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Landmark trade deals with China and Mexico and Canada are just the first evidence U.S. trade strategy is helping level the playing field and drive opportunity for Georgia exporters, a Commerce Department official said during a meeting with about 15 Atlanta executives Monday.
Two days before President Trump signed the U.S. Mexico Canada Agreement, acting International Trade Administration Under Secretary Joseph Semsar pointed both to that deal and the recently concluded “phase one” agreement with China as proof that the president’s policies are restoring balance to America’s trading relationships.
Critics argue these deals simply restore a sense of normalcy after a self-imposed trade tumult that the president set off by working to rejigger the global trading system.
The USMCA, a modernization of NAFTA, passed Jan. 16 with bipartisan support after tweaks to the enforcement of its labor and environmental provisions appeased House Democrats, promising to settle trade relations with neighbors that serve as one of the top two export markets for 46 states, including Georgia.
Mr. Trump signed the deal at the White House Wednesday, leaving Canada as the last country left to ratify it. Once that happens, likely over the next few weeks, an implementation period starts that could take months before it goes into effect.
The USMCA was needed to bring into the 21st century a 25-year-old deal that pre-dated online commerce, Mr. Semsar said while touting its benefits for companies during the meeting at the Metro Atlanta Chamber.
“When we negotiated NAFTA, we were still using floppy disks and typewriters, and the phones that we carry today were considered supercomputers. Therefore, NAFTA was silent on digital trade,” he said in remarks.
USMCA changes that, with measures that prevent data localization requirements and customs duties on digital products. It also sets new standards for intellectual property protection and eases customs processes, among other technical benefits, Mr. Semsar said. Unlike NAFTA, it includes a “sunset clause” that allows all sides to reevaluate the deal periodically.
Some of these provisions mirror those included in the Trans-Pacific Partnership, the 12-nation trade deal negotiated under President Obama that Mr. Trump exited early on in his presidency.
Favoring smaller deals where he could better use the leverage of the U.S. economy, Mr. Trump sought to strike a better balance with Canada and Mexico. He succeeded in maintaining some concessions on agricultural goods, such as access for dairy products in Canada, that were included in the TPP deal.
But a big win from the Trump perspective was reforming the rules of origin for cars made in the three-country region. Now, instead of NAFTA’s 62.5 percent, at least 75 percent of a car’s value must be produced in North America to qualify for the deal’s tariff exemptions. In what’s being touted as another win for American workers (ostensibly targeted at Mexico), at least 40 percent of a car’s value must be made by workers earning at least $16 an hour.
“This will incentivize billions of dollars in additional U.S. vehicle and auto parts production and assure that the U.S. will get a fair share of the jobs brought back from Asia,” Mr. Semsar said, speaking in the heart of a foreign-invested automotive corridor in the South.
The deal preserves zero tariffs on nearly all goods and opens up some new agricultural categories in Canada, including dairy, poultry and wheat.
That should be welcome news for farmers, who have been on the front lines of President Trump’s trade war with China. Exports of soybeans and other crops have plummeted as China substantially reduced its purchases of American farm exports as retaliation against U.S. levies. The Trump administration has authorized more than $28 billion on farm aid.
The China phase one deal includes a provision where the country pledges to buy $40 billion in farm goods over 2017 levels as part of a $200 billion in new purchases of U.S. goods and energy products over two years.
New tariffs have been frozen, but the U.S. has kept on existing tariffs on some $370 billion in Chinese goods to ensure enforcement of Chinese commitments to strengthen intellectual property protection and refrain from forcing American companies to transfer technology to Chinese partners to maintain market access. Those two concerns have been at the heart of the trade dispute.
Mr. Semsar said the deal, which eschews third-party arbitration panels for a graduated bilateral enforcement mechanism, holds enough leverage to keep China honest.
“China Phase One takes on tech transfers vigorously. We feel that the language is clear and enforceable. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement,” he told Global Atlanta in an interview.
With these deals under its belt, the U.S. is now on “good footing” as it looks negotiations with the European Union and the post-Brexit United Kingdom, along with pushing its agenda to position American products and services in Africa, Mr. Semsar said.
He added that the International Trade Administration would work with the network of U.S. Export Assistance Centers, including the Commerce outposts in Atlanta and Savannah, to hold seminars about the specifics of the trade deals and market access they provide.
For existing exporters, he pointed to the ITA’s Market Diversification Tool, an online solution that helps companies find new countries that might be suited to their products.
He praised the state of Georgia for its export promotion efforts, which led to a record $40.6 billion in overseas sales in 2018. Similarly, the Atlanta Metro Export Challenge, a grant program jointly sponsored but administered by the chamber, helps companies walk through the open doors that trade agreements provide.
“Industry interest in new markets coupled with a robust trade-support infrastructure, particularly for small and medium-sized enterprises, is key to a successful exporting ecosystem. The state of Georgia, including the Metro Atlanta Chamber, is a leader in fostering the support to create such an ecosystem, and is reaping the benefits,” Mr. Semsar told Global Atlanta. More than 90 percent of Georgia exporters are small and medium-sized companies.
The under secretary’s visit included a stop at the International Production and Processing Expo, also known as the poultry show, where he was slated to meet with the Kazakhstan ambassador to the United States about an American producer’s plans in the country.
He also helped present a U.S. Commercial Service Export Achievement Award to Delta Sigma Co. in Kennesaw. The company builds systems to automate precision manufacturing and engineering tasks. Mr. Semsar toured the facility and met with leaders and employees to talk trade. He met Tuesday with Gov. Brian Kemp before heading back to Washington.