After more than a year of talks, the Trump Administration passed the new NAFTA deal—the United States-Mexico-Canada Agreement (USMCA)—in October. With its focus on the increase in automobile manufacturing and workers’ pay, changes to the Canadian dairy market, and intellectual property, many people are wondering how it will affect jobs, prices, and the economy in general.
Buffalo State associate professor of economics and finance, Joelle Leclaire, a Canadian native, views USMCA through both a U.S. and Canadian lens.
“I think these deals just reinforce already existing relationships between the nations and don’t necessarily foster greater economic growth for lower-income countries relative to higher-income countries,” she said.
For the U.S. and Canada, the agreement is a mixed bag. Winners, she pointed out, will be U.S. dairy farmers who will get access to a once-protected Canadian market. While U.S. dairy prices should remain stable or slightly drop, Canadian consumers will likely see their prices rise and their quality fall.
“Quality might fall as smaller producers are overrun by larger American producers in the market,” she said.
While that carton of milk may be cheaper at the grocery store, don’t expect car prices to drop. Leclaire said that the part of the agreement that requires 75 percent of car parts to be manufactured in Canada, Mexico, or the United States will probably result in higher prices of cars in our market. For those who make cars and car parts, this is good news. The USMCA requires that 40 to 45 percent of car and truck parts be made by workers earning at least $16 an hour.
“This is very good because it secures good wages for workers in this sector,” Leclaire said. “I think jobs in auto manufacturing will be more secure in the U.S. as a result.”
However, overall she noted that these kind of trade deals are never about making the world economy stronger. Poor countries will continue to struggle.
“These deals are all about cementing already existing relationships of power,” she said.
She noted on a more global scale that one of the biggest anti-poverty moves in the world was when China beefed up its manufacturing and exportation of goods. While these goods are cheap for American consumers, they are not good for U.S. workers or towns that rely on manufacturing jobs.
“(China exports) have gotten to be a little ridiculous,” she said. “We need to take care of ourselves first. There is plenty of poverty still in the United States.”
To stay competitive, she said the United States should embrace more green technology to create good jobs.
“Investing in green technologies can help the United States become a leader in manufacturing again, but this time it would be manufacturing goods with a low impact or even positive impact on the environment,” she said. “It would create new jobs that target lower-income groups and restore American leadership in the world economy.”
After joining Buffalo State faculty as a lecturer in 2004, Joelle Leclaire became an associate professor in 2010. She obtained a doctorate in economics and social science from the University of Missouri-Kansas City. She earned her undergraduate degree from the University of Manitoba and master’s degree from the University of Ottawa. Her specialties include post-Keynesian theory, macroeconomics, and financial crises. She is an expert member of the private debt initiative, a research program of the Institute of New Economics Thinking. She received the Mentor of the Year Award by the McNair Scholars program in May 2017 and is the co-founder of Buffalo State’s INC.ubator.
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