American Chemistry MattersA Blog of the American Chemistry Council

American Chemistry Matters

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What is USMCA?

The United States-Mexico-Canada Agreement (USMCA) is a proposed new trade agreement between the U.S. chemical industry’s top two trading partners. This agreement builds upon the success of the North American Free Trade Agreement (NAFTA) while modernizing the current trade pact to address 21st-century trade issues like regulatory cooperation.

Why now?

As ACC’s new President and CEO Chris Jahn wrote in the Washington Examiner, USMCA needs to be passed as soon as possible in order to provide trade and economic certainty to U.S. chemicals manufacturers and the broader manufacturing industry. Uncertainty over the future of North American free trade continues to put announced U.S. chemical industry investments at risk.

Since 2010, chemical manufacturers have announced approximately $201 billion of investment in new or expanded chemicals and plastics production capacity in the United States. More than 60 percent of that capacity stems from foreign direct investment. Delaying USMCA passage could have a negative impact on growth, innovation, and the American jobs that depend on tariff-free trade relationship with Canada and Mexico. 

Why is USMCA important?

Free trade agreements have enabled the business of chemistry to grow and innovate across borders over the last 25 years. In 2018, the U.S. trade surplus in industrial chemicals was $31 billion and is projected to grow to around $61 billion by 2024. This is made possible in part by trilateral free trade with the U.S. chemical industry’s top two export destinations: Canada ($23 billion) and Mexico ($23 billion).

More than 30 percent of chemistry-related jobs are export dependent. In fact, chemical exports in the United States accounted for 10 percent ($140 billion) of all American goods exports in 2018. USMCA would strengthen NAFTA’s legacy by maintaining duty-free trade, helping remove barriers to trade, and keeping North American manufacturing costs low.

More than 96 percent of all manufactured goods are touched by the business of chemistry, and our industry supports 25 percent of the United States’ GDP. By boosting U.S. chemical industry growth and exports, USMCA will also help our customer industries grow and create jobs.

USMCA Provisions that Benefit the Business of Chemistry

ACC supports USMCA for several reasons:

  1. USMCA would prevent any new tariffs on North American chemicals trade. Tariffs otherwise would reduce demand for American made chemicals and threaten recently announced investments.
  2. USMCA’s final Sectoral Annex for Chemical Substances outlines specific areas of regulatory cooperation where regulators could create efficiencies that reduce costs while maintaining high levels of protection for human health and safety and the environment.
  3. USMCA would facilitate digital trade by ensuring that chemical industry data can flow freely and securely across North American borders all while implementing best-in-class intellectual property rules that will help protect the full range of U.S. manufacturing inventions and innovations.
  4. USMCA would modernize chemicals rules of origin by offering companies a clear and simple menu of options for documenting the origin of their products.

It is important for our industry and our country’s economy that Congress pass USMCA as soon possible. Please send a letter to your member of congress telling them to vote on USMCA using the Take Action box below!

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