Trade Policy Trajectories -- USMCA Implications
When U.S. and Mexican policymakers finalized the last details regarding labor standards enforcement, the COVID-19 lockdown was in full swing. Globally, central banks were churning out new economic support facilities as trade flows and economic activity came to a standstill.
Unless you were a lobbyist or a trade negotiator, finding updated information without our PolicyScope Platform was difficult when the noise of the news cycle looked like this regarding the pandemic (note the much higher volume of activity):
Fortunately, our PolicyScope platform users and subscribers to our daily report that cared about this issue were not distracted by the pandemic. The data made it easy to track the action as policymakers cut the deal regarding labor standards enforcement:
Here at BCMstrategy, we have moved past implementation are already pivoting to consider the broader geopolitical implications of launching a major regional trade agreement amid spiraling global tensions between China and the rest of the world. As we noted to The Atlantic Council for their blog earlier today:
“USMCA implementation arrives at an opportune moment, during a dreadful year for global trade and the global economy. The treaty establishes concrete commitments and next-generation standards regarding strategically significant 21st century trade policy priorities such as intellectual property, labor rights, supply chain management, data transfers, and pharmaceuticals production amid ongoing—and increasingly difficult—global WTO reform negotiations. The increased prominence provided to pharmaceuticals and medical supply production issues this year during the pandemic underscores the strategic importance of more diversified supply chain relationships.
The USMCA will help accelerate supply chain diversification as it goes into force today. The treaty seems also likely to provide a foundation for economic security and diversification in Mexico and Canada amid a global shift away from carbon-based energy that will take a toll on their economies in the near term. Many additionally hope that the energy, pharmaceutical, and labor market provisions together with tough new enforcement mechanisms will create concrete incentives for sectoral reform in the North American region.
“The multi-decade shift towards regional (rather than global) trade agreements has been accelerated by the regrettable and troubling rise of economic nationalism in the United States and other countries around the world. Part of that rise relates to perceptions that the benefits of global economic interoperability deliver asymmetric benefits. Part of the backlash against global trade also relates to perceptions that classic trade agreements do not adequately address modern regulatory and policy priorities associated with the increasingly digital knowledge economy. The USMCA, for all its faults, establishes high standards that can help forward-looking trade negotiators in Geneva and the Ottawa Group advance free trade priorities regarding intellectual property and data transfers at the global table alongside advanced labor and other regulatory standards.
“Finally, the USMCA goes into force just in time to provide a deeper foundation for potential cross-border economic cooperation as European, Japanese, and North American leaders sharpen their efforts to challenge China’s alternative vision for how the global trade and economic relationships should function.”
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