Deputy Under Secretary, Performing the Non-Exclusive Functions and Duties of the Under Secretary for International Trade Joseph Semsar Remarks September 1, 2020
Remarks at the Greater Houston Partnership
USMCA Day Webinar
September 1, 2020
As Prepared For Delivery
Thank you, Bob, for the kind introduction and for hosting today’s event. You have a wonderful program today, and I am extremely pleased to see that you are signing an MOU later this afternoon.
Before I talk about the USMCA, let me extend my support to all of those in the region who are struggling in the aftermath of Hurricane Laura.
These tropical storms in the Gulf have been unrelenting, and if we have learned anything, it’s the resilience of your region, and your ability to quickly bounce back.
We know this…just by looking at Houston post Hurricane Harvey, and how big and important your region is to industry located throughout the United States, and the world.
On behalf of President Trump and Secretary Ross, I am delighted to discuss the virtues of USMCA, and what it means to businesses, workers, and the export community in Houston.
Replacing a flawed NAFTA with a far better agreement with Mexico and Canada was a top priority for the Trump Administration on day one.
The final USMCA agreement passed Congress with overwhelming bipartisan congressional support.
In the House of Representatives, USMCA was approved on December 19, 2019, by a vote of 385 to 41. It passed in the Senate on January 16, by a vote of 89 to 10. The President signed the bill on January 29, and it went into effect on July 1, 2020.
USMCA had the strong support of organizations like the Greater Houston Partnership, and we thank you for everything you did to help make it a reality.
USMCA is the most comprehensive trade agreement impacting the greatest amount of trade anywhere in the world.
It is also fairest, and most balanced trade agreement in American history.
It has strong new rules of origin that will incentivize production in North America, strengthen the U.S. manufacturing base, and support manufacturing jobs in the United States.
It fortifies the world’s largest trading block and provides companies in Houston with a level playing field on our own continent for the first time since 1994.
And it will be a big win for companies, farmers, and workers throughout Texas, which has the longest Mexican border of any U.S. state at 1,254 miles.
In 2019, Texas ranked first among the 50 states with exports totaling $328 billion. One-third of those exports – or $109 billion – headed to Mexico; and $28.5 billion were shipped to Canada.
The USMCA should generate even more economic growth once the pandemic subsides.
USMCA eliminates many barriers that have long hindered U.S.-companies’ access to the Mexican and Canadian markets.
There are important new chapters on Digital Trade; Intellectual Property Rights Protection; Anticorruption; Small and Medium-Sized Enterprises; Currency Manipulation; State-Owned Enterprises; and Good Regulatory Practices.
The new chapter on digital trade includes rules that allow data to be transferred freely across borders and it prohibits protectionist limits on the location of data storage and processing.
This is a big win for U.S. companies that operate internationally, and especially for the more than 2,500 Houston manufacturing firms engaged in global trade.
The new chapter on Intellectual Property includes tough enforcement provisions against counterfeiting and piracy. There are new tools for customs officials to stop the flow of counterfeit goods and fakes through our borders.
USMCA also promotes export growth by reducing the costs of cross-border transactions. It allows traders to submit and receive customs-related documentation and data through one website in each country. Once customs requirements are met, goods are released immediately, thereby cutting all the red tape that previously delayed shipments. Canada and Mexico are required to publish information on all fees and penalties they assess on products imported from the United States.
This allows American companies to better predict trade-related costs before they export.
Express shipments valued below $2,500 benefit from reduced paperwork requirements, making low-value shipments easier, faster, and less costly for traders.
Both Canada and Mexico increased their de-minimis shipment-value levels. This allows lower-value packages to enter their countries from the United States without having to pay taxes and tariffs, and with simplified customs forms.
For agriculture, USMCA maintains NAFTA’s existing zero-tariff treatment. And it ends Canada’s barriers to U.S. exports of agricultural products, by expanding U.S. access to Canada’s dairy market.
It ends the unfair conditions that put U.S. workers in competition with low-wage labor by including fully enforceable labor and environmental obligations. It requires that 40 to 45 percent of automotive content be made by workers earning an average base wage of at least $16 an hour. This will ensure that the U.S. gets its fair share of additional production volume.
For the first time, we have a trade agreement that addresses unfair currency practices that put U.S. producers at a competitive disadvantage. The undervaluation of currency is an issue that has been a source of concern for domestic manufacturers since the early 2000s, and we are finally doing something about it.
Importantly, the USMCA updates the rules-of-origin for automobiles by requiring that 75 percent of the content of vehicles be produced in North America. This provision alone should create tens of thousands of new jobs in the U.S. automotive sector.
New rules-of-origin apply to other industrial products as well, increasing the regional content of chemicals, steel-intensive products, titanium, glass, and optical fiber.
These new rules ensure that only producers who use sufficient amounts of U.S.- or regionally made parts or materials—receive preferential tariff benefits.
USMCA has a separate annex dealing with regulatory cooperation in chemicals, pharmaceuticals, medical devices, information and communications technologies, and cosmetics.
Another annex is intended to protect the innovation of encryption products. This is viewed as a significant victory for the U.S. high-tech industry.
All these USMCA provisions are new. They have never been part of any U.S. trade agreement before.
We will be using them as a starting point for deals with countries in Asia, Africa, Europe, and elsewhere.
We negotiated USMCA with the intent of preserving Mexico and Canada as the largest export markets for U.S. products.
Last year, $1.3 trillion of goods flowed among the three countries, supporting close to three million U.S. jobs.
As we experience a strong V-shaped recovery, USMCA presents new opportunities for companies based in Houston.
Your city is among the largest exporter of any metro area in the entire United States, with goods exports amounting to $121 billion in 2018.
It is the Energy Capital of the world.
It is a major industrial base with more than 6,400 manufacturers, and 8,200 tech-related firms.
Your ingenious companies and research institutions are attracting some of the largest increases in tech talent in the nation. And Houston has access to intermodal ports, rail, trucking routes, and two international airports.
With the USMCA open for business, the Commerce Department continues our efforts to ensure that you and other stakeholders are aware of the new changes and benefits in the Agreement.
A special thank you as well to my team at the International Trade Administration—and our U.S. Export Assistance Center of Houston. Our staff in Houston is working closely with many of you in the business community to take advantage of USMCA. We have launched a website at www.trade.gov/usmca stakeholders with detailed information about the Agreement.
We all have a stake in making North America more competitive, more vibrant, and more prosperous.
As our economic recovery continues, we look forward to working with you to reap the benefits of the new USMCA.
Thank you for inviting the Department of Commerce to part of this important event today, and I hope you all can take advantage of the USMCA moving forward.