On the other hand, critics of the agreement claim that it is responsible for job losses and wage moderation in the United States, driven by low-wage competition, from companies that have relocated their production to Mexico to reduce costs and a growing trade deficit. Dean Baker of the Centre for Economic and Political Research (CEPR) and Robert Scott of the Economic Policy Institute argue that the post-NAFTA increase in imports has resulted in a loss of up to six hundred thousand U.S. jobs over two decades, although they acknowledge that some of this import growth would likely have occurred without NAFTA. Neither the worst fears of Canadian trade opponents – that open trade would erode the country`s manufacturing sector – nor the highest hopes of NAFTA proponents – that this would lead to a rapid increase in productivity – have been realized. Employment in Canada`s manufacturing sector has remained stable, but the productivity gap between the Canadian and U.S. economies has not been closed: until 2017, Canada`s labour productivity remained at 72% of the U.S. level. The renewed agreement between the United States, Mexico and Canada could indeed strengthen the economy in North America, as it adapts NAFTA disciplines to the current needs of the 21st century economy. In the mid-1990s, NAFTA introduced trade liberalization obligations and established new market-opening rules that phase out virtually all tariff and non-tariff barriers.
Such trade benefits often come under interest, because while costs are highly concentrated in certain sectors such as the automotive industry, the benefits of an agreement such as NAFTA are widespread in society. PROPONENTs of NAFTA estimate that about 14 million U.S. jobs depend on trade with Canada or Mexico, and that the nearly two hundred thousand export-related jobs created each year by the pact cost an average of 15-20% more than lost jobs. This classification system allows for greater flexibility than the CLC`s four-digit structure, by implementing a hierarchical six-digit coding system and dividing all sectors into 20 branches. Five of these sectors are primarily those that produce goods, the other 15 being exclusively those that provide some type of service. Each company receives a primary NAICS code indicating its main line of business. A company receives its main code based on the definition of the code, which generates most of the company`s revenue on a site reported last year. NAFTA has had three major advantages. U.S. food prices were lower due to duty-free imports from Mexico. Oil imported from Canada and Mexico has prevented the rise in gas prices. NAFTA also increases trade and economic growth for all three countries.
Now, the establishment of the USMCA should increase the confidence of businesses and investors. The agreement includes 34 chapters and 12 letters and maintains most of the NAFTA market opening measures as well as new provisions to integrate trade by facilitating the participation of businesses and small and medium-sized enterprises (SMEs). The USMCA is also making significant changes to rules of automotive origin, rules of thought compensation, public procurement, investments and the protection of intellectual property rights, while strengthening staff protection and anti-corruption measures. The USMCA also provides for customs management obligations in a way that facilitates the trade or transit of goods while supporting compliance with national laws and regulations. The legislation was developed under President George H. W. Bush as the first phase of his Enterprise for the Americas initiative. The Clinton administration, which signed NAFTA in 1993, thought it would create 200,000 U.S. jobs in two years and a million in five years, because exports play an important role in the United States.