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February 12, 2020

The NAM Talks Trade

The National Association of Manufacturers (NAM) is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. As a powerful voice for the manufacturing community, the NAM has been a leading advocate for a trade policy agenda reflected in recent trade activity briefly described below.

The United States Mexico Canada Agreement (USMCA)

USMCA is an updated version of the nearly 25-year-old, trillion-dollar North American Free Trade Agreement (NAFTA). It includes major changes on cars and new policies on labor and environmental standards, intellectual property protections, and some digital trade provisions.

The agreement addresses rules regarding country of origin, labor provisions and intellectual property. Automobiles must have 75% of their components manufactured in Mexico, the U.S. or Canada to qualify for zero tariffs (up from 62.5% under NAFTA). Mexico agreed to pass new labor laws to give greater protections, including ability to unionize, to workers, including migrants and women. By 2023, automobile parts must be made by workers who earn at least $16 an hour.

Terms of copyright is extended to 70 years beyond the life of the author (up from 50). Provisions are included to deal with the digital economy, such as prohibiting duties on things like music and ebooks, and protections for internet companies so they are not liable for content their users produce. And an important inclusion provides that U.S. farmers get more access to the Canadian dairy market.

The agreement adds a 16-year sunset clause. The deal is also subject to a review every six years, at which point the U.S., Mexico and Canada can decide to extend the USMCA.

NAM President and CEO Jay Timmons released the following statement on passage of the U.S.–Mexico–Canada Agreement:

“Months ago, when others predicted nothing but partisan gridlock, manufacturers mobilized to make sure that the U.S.–Mexico–Canada Agreement won the overwhelming support it deserved. Today, the NAM’s efforts helped secure a strong bipartisan vote for this historic agreement. Democrats and Republicans alike voted to protect the millions of manufacturing jobs that depend on North American trade.”

FOR MORE INFORMATION: The U.S. Trade Representative has posted a series of fact sheets online, including Rebalancing Trade to Support Manufacturing.

The United States-China Phase 1 Trade Deal

U.S. manufacturers sell more of what they make to China than to any other country outside of our North American trading partners Canada and Mexico. The Phase 1 trade deal signed in January by U.S. President Donald Trump and Chinese Vice Premier Liu cut some U.S. tariffs on Chinese goods in exchange for Chinese pledges to purchase more of American farm, energy and manufactured goods and addresses some U.S. complaints about intellectual property practices.

The Phase 1 trade deal incorporates core elements of NAM’s negotiating objectives framework. It includes concrete wins to protect a broad range of U.S. intellectual property, such as trade secrets and patents, and includes commitments on stronger and more independent judicial enforcement in China to tackle longstanding issues, such as China-based counterfeiting, that have harmed manufacturing innovations and the jobs of American workers. China also agreed to specific purchases of American-manufactured products and new enforcement mechanisms in case China does not meet its commitments. While the deal does not include any formal tariff reduction, President Trump reaffirmed U.S. commitments to reduce existing U.S. tariffs on List 4A ($160 billion that went into effect on Sept. 1, 2019) from 15 to 7.5%.

NAM President and CEO Jay Timmons acknowledged this “turning point for manufacturers,” saying:

“. . . this is an indisputable win for our country and a momentous day in the U.S.–China economic relationship. It is a remarkable turning point for manufacturers, with the unprecedented and enforceable commitments on critical intellectual property protections to which China has agreed. The NAM looks forward to . . . working with the administration in holding China accountable for its ambitious commitments.

“. . . we are committed to achieving more progress in reducing trade uncertainty . . . on a host of difficult issues, which have been the heart of the trade battle, including Chinese subsidies to domestic companies and the behavior of Chinese state-owned firms were pushed off to later rounds of talks, which aren’t expected to conclude until after the U.S. presidential election in November.”

FOR MORE INFORMATION: The U.S. Trade Representative provides additional detail and access to the official fact sheet online.

Your Team

If you have questions about these U.S. trade policy, don’t hesitate to reach out to your CBIZ adviser. As a corporate member of the National Association of Manufacturers, we can put you in touch with the NAM’s trade contacts for USMCA and China policy.

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