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What are the differences between NAFTA and the USMCA?

The Senate has passed a new trade agreement among the U.S., Mexico and Canada. The USMCA, as it’s now called, is meant to replace the North American Free Trade Agreement, and it does change or replace some important provisions -- but critics say it is hardly the overhaul that was once advertised. Amna Nawaz reports and speaks to Lori Wallach of Public Citizen’s Global Trade Watch.

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  • Judy Woodruff:

    Just before the Senate opened the impeachment trial of President Trump, it passed a new trade agreement among the U.S., Mexico and Canada.

    As Amna Nawaz tells us, the USMCA accord, as it's now called, is meant to replace NAFTA, the North American Free Trade Agreement. And it does change or replace some important provisions. But many say it's hardly the overhaul that was once advertised.

  • Amna Nawaz:

    The Senate sent the U.S.-Mexico-Canada agreement to President Trump's desk after voting for it in rare bipartisan fashion.

  • Sen. Charles Grassley, R-Iowa:

    The yeas are 89, the nays are 10. The bill is passed.

  • Amna Nawaz:

    The more-than-1,800-page agreement replaces NAFTA, first signed into law by President Bill Clinton. But it does keep much of NAFTA intact.

    However, there are important differences as well, including requiring automobiles to have 75 percent of their components manufactured in North America. That's up from roughly 63 percent under NAFTA. It also says 40 to 45 percent of automobile parts must be made by workers paid $16 an hour on average by 2023. And it strengthens labor laws, particularly in Mexico, by allowing inspectors into facilities to investigate violations of workers' rights.

  • Republican Senator Lindsey Graham:

  • Sen. Lindsey Graham, R-S.C.:

    It allows North America to be one of the most progressive free trade zones in the world. And our economy will be stronger going forward because of this new trade agreement.

  • Amna Nawaz:

    The USMCA also gives American farmers more access to Canadian dairy markets.

    Before the final agreement was reached with Democrats, there were blows to some corporate interests. For example, one rule providing biologic drugs with 10 years of patent exclusivity was withdrawn.

    For his part, President Trump had long pledged to overhaul NAFTA, blaming it for the loss of U.S. manufacturing jobs to Mexico.

  • President Donald Trump:

    I'm going to renegotiate NAFTA, one of the worst trade deals ever signed in the history of our country.

  • Amna Nawaz:

    While the new deal includes money to address pollution and overfishing, it's been criticized for not tackling climate change, leading Senators Bernie Sanders, Chuck Schumer and Kirsten Gillibrand to all vote against it.

  • Sen. Kirsten Gillibrand, D-N.Y.:

    We had a huge once-in-a-lifetime opportunity to actually address global climate change, and we chose not to.

    And so I — while the agreement did make progress, it didn't make enough.

  • Amna Nawaz:

    The deal will not go into effect until Canada approves the pact. Lawmakers there are expected to vote on the deal in the coming weeks.

    For some perspective now on what's significant about this deal, as well as its limitations and drawbacks, from a longtime critic of NAFTA, Lori Wallach has been working to change the trade deal for more than 25 years. She is the director of Public Citizen's Global Trade Watch.

    Welcome back to the "NewsHour."

  • Lori Wallach:

    Thank you.

  • Amna Nawaz:

    So, there's overwhelming bipartisan support for this deal.

    Let's starts with what you see as good in this deal. What are the improvements, especially when it comes to U.S. workers and the economy?

  • Lori Wallach:

    So the original deal that President Trump signed in 2018, the NAFTA 2.0, wasn't better than the original.

    But after fighting for a year with the Democrats, who made him reopen it and renegotiate it, the final deal that got passed improved labor standards and environmental standards, and ends up whacking a variety of corporate protections that would have been bad for the consumers and the environment.

  • Amna Nawaz:

    So, we saw one of the biggest criticisms there we just heard, the fact that it doesn't address climate. Right?

    The argument there is, look, if a lot of those things had been written in, maybe wouldn't have gotten that overwhelming bipartisan support, that the modest improvements are better than none.

    What do you say to that?

  • Lori Wallach:

    There's a real difference between what you do to fix a really bad agreement that's causing ongoing damage.

    Over a million jobs have been government-certified as lost to NAFTA, with more being outsourced to Mexico every week, because real wages, they now are 40 percent lower than manufacturing in China.

    So, what you do to stop that flow of job outsourcing or a tax on environmental policies is different than what you would do from scratch to write a good agreement.

    So, stopping a bad agreement's ongoing damage is different than a real good agreement that you put climate standards and you fix all the things that didn't get fixed in NAFTA.

  • Amna Nawaz:

    There's another specific change you mentioned to my colleague earlier.

    There was, in the previous deal under NAFTA, a mechanism under which corporations could sue countries if they felt like NAFTA had been violated, and that would be at taxpayer expense. That went away in this new deal. I understand that you're happy about that.

    But are there other things that would fall under a similar category, of things that the corporations would be happy to see in the deal that you thought should go away or that were new in this deal?

  • Lori Wallach:

    So, one of the best things that happened in the last year is the Democrats forced Trump to remove new goodies he had added for big pharma.

    And those new monopolies would have locked in high medicine prices and exported our high-price policies to Mexico and Canada. That got sacked just in the last minutes, which is how the thing got a vote in the House.

    The things that didn't get fixed, the agreement still has the limits on buy America, buy local, buy green policy. Why should a trade agreement even tie the hands of Congress or state legislatures vis-a-vis government procurement?

    The agreement still requires us to import food that doesn't meet U.S. safety standards. And they added one bad, really bad new thing, which is limits on the regulation of the big online monopolists vis-a-vis consumer privacy or what liability they have when fake information or counterfeit products are sold.

  • Amna Nawaz:

    If we take a step back, it's worth noting we're in a week where President Trump just signed this first phase of a trade deal with China. You have this new North American trade agreement, the USMCA, moving forward.

    Both of these have been hard fought over, at least since the beginning of the Trump presidency. When you take a step back and look at those, how dramatically has that landscape changed when it comes to the overall U.S. economy and also for the average U.S. consumer?

  • Lori Wallach:

    These trade agreements that are done this week aren't going to be a big change for consumers.

    In the long run, if the revised NAFTA works, given the rewrites, if the Democrats make Trump add new labor standards, hopefully, wages will increase in Mexico, and that will basically slow the outsourcing of jobs from the U.S.

    But it's not going to bring back hundreds of thousands of jobs, the way the president has claimed. Nothing makes that clearer than the fact that a lot of the U.S. auto companies have announced relocating production to Mexico since the agreement was done.

    So the upside is that, basically, there could be less outsourcing, there will be less corporate attacks on environmental and labor laws. That's a big improvement. But it's a long-term proposition to seek it get enforced.

  • Amna Nawaz:

    Just a few seconds left. But I have to ask you, do you think any trade deal could bring back all of those manufacturing jobs that were lost?

  • Lori Wallach:

    I think that the right kind of trade agreement that takes into account the climate crisis, that takes into account income inequality, would distribute production more broadly around the world.

    And you have to do that anyway to avoid the long-distance shipping and the unified production that right now is threatening the climate. So the rules of trade are what are being written. It's not about tariffs anymore. Generally, the tariffs are cut, unless there's a penalty put in place.

    So the rules decide where investments will happen and who the winners and losers are. And going forward, this NAFTA, it's not the template for a good agreement. It's the new floor from which we will fight to have an agreement that really puts people and the planet first.

  • Amna Nawaz:

    Lori Wallach of Public Citizen's Global Trade Watch, thanks for being here.

  • Lori Wallach:

    Thank you.

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