A recent deal struck between the Congress and the White House, leading to the president signing the United States-Mexico-Canada Agreement into law, is a victory for the state of Louisiana. USMCA is an update to the North American Free Trade Agreement, NAFTA.
While the U.S. runs a trade deficit with Mexico and Canada, Louisiana has a trade surplus with each nation. Louisiana’s trade surplus with our North American neighbors totaled close to $5 billion in 2017 alone. This newspaper recently reported that North American trade grew significantly in 2018, with Louisiana exporting $9.2 billion in goods to Mexico and $3.5 billion to Canada.
In fact, of all fifty states, Louisiana’s economy is the third most-dependent on international commerce. NAFTA needed significant updating and the Office of the US Trade Representative has done an outstanding job modernizing NAFTA to meet the needs of a 21st-century economy.
Since NAFTA came into force in 1994 and created one of the largest free trade areas, the trilateral agreement gradually eliminated most tariff and non-tariff barriers on trade in goods among its partner nations. The U.S. and Canada gained access to the previously protectionist Mexican market and brought the effective duty rate on most goods and services to zero. From 1993 to 2017, imports and exports increased for each nation.
The USMCA retains most of NAFTA’s market opening measures and most of its chapters, but makes notable changes to rules-of-origin requirements, market access for agricultural products, dispute settlement procedures, government procurement, investment, and intellectual property rights protection. The rules-of-origin provisions will help Louisiana continue to draw needed foreign investment.
The Port of South Louisiana is already home to some of the largest foreign direct investments in the state, and we look forward to hosting more businesses taking advantage of the USMCA. USMCA also addresses new trade issues, such as digital trade and e-commerce, state-owned enterprises, anti-corruption, and currency misalignment. All of these substantive areas are now subject to negotiated rules and disciplines that will encourage trade.
Finally, as the largest port by tonnage in the Western hemisphere, the Port of South Louisiana applauds Louisiana’s leaders in Congress, who came together to support USMCA, because the trade deal is critical to our economy. Alone, the Port of South Louisiana is the largest grain and energy transfer port and the second most active Foreign Trade Zone in the United States. Centrally located within Louisiana’s vast state and Interstate highway systems and serviced by three trunk-line railroads, the port’s grain elevators, for example, handle more than 50% of all U.S. grain exports annually.
executive director, Port of South Louisiana