How the USMCA trade deal differs from NAFTA -- and how it doesn't - YouTube

JUDY WOODRUFF: We were just talking about the USMCA, as it's called.

Let's break down this trade agreement further and examine what was agreed to and what it

means.

Amna Nawaz has that part of the story for us.

REP.

NANCY PELOSI (D-CA): It's a victory for America's workers.

AMNA NAWAZ: Today's agreement would replace the 25-year-old North American Free Trade

Agreement first signed into law and hailed by President Bill Clinton.

BILL CLINTON, Former President of the United States: NAFTA will tear down trade barriers

between our three nations.

It will create the world's largest trade zone and create 200,000 jobs in this country by

1995 alone.

AMNA NAWAZ: Politicians and economists have long debated NAFTA's impact on economic growth

and jobs in this country.

But many workers, labor unions and political leaders say the deal made it too easy for

Mexico to lure manufacturing jobs and factories out of the U.S. President Trump has long pledged

to either get rid of NAFTA or substantially rewrite it.

It was a crucial promise of his campaign.

DONALD TRUMP, President of the United States: I'm going to renegotiate NAFTA, one of the

worst trade deals ever signed in the history of our country.

(CHEERING AND APPLAUSE)

AMNA NAWAZ: NAFTA won't exactly be eliminated.

Many of its provisions governing trade between Mexico, Canada and the U.S. will still be

intact.

But the new deal has provisions aimed at increasing manufacturing here.

Specifically, a greater percentage of a car and its components will have to be produced

in North America, and by workers who get better wages.

The Trump administration, Democrats and labor unions all say USMCA will provide tougher

labor enforcement, including some inspections in Mexican factories.

It also includes a loss for the pharmaceutical industry by stripping out a rule that would

have protected expensive biological drugs from generic competitors for 10 years.

Meanwhile, today in Mexico City, U.S. trade Representative Robert Lighthizer signed the

deal with his Mexican and Canadian counterparts.

ROBERT LIGHTHIZER, U.S. Trade Representative: The result, I think, is the best trade agreement

in history.

AMNA NAWAZ: Mr. Trump has indicated he will sign the USMCA once it is passed by Congress.

For a closer look at some of the provisions in this new deal and what their impact will

be, I'm joined by Christopher Wilson, who closely follows NAFTA and Mexico for the nonpartisan

Wilson Center.

Welcome to the "NewsHour."

CHRISTOPHER WILSON, Wilson Center: Thanks a lot for having me.

AMNA NAWAZ: So, let's take a step back here.

Some of the provisions from the previous NAFTA deal do remain in this new deal.

How substantially different is this new USMCA from the old NAFTA?

CHRISTOPHER WILSON, The Wilson Center: Yes, I would say the new USMCA is really 90 percent

NAFTA.

And that's actually the most important thing here is that what happened is that this cloud

of uncertainty about the future of NAFTA, the possibility that the president might withdraw

from NAFTA, goes away with the agreement around the completion of the USMCA.

That matters because companies have invested billions of dollars in the creation of a North

American system of manufacturing production.

So we have now not just sort of regular trade of finished goods happening between the United

States, Mexico, and Canada.

We're actually building things together.

And so all of those products, all of that trillion dollars of trade was put at risk.

Now investors, companies that are involved in the trade can sort of breathe a sigh of

relief and continue doing business.

That said, there were, of course, some important changes as well.

AMNA NAWAZ: Important changes, important updates, too.

Why were those necessary?

CHRISTOPHER WILSON: Well, that's matter of huge debate, whether those were necessary

or not.

And I think, in certain areas, different people would sort of have different opinions.

So, on labor, for example, the idea that there was a need for changes to Mexican labor law,

Mexico agreed to a major labor reform through the USMCA, that, in my opinion, was absolutely

necessary.

Workers in Mexico were not well-represented previously, are not currently well-represented,

but under the new labor reform, they will have real unions that represent the workers,

instead of employer-dominated unions that have probably artificially suppressed wages

to a certain extent in Mexico previously.

So, hopefully, that will change for the better following this agreement.

AMNA NAWAZ: There's also been sort of a rebalancing, right?

There was this big push to try to bring back those manufacturing jobs to the U.S., protect

the wages here.

Will this deal have a significant impact on that front?

CHRISTOPHER WILSON: I mean, I think the reality is that most of those jobs in manufacturing

that have been lost in the United States were lost due to automation, technological change,

robots on the factory floor, things like that.

So we shouldn't expect any major changes.

I mean, the reality is, in my opinion, NAFTA wasn't the main problem there.

So changes to NAFTA can't solve that big problem.

That said, there are some specific areas where there are important changes.

And the auto industry was one that was mentioned, right?

So there will now be rules that say, a larger portion of what goes into an automobile needs

to be made in -- somewhere in North America.

That's going to bring some auto jobs back to the United States.

But it's going to come at a cost, because cars will be a little bit more expensive.

And this is what the ITC, the International Trade Commission, of the U.S. government found

when they did a study on the change from NAFTA to the USMCA.

They said, there will be jobs gained and sort of production gained in the U.S. auto industry,

but there's actually a larger loss in the rest of the economy, because it takes money

and new investments to meet these new rules.

AMNA NAWAZ: So, we could see car prices go up.

I want to ask you, from the American farmer's perspective, because the auto industry gets

a lot of attention when it comes to this.

Mexico's a huge purchaser when it comes to American wheat.

And barley farmers have had a lot of uncertainty, not just with this deal, but also under the

trade tariffs.

What does this deal do for them?

What does it give them today?

CHRISTOPHER WILSON: Yes.

And this is sort of back to that first message.

It gives them back certainty about their market.

And Canada and Mexico are incredibly important markets for our agricultural community in

the United States.

There's, of course, huge challenges right now because of the trade war going on with

China as well.

Whenever there's a trade war, agriculture is the place in the United States that gets

hit first.

China will respond with tariffs on agriculture in the United States.

Mexico and Canada responded when there were steel and aluminum tariffs being fought over

last year with tariffs on U.S. agricultural exports.

And that's because they're politically sensitive.

People know, other countries know that, if they hit agriculture in the United States,

it's a way of exerting political influence on Congress in the United States.

And so this deal just gets us back to having certainty.

It also provides a little bit of new access to the Canadian dairy market.

There's a few extra good things in there for agriculture.

But it gives them a platform on which they can continue to do business.

AMNA NAWAZ: And we mentioned the stripping away of protection for drug companies against

generic competitors.

Does this mean prices could come down?

CHRISTOPHER WILSON: Well, we will have to see what happens in the future there, because

the -- what we have is, this is specifically about biologic drugs, a specific set of sort

of pretty expensive, cutting-edge types of drugs generally.

In the United States right now, there's 12 years of intellectual property protection

for those drugs.

Under the USMCA before, there had been a commitment to 10 years of protections for them.

Democrats might like to lower that level from 12 years to something lower than 10 years,

possibly in the future.

And now, with the update to this, the agreement that they just negotiated, they will be able

to do that if they want to.

But this is all going to depend on what happens in the 2020 elections in the United States.

But maybe sometime in the future, there will be a change on that specific set of drugs.

AMNA NAWAZ: Like a lot of things, it's going to depend on what happens in the 2020 election.

CHRISTOPHER WILSON: Absolutely.

AMNA NAWAZ: Christopher Wilson of the Mexico Institute at the Wilson Center, thanks so

much for being here.

CHRISTOPHER WILSON: Thank you, Amna.