By
Matt Blunt
October 17, 2019 at 5:00 am ET
Congress should make the ratification of the United State-Mexico-Canada Agreement (USMCA) a priority this fall. The USMCA is a 21st Century trade agreement with our North American trading partners that will help bring certainty and enhanced competitiveness for many industries, including the U.S. auto industry, which will help grow the U.S. economy.
FCA US, Ford and General Motors believe the USMCA will serve as a blueprint for future U.S. trade agreements, allowing U.S. automakers to grow and compete in the increasingly global auto market. There is no doubt the trade agreement will help drive additional investment in the U.S. manufacturing supply chain, and help support the millions of jobs that depend on a vibrant auto industry. Already, member companies source the highest percentage of their vehicle content from U.S. manufacturers and suppliers. This new, modernized agreement will force foreign automakers to accelerate their investments in the U.S. economy.
We had four priorities when the administration embarked on modernizing NAFTA and negotiating a new 21st Century trade deal with our North American partners. Our first priority was to maintain duty-free access to the Canadian and Mexican auto markets. Second, we believed any new trade agreement should address currency manipulation. Third, we advocated for continued acceptance of U.S. auto safety standards. Fourth, we believed a new trade deal should include balanced and workable rules of origin for vehicles and parts in North America.
The USMCA achieved these four priorities.
The agreement will preserve critical duty-free access to two of the largest vehicle markets in the world, where our companies have been incredibly successful. In Canada, our brands now account for about 40 percent of the 2 million vehicles sold. And in Mexico, American nameplates have secured 27 percent of the 1.4 million vehicle market — a market that is expected to steadily grow in the future.
The USMCA’s ground-breaking provisions addressing currency manipulation are the strongest such provisions ever included in a U.S. free trade agreement. Additionally, the language ensuring acceptance of vehicles built to U.S. regulatory standards is long overdue. We believe rules that address currency manipulation and regulatory standards should be included in every future U.S. free trade agreement going forward.
We are also pleased U.S. negotiators listened to stakeholders when updating the rules of origin for vehicles and parts in the region. The more stringent rules of origin and U.S. sourcing provisions will require all automakers — including FCA US, Ford and General Motors — to invest more in the U.S. This is good news for jobs and investment in the U.S. economy. The USTR highlighted that transition plans reviewed with them by manufacturers will incentivize a $23 billion increase in U.S. annual parts sales alone.
The USMCA encourages U.S. R&D investment for the first time, which will advance economic growth across a wide universe of industries including auto manufacturing. This investment and the new rules of origins are critical to ensuring the emerging electrification and autonomous vehicle technologies stay in the U.S.
FCA US, Ford and General Motors believe the USMCA will not only help the U.S. auto industry remain globally competitive, but will bring certainty and stability, which in turn will encourage automakers to invest and expand here in the U.S.
Earlier this summer, Mexico became the first country to ratify the USMCA. We are encouraged by reports that discussions between the USTR and the working groups established by House Speaker Nancy Pelosi (D-Calif.) have been constructive. We believe it is vital for Congress to quickly resolve its outstanding issues and move to pass this modernized trade agreement as soon as possible.
The USCMA will support FCA US, Ford and General Motors’ U.S. plant base and increase their U.S. supplier base. All of this will help support the workers that rely on our member companies’ success to support their families. Congress can help boost the U.S. economy and help American workers by passing the USMCA now.
Matt Blunt is president of the American Automotive Policy Council and former governor of Missouri. AAPC represents FCA US LLC, Ford and General Motors.
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