There were audible sighs of relief in Oregon’s business community after congressional Democrats and President Donald Trump reached an agreement on a new trade pact replacing NAFTA, the North American Free Trade Agreement.
“The biggest thing, if I were to put it in a word, is that it brings us certainty,” said Jack Isselmann, a senior vice president at Greenbrier, the big Portland railcar manufacturer. “Certainty and relief are the two major reactions.”
“What this is going to do is offer companies a safe harbor” to continuing investing in operations across the three countries, added Maria Ellis, executive director of the Portland-based Pacific Northwest International Trade Association.
Oregon is one of the most trade-dependent states in the country – by some estimates, more than 1 in 5 jobs here are tied to international trade – and Canada is its second-largest trading partner after China. As a result, businesses and political leaders here closely watched the long and contentious negotiations over a trade deal covering North America.
“NAFTA 1.0 is no bargain,” said Rep. Earl Blumenauer, D-Portland, who chairs a House trade subcommittee and was closely involved in negotiations with the Trump administration. “But getting rid of NAFTA in its entirety would have really wildly disrupted our supply chains and been very, very destructive. We dodged that bullet.”
The new trade pact – the U.S.-Mexico-Canada Agreement, or USMCA – still has to be approved by both houses of Congress and then sent to the president for his signature.
Blumenauer and fellow Oregon Democratic Rep. Suzanne Bonamici both said the agreement contains a number of improvements that helped bring on board Democrats who have been skeptical of free-trade deals.
It includes several provisions aimed at prodding Mexico into improving its labor and environmental standards. In particular, it would require higher wages in Mexican auto plants – or mandate that some of the work be shifted back to the U.S. and Canada.
Bonamici, who House Speaker Nancy Pelosi appointed to a work group on the new trade agreement, said that if the broad political support brings ratification for the USMCA, the benefits should flow beyond Oregon’s biggest companies.
“It isn’t just Nike, Intel and Columbia [Sportswear],” she said. “There are a lot of small businesses, a lot of agriculture … that also benefit from increased market access.”
Ellis, the trade association executive, said Northwest dairy farmers could benefit from Canada’s agreement to reduce its stringent controls on some dairy imports. And Blumenauer said one USMCA provision places tighter enforcement against lumber imports produced by illegal logging in South America. That should help Northwest timber companies, he said.
But Canada did not accept any changes regarding softwood lumber imports to the U.S. American producers have long argued that they’ve faced unfair competition because Canada has subsidized timber harvests for its companies.
“I think it continues to be just a work in progress,” Blumenauer said of the lumber trade dispute.
Blumenauer said he has long had to balance the heavy trade dependence of his congressional district with the big skepticism toward free trade by many of his constituents, particularly on the political left. But he noted that the new deal seemed to for once unite Democrats – particularly after it received the backing of AFL-CIO President Richard Trumka. Organized labor strongly fought NAFTA when it was originally ratified in 1993 and just about every trade deal since.
‘I don’t think I want to give President Trump credit for bringing us together,” said Bonamici with a laugh.
But she did praise Trump’s trade representative, Robert Lighthizer, for working closely with Democrats to put together a deal.