USMCA receives welcome from trade groups

USMCA receives welcome from trade groups

ISRI among associations expressing optimism for three-nation pact that replaces NAFTA.

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July 2, 2020

On July 1, the trading relationship between the United States, Mexico and Canada turned the page from the North American Free Trade Agreement (NAFTA) to the new United States-Mexico-Canada Agreement (USMCA).

The USMCA, a Trump administration priority to recalibrate aspects of the three-nation trading regimen, has received words of welcome from several trade associations in the recycling, metal and paper industries.

The Washington-based Institute of Scrap Recycling Industries (ISRI) calls the USMCA “a victory for the recycling industry.” States ISRI Vice President of Advocacy Adina Renee Adler, “The market and policy certainty that comes with the agreement will support the 130,000 U.S. jobs that depend on strong regional trade for scrap commodities and the industries that depend on these critical materials. We look forward to reaping the benefits of this agreement, especially in support of a strong post-pandemic economic recovery.”

A coalition of six North American steel and stainless steel associations issued a joint news release calling the USMCA “a critical milestone for the North American steel sector, its workers and its supply chains.”

That coalition included the Washington-based American Iron and Steel Institute (AISI); the Canadian Steel Producers Association; CANACERO, a Mexican steel industry association; the Washington-based Steel Manufacturers Association, which represents electric arc furnace (EAF) steelmakers; the Specialty Steel Industry of North America, which represents makers of stainless and high-temp steel; and the Committee on Pipe & Tube Imports.

“The collective North American steel sector stands ready to work with our governments and supply chains to ensure the success of the USMCA, and is willing and able to supply North American steel to our customers to meet their needs,” the six associations write in their press release.

While some aspects of President Trump’s desire to seek changes considered concessions from Canada and Mexico gained attention as USMCA was negotiated, on the metals front at least one major change could provide support to metals producers in all three North American countries.

“The USMCA ultimately requires that 70 percent of the total steel and aluminum used in an automobile must be sourced from North American suppliers,” states Daniel Cannistra, a partner at international law firm Crowell & Moring. “Auto producers or original equipment manufacturers are going to need to document their steel and aluminum usage. They’re going to need their suppliers to feed this information to them so they can calculate how much North American aluminum they are actually using. An important step of this will be the development of a formal certification process.”

Some of the regulations pertaining to steel and aluminum origins for automakers were published in mid-June. Steelmakers and aluminum producers may need to verify their product came from a North American furnace, although some “melted and poured” requirements are not scheduled to be phased in until 2027, and they seem to differ for steel compared with aluminum.

Paper recyclers and producers of recycled-content paper and board also likely benefited from the smooth transition from NAFTA to USMCA, which was not always a given during the negotiation process.

Heidi Brock, president and CEO of the Washington-based American Forest & Paper Association (AF&PA), comments, “The American Forest & Paper Association recognizes that today is a historic day marking the entry into force of the USMCA, which will preserve free and fair trade in North America and commit the countries to combat illegal logging and associated trade.”

Adds Brock, “Especially now, as we face the COVID-19 global pandemic together, the USMCA will increase manufacturing capacity and investment in North America, providing stronger labor protections and expanded market access to help keep the economy and our industry going at this critical time.”