Modernize NAFTA, But Do So with Care

Date: September 27, 2017
The following commentary by MEMA President and CEO Steve Handschuh was published in the Sept. 26 issue of The Washington Post.
 
Regarding Commerce Secretary Wilbur Ross’s Sept. 22 op-ed, “NAFTA’s ‘rules of origin’ are killing American jobs“:
 
The Trump administration has indicated that changing rules of origin under the North American Free Trade Agreement would increase jobs in the United States. NAFTA’s rules of origin were never intended to create jobs: They were intended to create an interconnected supply chain and allow American businesses to remain competitive in a global economy, and they have worked.
 
More than 871,000 Americans are directly employed by the motor-vehicle-parts-manufacturing industry, which is represented by the Motor & Equipment Manufacturing Association. This number, up nearly 19 percent since 2012, represents 2.9 percent of U.S. employment and 2.4 percent of gross domestic product. In all, the total employment impact of our industry is 4.26 million American jobs.
 
Using rules of origin as a blunt instrument will not create more U.S. jobs. More effective tools, such as optimizing exports and workforce-development programs, should be explored. In addition, the position laid out by Ross does not recognize the labor of highly trained American workers necessary to assemble complex components. Unrealistic rules of origin would increase the cost of manufacturing, raise prices for consumers and, a recent study shows, eliminate as many as 50,000 U.S. jobs. Modernize NAFTA, yes. But do no harm.
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