trade Paradigm?

There was disagreement among the speakers and audience with regard to what is the ideal new trade paradigm.  Charles Boustany Jr., Partner, Capitol Counsel, LLC, and former U.S. Rep. Louisiana (R) said:

“The new basic paradigm is to reach the very highest standards possible for a participation global values chains to use multilateral agreements, regional agreements, plural-lateral agreements to create better integration, make it open architecture.”

Jennifer Hillman said: “We have to have a global agreement. A bilateral deal that just focuses on goods is completely missing where 21st Century trade in which  80 percent of the economy is services.”

An audience member said the USMCA should be called the Trump Paradigm – or  Coercion approach for forcing Mexical and Canada to come to the  table or else face crippling sanctions.   Boustany said “yes, there is a level of coercion to get countries to come to the table like Canada and Mexico but that doesn’t apply to all other countries.”