A new report from the U.S. Trade Representative says the new USMCA will bring substantial benefits; however, an IMF study suggests otherwise.
Detroit’s automakers are rushing to defend a report from the Trump administration that touts the benefits of the new North American Free Trade Agreement.
The Trump administration report, produced by the United States Trade Representative (USTR), was released Thursday in advance of less than an underwhelming independent government estimate of the economic impact of proposed U.S. Mexico Canada Agreement, or USMCA.
Trump has portrayed the new agreement he negotiated as a replacement for NAFTA as likely to lead to a rush of new investment and jobs in the U.S. and an end to the outsourcing he and others have blamed for a hollowing out of American manufacturing.
But a congressionally mandated study by the International Trade Commission due to be published as soon is expected to show that the USMCA negotiated by the Trump administration would have a modest impact on the U.S. economy.
(Trump won’t close border but threatens to scuttle NAFTA replacement. Click Here for the story.)
A study released last month by researchers at the International Monetary Fund found the new pact would have “negligible’’ impact on U.S. gross domestic product and lead to a reduction in regional trade.
The benefits of President Donald Trump's new trade deal are being debated.
But the organization that represents Detroit’s three defended the administration’s position on the new NAFTA.
“USTR’s analysis is a thoughtful assessment of the impact of the USMCA on the American auto sector – finding that it will generate significant investments in U.S. autos and the auto manufacturing supply chain,” according to Matt Blunt, president of the American Automotive Policy Council, a Washington, D.C.-based group represented FCA US LLC, Ford Motor Co, and General Motors Co.
(Click Here for more about suppliers, dealers expressing concern about stability of the industry.)
“The approach USTR took combined with the data available to them is the best way to understand the long-term impact of the investments that will occur in order to comply with the new USMCA. USTR also took a conservative approach in how it estimated the impact on the auto sector.”
AAPC's Matt Blunt said the Big Three automakers supported the USTR's conclusions about the new NAFTA replacement.
Blunt mentioned that for those reasons, the AAPC was in agreement and supported the conclusions USTR has made that the during next five years, investment and production in the U.S. auto sector will grow as a result of changes to the auto rules of origin.
“The USMCA will create significant growth in the U.S. auto industry and we are urging Congress to support and pass this modernized trade agreement without further delay.”
(Trump administration takes credit for fuel economy, emissions improvement. Click Here for the story.)
The administration’s said that the new NAFTA would lead to $34 billion in new automotive investment in the U.S. and 76,000 new jobs in the sector in the first five years. Included in that figure was $15.3 billion in new investments in the U.S. announced already by automakers including GM, Ford and Fiat Chrysler.