Industry Groups Testify at USITC Hearing on Potential Impacts of USMCA

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Industry groups testified before the U.S. International Trade Commission (USITC) late last week on the United States-Mexico-Canada Agreement (USMCA) and its potential impact on the U.S. economy and industry sectors.

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The Aluminum Association was one of the groups to comment, particularly focusing on the Section 232 steel and aluminum tariffs. Despite the three countries reaching a deal on USMCA — which is set to serve as the successor to the North American Free Trade Agreement (NAFTA) if ultimately finalized — the U.S. metals tariffs remain in effect for Canada and Mexico.

During her testimony, Aluminum Association President and CEO Heidi Brock renewed the industry group’s call for quota-free tariff exemptions for Canada and Mexico.

“Limiting access for U.S. aluminum producers to reach their suppliers and customers – and in some cases, their own subsidiaries and facilities – in Canada and Mexico, as we see with the Section 232 tariffs today, will hamper continued growth and investment for our industry here at home,” Brock said. “This is why we continue to call for quota-free exemptions from these tariffs for our USMCA partners. The U.S. aluminum industry faces an acute and persistent issue of illegally subsidized Chinese aluminum overcapacity in the market, but tariff or quota actions against countries like Canada and Mexico that operate as market economies do not address the China challenge and instead harm the overall competitiveness of the region.”

Brock concluded the USMCA cannot work without removal of the tariffs on Canada and Mexico.

“From the beginning, we have supported a modernized North American trade agreement, and USMCA achieves that in important ways,” she said. “However, we urge the president to resolve the Section 232 tariffs on aluminum imports for our neighbors to ensure free movement of aluminum and aluminum products within North America. The new agreement simply cannot work as intended for the aluminum industry and our customers with those tariffs – or quotas to limit access to supply – in place. Full, quota-free exemptions for Canada and Mexico from aluminum tariffs as part of this agreement will benefit the U.S. aluminum industry and the hundreds of thousands of American workers who depend on its success.”

Almost two weeks after the USMCA was announced, the USITC announced Oct. 12 that it would investigate the potential impacts of the deal. The investigation came at the request of U.S. Trade Representative Robert Lighthizer.

Kevin Dempsey, the senior vice president for public policy and general counsel for the American Iron and Steel Institute (AISI), also testified at the hearing.

Dempsey said the U.S. steel industry views NAFTA as a “successful agreement,” but one that should be modernized and strengthened. He went on to list provisions of USMCA that he said would benefit the steel industry, including a strengthened rules of origin benchmark and provisions promoting “increased cooperation and information sharing between the three North American governments to address circumvention and evasion of trade remedy orders.”

As we noted Friday, it remains to be seen what impact, if any, the new Democrat-majority House of Representatives will have on implementation of the USMCA.

Some Democrats have expressed concerns about the deal, including New Jersey Rep. Bill Pascrell, the leading Democrat on the House Ways and Means Subcommittee on Trade.

“As claims start to be made about the miracles that the new NAFTA will bring, we are relying on you, this commission, the International Trade Commission, to tell it like it really is,” Pascrell said in his opening remarks during the USITC hearing last Thursday.

Pascrell said he is reviewing the text of the USMCA and plans to use the USITC’s analysis, among other analyses, to inform his views on the agreement.

“There are certainly some improvements in the USMCA over the previous NAFTA, but the jury is still out as to whether this deal meets my standard for a better deal for American workers,” Pascrell said. “The Commission’s report on the potential economic impact of the USMCA is a critical component in assessing the merits or flaws of the new deal. Any new deal will not be a success unless it eliminates the incentives for outsourcing in the original NAFTA and boosts jobs and wages in a meaningful way in the United States.

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“For these reasons, we need a comprehensive and meaningful ITC report to determine whether all of the Administration’s rhetoric around transforming and rebalancing U.S. trade policy will actually carry the day.”

The full text of the USMCA is available on the Office of the U.S. Trade Representative’s website.

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