President Donald Trump scored a major victory today with the Senate’s approval of the new trade agreement between Mexico, the United States and Canada, known as the USMCA, one of his main election promises.

By 89 votes to 10, the Senate joined the House of Representatives, and now goes to the Trump table for ratification.

Trump has repeatedly stated that the USMCA is “the most important trade agreement” signed by the country.

“This historic pact not only modernizes and rebalances our relationship with Canada and Mexico, it promotes growth, job creation and provides fundamental certainty for farmers and manufacturers. It fulfills another promise made by President Trump to negotiate fair and reciprocal agreements,” said Treasury Secretary Steven Mnuchin in a statement.

After months of negotiations and delays, the House of Representatives had approved the trade agreement in December with the support of the Democratic majority, which had demanded the inclusion of labor law and environmental protections in the USMCA.
Broad bipartisan support in Congress is rare given the context of acute polarization in the country since Trump’s arrival at the White House in early 2017.

In fact, the Senate was forced to speed up the vote to avoid coinciding with the impeachment trial of President Trump scheduled to begin next Tuesday.

Among the unusual supporters was Senator and Democratic presidential hopeful Elizabeth Warren, representing the party’s more progressive wing, who said it was a “slight improvement” as it would offer “some relief to American workers.

One of the few votes against it came from the leader of the Democratic minority in the Senate, Chuck Schumer, who opposed it, considering that “although it includes very good labor provisions” it does not “address climate change, the greatest current threat to the planet”.
Despite the grandiloquent statements, however, experts predict a positive but modest impact on economic activity.

“It has been a negotiation driven, designed and marked by the United States: it has not yielded anything. Mexico has given the most, since it is the one with the densest supply chains with the US. And Canada, to some extent, since it has had to open its dairy market to the US,” Monica DeBolle, a researcher at the Peterson Institute in Washington, told Efe.

According to a report by the International Trade Commission, USMCA is expected to increase economic growth by 0.35 percentage points of GDP per year by the sixth year after it takes effect, and to create 176,000 jobs.

Among the innovations, it reinforces the percentage of automobile components that must be produced in the region (from the previous 62.5% to 75%), it requires that in a large part of the automobile sector the minimum wage for employees be progressively raised to 16 dollars an hour in 2023 (to curb cheap labor in Mexico), and it has a clause for possible revision of the pact after 6 years.

The new pact is the result of a process of renegotiation of the old North American Free Trade Agreement (NAFTA), which was signed in 1994 at the initiative of Trump, who considered it obsolete.

To enter into force, the agreement now only requires Trump’s signature, which is expected next week, as well as ratification by the Canadian Parliament, as the Mexican authorities already gave their approval in June 2019.

The president of Mexico, Andres Manuel Lopez Obrador, signed in the Mexican capital this new version with the representative of Foreign Trade, Robert Lighthizer, and the Deputy Prime Minister of Canada, Chrystia Freeland.

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