McALLEN, Texas (Border Report) — The senior vice president of the Federal Reserve Bank of Dallas told a binational trade conference held at South Texas College on Friday that he believes the U.S.-Mexico-Canada Agreement (USMCA) will pass Congress.
“I actually feel reasonably confident the USMCA agreement can get through Congress. There seems to be an effort on both sides of the isles,” Blake Hastings, who is in charge of government relations for the Dallas Fed offices, said Friday.
“I believe it has a strong chance of passing I don’t want to predict whether it will or won’t but what I’m hearing from lawmakers is much more promising than what I was hearing two months ago,” Hastings told the “7th Annual Bi-National Innovation Conference: A New Era of Manufacturing in South Texas and Northern Mexico” in McAllen.
Passage of USMCA, he said, “would be a huge win for the U.S. economy and U.S. manufacturing sector and an even bigger win for the state of Texas and an even bigger yet win for the City of McAllen.”
Critics say that USMCA must pass Congress before the end of the year or it is at risk of being put off until next year. The proposed trade agreement would replace the North American Trade Agreement (NAFTA), which had been in effect since Jan. 1, 1994, and created a free-trade area between the three countries to promote manufacturing and industry, and bolstered the economy of border communities.
NAFTA went into effect amid controversy: The pact led to the flight of thousands of jobs abroad before boosting U.S. exports and leading to more imports from Mexico and Canada.
One sticking point among Democrats is the assurance of fair labor practices in Mexico, the Washington Examiner reported Thursday. According to the article, House Democrats are demanding that President Trump’s USMCA plan include a provision banning imports from Mexican factories that violate labor rights terms, which they say is a critical enforcement mechanism.
On Friday, Hastings said he was not concerned that such a provision would impact border communities like South Texas or the manufacturers on the border, also called maquiladoras, because he said that in talks with Mexican labor leaders in Reynosa and Matamoros, they have told him they are amenable and willing to comply with terms as long as they know what those agreed-upon terms actually are.
“This is something that has always been an issue, primarily for the Democrats, when it comes to trade agreements. They want to see labor having certain rights and being treated certain ways, whether through wages or worker rights or things of that nature,” Hastings said. “I’ve spoken to a number of labor unions that are very involved in labor development in Reynosa and Matamoros and I don’t get a sense that’s going to be a huge issue for Mexican manufacturers. I really don’t. I think that’s more of a political thing to make it more palpable for Democrats to vote for. I don’t think that’s going to have a material effect on the trade relationship.”
That’s why USMCA is so critical because it will set the rules.”Blake Hastings, senior vice president of the Federal Reserve Bank of Dallas
The most important thing is to get a trade agreement passed, Hastings said, which will help to give manufacturers and businesses more confidence in future economic outlooks, and should prompt them to invest in more business ventures.
“Getting USMCA passed, in whatever form there is, is going to create trade certainty. It’s going to let businesses know these are the new rules of the game,” Hastings said. “Not knowing what the rules are going to be tomorrow because it could change on a whim, you can’t operate in that environment and I think that’s why USMCA is so critical because it will set the rules .”
On Wednesday, the Federal Reserve cut interest rates by a quarter percentage point in order to support an economy that seems to be showing signs of weakness. This was the third time in a row that the Feds cut interest rates.