Far from a negative, trade is key to building American jobs
Recent reports from the Biden administration and the private sector highlight the importance of trade for U.S. prosperity and jobs. They also point to North America’s role as a foundation for testing and achieving U.S. trade objectives.
On March 1, the United States Trade Representative (USTR) released the Biden administration’s 2022 Trade Policy Agenda and 2021 Annual Report to Congress and its 2022-26 strategic plan for trade policy. The USTR reports highlight key elements of the administration’s approach and reflect its emphasis on forging a more equitable and inclusive trade policy.
The USTR addresses trade around the world, but the agenda’s key elements all have significant North America dimensions, underscoring the role of Canada and Mexico as America’s largest trade and production partners.
On Feb. 28, the Business Roundtable also issued an updated study on trade and jobs that found more than 41 million U.S. jobs are supported by trade. One in five U.S. jobs was linked to imports and exports of goods and services, based on pre-pandemic data (2019), the study found, and trade-dependent jobs have grown four times as fast as U.S. jobs generally. About 30 percent of those jobs, over 12 million, are supported by trade with Canada and Mexico, according to authors’ research.
The Business Roundtable report found that trade increases jobs in every U.S. state, including in sectors that are not commonly associated with trade, such as construction and hospitality services. It concluded that trade has net positive effects on the middle class, union members, minorities and those with a high school education, as well as higher levels of education.
Together, these reports highlight how vital America’s trade agenda is for jobs and prosperity. Contrary to some current public opinion, trade is not a negative for job creation, an impediment to a strong middle class, or a side note to domestic investment. It is a key part of restoring, fortifying and building future American jobs. Middle class prosperity will grow as the U.S. expands markets for its goods and services, and deepens partnerships with countries that make U.S. products more competitive and its supply chains more resilient and dynamic.
In this light, the North American marketplace is a foundation for progress on the U.S. trade agenda. Canada and Mexico are America’s largest trading partners, vying for the top spot over the past two years. They are the largest buyers of U.S. exports, including agricultural goods. Around half the trade across North America is in “intermediate goods,” meaning goods that are used to build final products. Mexico and Canada incorporate more U.S. materials in their manufactured exports to the U.S. than do any other countries in the world, supporting jobs in all three countries.
Not surprisingly, the Biden administration has built mutually reinforcing processes to achieve good outcomes across the continent. First, it gives high priority to implementing the United States-Mexico-Canada Agreement (USMCA) with a series of engagements to put the agreement into action. Second, it forged three mechanisms to complement the USMCA and address issues such as pandemic recovery, resilient supply chains, better border facilitation, critical mineral supply, and green energy deployment. The three processes are the U.S.-Mexico High Level Dialogue (HLED), the U.S.-Canada Roadmap, and the North American Leaders Summit (NALS), which all include robust action agendas.
A Feb. 28 article by Trade Representative Katherine Tai underscores the USMCA’s importance. Combined with the HLED, NALS and U.S.-Canada Roadmap, these efforts tackle the key elements of Biden’s trade agenda. Of note, the three governments agree on promoting more equitable, inclusive trade in North America and they are using the USMCA’s cooperation and enforcement mechanisms to deal with problems. The United States is putting into practice its worker’s rights focus with two successful USMCA cases supporting union democracy in Mexico and has flagged that it will pursue forced labor via the USMCA.
The three neighbors have agreed to bring more small businesses and disadvantaged groups into North American commerce and to promote workforce development. They have agreed on ambitious environmental goals and the promotion of green technology, including electric vehicles. The U.S. is engaged with Mexico to avoid environmentally dangerous energy policy reform proposals and requested USMCA consultations regarding Mexican environmental practices.
With Canada and Mexico as the largest markets for U.S. agricultural products, North America will be a testing ground for working through differences and expanding markets that are vital to farmers in all three countries.
The three countries have pledged to strengthen key supply chains after the disruption of the pandemic via bilateral and trilateral working groups. There will be a lot of interest to see if these groups produce tangible results and if the governments can resolve disagreements over issues such as “Buy America” or vehicle rules of origin. Making supply chains more efficient and resilient will be vital for encouraging companies to bring back investment from China. Similarly, if done well, this cooperative North America effort can learn from the serious mistakes made during the pandemic and set mechanisms to better manage any future pandemics and other cross-border emergencies. As Tai notes, success requires productive, ongoing public-private stakeholder engagement that can build public support.
Done well, this North American cooperation will serve as a foundation and testing ground for cooperation with other countries. Getting North America right and getting trade right are essential to growing U.S. jobs, prosperity and public confidence in the value of trade.
Earl Anthony Wayne, a former U.S. ambassador to Mexico and Assistant Secretary of State for Economic and Business Affairs, is board co-chair of the Wilson Center’s Mexico Institute and a Distinguished Diplomat at American University’s School of International Service. Follow him on Twitter @EAnthonyWayne.