Myths and Facts: USMCA
Aug 26, 2019
Myth: USMCA doesn’t improve protections for working Americans or curb companies from offshoring jobs.
Facts: Unlike NAFTA, USMCA has an enforceable chapter specifically dedicated to ensuring that all parties maintain high labor standards. In particular, USMCA commits all parties to:
- protect the right of workers to collectively bargain;
- prohibit forced labor and employment discrimination;
- protect workers exercising their labor rights from violence;
- enforce their respective labor laws effectively – and not undermine them in order to encourage investment or trade;
- guarantee workers access to impartial and independent tribunals in order to enforce their labor rights;
- apply labor law protections to migrant workers; and
- encourage more production of automobiles and auto parts in the United States by creating new rules of origin that raise the amount of North American content that must be included in an automobile, while also requiring 40-45 percent of auto content to be made by workers earning at least $16 per hour.
USMCA also requires Mexico in particular to adopt new legislation strengthening the ability of workers to effectively exercise their right to collectively bargain. The landmark legislation that Mexico enacted in May 2019 as part of complying with USMCA’s high labor standards establishes independent bodies to register union elections and guarantees that workers can join the union of their choice.
Myth: USMCA will raise prescription drug prices and stop legislative efforts at addressing costs for consumers.
Facts: Nothing in USMCA will require or restrict any changes to U.S. laws on intellectual property rights for pharmaceuticals or drug pricing – including for biologic drugs.
- Strong intellectual property protections for pharmaceuticals are a key driver of the United States’ leadership in life-sciences innovation. They promote the creation of transformative drugs for consumers.
- Under the Biologics Price Competition and Innovation Act (BPCI), the United States already provides 12 years of protection for biologics. Congress considered the views of a number of experts in deciding to establish a 12-year term. BPCI had broad bipartisan support and was signed into law by President Obama in 2010.
- USMCA requires a minimum of 10 years of protection for biologic drugs, thus moving Canada (presently 8 years) and Mexico (presently 5 years) closer to the United States.
- The European Union also guarantees 10 years of exclusivity for biologic drugs – the same term as USMCA. In fact, in 2011, a large bipartisan group of Congressmen noted in a letter to President Obama that it was critical to preserve the U.S. term of 12 years precisely because, otherwise, “[b]iotechnology companies will move overseas where other regulatory environments, like the European Union, recognize the importance of fostering innovation.”
Myth: USMCA makes no improvements to protect the environment.
Facts: Unlike NAFTA, USMCA has an enforceable chapter dedicated to strengthening environmental protections. In particular, USMCA commits all parties to:
- not weaken or waive environmental law protections in order to encourage trade or investment;
- guarantee their citizens access to impartial and independent tribunals in order to enforce their rights under environmental laws;
- stop subsidies that contribute to the destruction of fisheries, such as those that benefit illegal, unreported and unregulated fishing;
- combat trafficking in wildlife, timber and fish;
- improve transparency and cooperation with respect to air pollution; and
- take measures to prevent and reduce marine litter, including plastic litter and microplastics.
Myth: USMCA would somehow reduce overall trade and investment between the United States, Mexico and Canada, and drag down economic growth.
Facts: The U.S. International Trade Commission, an independent agency, found that USMCA “would likely have a positive impact on all broad industry sectors within the U.S. economy,” and estimated it would raise U.S. real GDP by over $68 billion and create nearly 175,000 jobs.
Myth: USMCA is just NAFTA by another name, with no significant improvements over the status quo.
Facts: USMCA represents a substantial modernization over NAFTA in a number of key respects. Once enacted, USMCA will:
- set new standards for the 21st-century digital economy, including a ban on data localization;
- expand access to Canada’s heavily protected dairy, egg and poultry markets;
- establish, for the first time in a trade agreement, rules to address currency manipulation;
- strengthen intellectual property protections that are critical to ensuring that we reap the full benefits of American innovation;
- cut red tape and taxes for small businesses exporting to Canada and Mexico; and
- create a number of good governance rules, including greater transparency in regulatory development.