Small Gains & Big Risks: Evaluating the Proposed United States-Mexico-Canada Agreement

It is no surprise that calls to renegotiate the North American Free Trade Agreement (NAFTA) resonated with so many Americans. Numerous studies have documented the negative effects of NAFTA on certain groups, regions and the environment in the US, Mexico and Canada. However, the resulting United States-Mexico-Canada Agreement (USMCA) will not restore innovation, industrial jobs, worker rights and living wages, and neither will it provide the protections for affordable health care and the environment that have been on decline since the original NAFTA went into force.

A policy brief by Sandra Polaski, Jeronim Capaldo and Kevin P. Gallagher examines the small gains and heightened risks of the UMSCA. The authors determine that unless the agreement is revised to shift the balance in favor of workers, households and communities in North America and the global commons, it should be rejected in favor of an agreement that prioritizes shared and sustainable prosperity.

The minimal gains from the agreement include a modest one-time increase in gross domestic product (GDP), total employment and wages. The risks, however, include weak enforcement and dispute resolution procedures for the protection of labor rights and environment, a loophole whereby US oil and gas companies can still sue the Mexican government directly if it adopts higher public health standards and special protections for large pharmaceutical and digital firms that will raise health care costs and threaten privacy. The authors determine that a values-driven trading regime must prioritize the role of global public goods that are needed to deliver human welfare and a healthy planet, promote cooperation and collective actions and coordinate policy initiatives to mitigate common risks.