When Marty Moran looks at the reworked U.S.-Mexico-Canada trade deal, he sees sewing thread and Transportation Security Administration uniforms.
That’s because the tentative pact would make it tougher for suppliers outside of North America to skirt import duties - and includes a provision tightening “Buy American” rules for the TSA and its nearly 50,000 employees.
“It opens more doors for products to stay here in the U.S. that have to have U.S. yarn in them,” said Moran, chief executive of Buhler Yarns, a Korean yarn-spinning company with a facility near Athens.
The USMCA was finalized by President Donald Trump and Speaker Nancy Pelosi in mid-December. It recently sailed through the U.S. House - with all 14 Georgia lawmakers lending their support - and is poised to be considered by the Senate in early 2020.
Perhaps the biggest impact of the deal is averting the potential for economic calamity had the U.S. withdrawn from the current North American Free Trade Agreement without a replacement in place, supporters said. Early in his presidency, Trump planned to withdraw from NAFTA, a pact he had called “a total disaster,” until his top advisers convinced him to renegotiate first.
The USMCA “removes a great deal of uncertainty in terms of trade with two of our largest trading partners, and that’s a very positive development,” said Roy Bowen, president of the Georgia Association of Manufacturers.
Local proponents also think the revised pact will bring modest gains to some of Georgia’s top industries — including agriculture, textiles and manufacturing — by bolstering access to some of Canada’s tightly controlled markets, cracking down on labor standards in Mexico and limiting how many component parts of a product can be imported from outside North America.
Opportunities in Canada
In the 26 years since it’s been in effect, NAFTA has helped remake Georgia’s economy.
While many factory jobs – and towns – took hits, it helped provide incentives that created tens of thousands of new jobs in transportation, shipping, warehousing and delivery. Canada and Mexico are now Georgia’s top two export markets.
Local farmers are expecting a small increase of dairy, egg and peanut exports with the raising of previous Canadian quotas. Ditto for poultry, by far Georgia’s largest agricultural export, valued at more than $850 million in 2018.
“Mexico and Canada are Georgia’s one and two markets for chicken exports, so any time you can get any concession - even if it’s only a modest concession - to do more on some of those larger commodities is great for us,” said Tripp Cofield, national policy counsel at the Georgia Farm Bureau.
The USMCA hasn’t been as well-received among Georgia produce farmers who were seeking extra protections from cheap Mexican imports. Groups such as the Georgia Fruit and Vegetable Growers Association had lobbied for easier ways to fight back against the dumping of cheap produce like berries and squash, but their proposal was dropped during negotiations.
After the agreement was announced, Georgia Agriculture Commissioner Gary Black said he remained “concerned about unbridled access to our markets for Mexican fruits and vegetables.”
At the same time, Black and others suggested additional help might be on the way. “I am optimistic that enhanced federal monitoring of trade practices and food safety will mitigate some of these concerns,” said Black.
U.S. Rep. Austin Scott, R-Tifton, a senior member on the House Agriculture Committee, said U.S. Trade Rep. Robert Lighthizer has “committed to addressing my concerns” on produce but did not elaborate further.
Georgia business groups including the Georgia Chamber support USMCA, even though the chamber’s president said he was concerned by the lack of new produce protections and the removal of intellectual property provisions.
In the short term, the USMCA could mean fewer goods from China and other Asian countries making it into larger products manufactured in North America. Many Georgia industries cheered such language tightening country-of-origin provisions, which are designed to ensure that more component parts of goods from cars to textiles are made in the U.S., Mexico and Canada in order to qualify as duty-free.
That could lead to increased demand for local makers of car parts, according to Bowen of the Georgia Association of Manufacturers.
The reworked trade deal also requires a higher percentage of auto workers to earn higher wages - good news for U.S. workers, who were losing work to cheaper Mexican laborers.
But both provisions could increase costs for foreign car manufacturers like South Korea’s Kia Motors,which often buy parts from outside North America. Kia operates an assembly plant in West Point and also relies on a large factory in Mexico.
A Kia spokesman declined to comment on the USMCA “until we have a greater understanding of what is being proposed.”
At Buhler, Moran sees similar language included for textiles benefiting his company.
His Jefferson-based plant employs 165 and spins specialized fibers such as Supima cotton, lyocell and modal into yarns that are eventually turned into high-end clothing. The company has embraced automation and new technology to stay competitive.
A new USMCA provision requiring a higher percentage of the smaller component parts of a garment – including thread, pocketing and elastics – to be sourced from North America could create even more business, Moran said.
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