Consideration and Adoption of Resolution No. 2019-50:  A resolution of the Flagstaff City Council urging the United States Congress to ratify the United States-Mexico Agreement (USMCA).

On September 30, 2018, the United States, Canada and Mexico announced they had reached a trilateral free trade agreement in principle after conducting negotiations talks on the North American Free Trade American (NAFTA). The agreement called the United States-Mexico-Canada Agreement or USMCA (NAFTA 2.0) is intended to replace the old NAFTA by creating a modernized free-trade system between the three governments addressing emerging issues, such as but not limited to the organization of regulatory systems, e-commerce and the protection of intellectual property. The USMCA changes some of the rules and processes governing how certain goods are traded within North America and mechanisms available for how trade disputes are resolved. The USMCA allows Americans to trade more than $3.8 billion (approximately $1.4 trillion annually) in goods and services every day with Mexico and Canada supporting more than 12 million American jobs. The U.S.-manufactured goods exports to Mexico and Canada support the jobs of more than 2 million American workers across the United States. Most U.S. manufacturing sectors (38 out of 42) and most states (46 out of 50) count Canada or Mexico as their first- or second-largest foreign purchasers. The U.S. agricultural exports to Canada and Mexico quadrupled from $8.9 billion in 1993 to $40 billion in 2018, and the two countries are top markets for U.S. grains, dairy products, meats, fresh fruits, and vegetables. Nearly one-third of U.S. agricultural exports went to Mexico and Canada in 2017. Canada and Mexico are the top two export destinations for U.S. small and medium-sized business with more than 120,000 of which these businesses sell their goods and services in our Canada and Mexico. The USMCA ensures that the US products and services will have preferred access to the Mexican and Canadian markets.
 
For Arizona, Mexico and Canada are the top two trading partners in terms of total trade as well as top two destination for Arizona products and services, with more than 228,000 Arizona jobs dependent on trade and investment with Mexico and Canada. The State of Arizona trade with Canada and Mexico totaled over $20 billion in Arizona. The USMCA is a strong and advanced trade agreement negotiated that benefits Arizona workers, farmers, ranchers and businesses in return will increase tourism and economic activities in the city of Flagstaff toward economic and community vitality.

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Economic Development.

Previous council discussion occurred during the Tuesday September 17, 2019 council meeting and approved to bring forth a resolution urging the US Congress to ratify the United States-Mexico-Canada Agreement (USMCA).  

The United States–Mexico–Canada Agreement (USMCA) is based on the North American Free Trade Agreement (NAFTA) which originally came into effect on January 1, 1994. The USMCA is the result of a 2017–2018 renegotiation of NAFTA by its member states, which informally agreed to the terms on September 30, 2018, and formally on October 1. The USMCA was signed by United States President Donald Trump, Mexican President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau on November 30, 2018 during the 2018 G20 Summit in Buenos Aires. The language of the agreement was submitted before the US Congress for a 60-day review for possible changes. On June 16, 2019, Mexico fully ratify the agreement through their legislature while the United States and Canada have yet to ratify. The USMCA contains the following key changes:

Dispute Resolution

• NAFTA Chapter 20, country-to-country dispute resolution mechanism maintained
• NAFTA Chapter 19, anti-dumping/countervailing duty dispute-resolution mechanism maintained
• NAFTA Chapter 11, investor-state dispute resolution mechanism (ISDS) eliminated between Canada and the United States.
• ISDS was a mechanism that allowed private corporations to take legal action against a foreign government if it believes that foreign government’s policies infringe on the corporation’s rights to engage in commerce in that country in accordance with the terms of NAFTA

Automotive Rules of Origin and Regional Value Content

• Total North American content of a vehicle must equal 75% (up from 62.5%).
• 70% of all steel, aluminum, and glass used in the production of the automobile must originate in North America.
• Part content will be divided up into core, principal, and complementary parts with content requirements of 75%, 65%, and 60% respectively.
• 40% of an automobile and 45% of a light truck must be produced using an average labor wage of $16/hour.
• Quotas totaling 2.6 million Canadian and Mexican vehicles (well above the current 1.8 million) were established the USMCA.
• Quotas of $32.4 billion in Canadian auto parts imports and $108 billion in Mexican auto parts imports were established in the USMCA.
   
  Dairy Market Access
• Restrictions on the import of U.S. ultra-filtered milk into Canada have been removed.
• U.S. producers will have access to an additional 3.6% of Canada’s dairy market.
• Canada’s dairy supply management system, which places limits on foreign imports is maintained.
   
  Intellectual Property
• Pharmaceutical companies can maintain patents on biologics for a 10-year term, up from eight years.
• The term of copyright was extended from 50 years after an author’s death to 70 years.
   
  Sunset Clause
• Terms of USMCA will remain in effect for a period of 16 years, at which time the parties can choose to revisit and/or renegotiate those terms, or withdraw from the agreement altogether.
• After six years, the term of USMCA’s sunset (16 years) can be revisited and potentially extended if the parties feel doing so would be beneficial.
  Section 232 Tariffs
• No resolution on steel and aluminum tariffs, or Canadian and Mexican countermeasures.