WASHINGTON – A government report concluded that the Trump administration's revised North American trade agreement would offer a modest benefit to the economy, challenging the president's claims that the agreement would make far-reaching changes.
Mr. Trump has reviled the quarter-century-old North American Free Trade Agreement as the worst trade pact in existence and blamed it for pushing the trade deficit, or the gap between what the country imports and what it exports. Over the past year and a half, he gave his administration a mandate to improve the pact. In November, Canada, Mexico and the United States signed an updated agreement, which the President rebranded as the United States-Mexico-Canada Agreement, and the new deal is awaiting ratification by the legislators in all three countries.
The report found that the agreement would increase the gross domestic product by 0.35 percent after inflation, or $ 68.2 billion, and create 175,700 jobs – less than the average recent economy produced in a single month. It would increase United States trade with Canada and Mexico by about 5 percent, as well as provide a modest increase in agriculture, services and manufacturing activity.
"In light of the size of the U.S. economy relative to the size of the Mexican and Canadian economies, as well as the reduction of tariff and nontariff barriers that have already been made among the three countries under the oil company, the impact of the agreement on the US. Economics is likely to be moderate, "the commission said.
Critics of the accord are seized on the findings. "This report confirms what has been clear since this deal was announced – Donald Trump's Oil represents at best a minor update to Oil, which will offer only limited benefits to U.S. workers, "said Senator Ron Wyden, Democrat of Oregon.
The administration, however, saw the report as evidence of the pact's strengths, noting that the Commission typically projects only modest benefits from trade agreements.
Robert Lighthizer, the The United States trade representative, said the Commission's estimates of the deal's contribution to economic growth were twice as large as its estimates for Trans-Pacific Partnership, a 12-nation deal negotiated by Obama administration. The commission has significantly updated its methodology, however, making comparisons difficult.
"There is no doubt that the U.S.M.C.A. is a big win for America's economy, "Mr. Lighthizer said
Kevin Hassett, chairman of the president's council of economic advisers, said he believed that the report underestimated some of the deal's economic benefits, including provisions on intellectual property. But he said he was encouraged.
"I think that should be reassuring to anyone who is on the fence on this bill," he said.
Since negotiations began in August 2017, the administration has secured some substantive changes to
Many of the changes have been updated to the existing Nafta framework. In addition, there is no need for the government to restrict the government's ability to manipulate its currency. Other improvements were drawn from Trans-Pacific Partnership. Mr. Trump withdrew the United States from that agreement days before taking office, before the Congress could act on it.
The Trump administration has also tightened regulations on how cars are manufactured – for example, increasing the percentage of vehicle that needs The Commission's report projected that this rule changes in the automotive sector would result in many of the largest economic changes from the pact. It was estimated that the rules meant to bolster American automotive manufacturing would add more than 28,000 jobs and increase investment by $ 683 million per year.
But by raising the cost of producing cars, auto provisions would actually reduce American car exports and weigh the economy over all, the report said.
These figures clashed with a rosier analysis of the automotive effects of the deal released by the Trump administration. Based on information provided by North American automotive manufacturers, Mr. Lighthouse's office estimates Thursday that the rule change would result in $ 34 billion in investments in the United States, as well as $ 23 billion in annual purchases of American-made parts and 76,000 American jobs all within five years.
A senior official in The trade representative's office said Thursday that the deal's auto provisions were "a significant factor" in investments announced by Ford, General Motors, Toyota, Volkswagen and others. He said the updates to the agreement would close the gap, allowing companies to use more parts from countries such as China and would help build industry for autonomous and alternative energy vehicles.
The trade commission model essentially simulates what the United States economy in 2017 would have looked like if the new agreement was in place then. It makes several assumptions that could affect the economic impact, including the premise that there is little room for the economy to add additional jobs without also boosting wage growth for employees.
Perhaps most notably for Mr. Trump, who views America's trade deficit as a measure of economic success, the model assumes no changes in trade balance between the United States, Mexico and Canada.
Some of the largest economic benefits of the pact, according to trade Commission, it would come from the parts of the deal that codify free flow of data across borders – measures that have been supported by technology companies.
Industry groups have called for fast pacts into law. Linda Dempsey, vice president for international economic affairs at the National Association of Manufacturers, said that the deal was "a win for manufacturers."
Jordan Haas, director of trade policy at the Internet Association, said that the report emphasized that The deal's digital trade provisions were "critical to America's future economic success" and "mean jobs and opportunities in every state."
Still, the trade commission's report will likely add fuel to criticism of the agreement, especially among some of the Democrats, who has criticized the deal's environmental, labor and pharmaceutical provisions.
The Trump administration began trading negotiations with the aim of appealing to more populist Demokrates, who have long criticized Nafta for sending jobs out of the country. That the support is more critical than ever for the administration, since the pact will probably need at least two dozen Democratic votes to pass the House of Representatives if every Republican votes for it, a result that is not guaranteed.
The revised deal includes changes meant to court labor unions and liberal politicians, including the minimum wage requirement for the auto industry and the end of a special arbitration system for corporations.
But as a vote in Congress approaches, the opposition on the left seems to be hardening The Democrats say they are concerned that the agreement will not adequately protect the environment and labor rights, and that its intellectual property protection for the pharmaceutical industry could undermine legislative efforts to make health care more affordable.
While some Republican The lawmakers objected to the Trump administration's negotiating goals during the talks, most now seem to support the deal's passage, partly to provide companies with greater certainty in their districts.