In the 25 years since the North American Free Trade Agreement (NAFTA) went into effect, trade with foreign markets has become a huge economic driver for job providers all across the Upper Peninsula.
It should come as no surprise that our biggest trading partners are our neighbors, Canada and Mexico. Combined, the two countries bought 91 percent of the iron and steel exported from Michigan in 2017.
Nationwide, annual trade with Canada and Mexico has nearly quadrupled to $1.3 trillion since 1994, the year NAFTA took effect.
Establishing a free trade agreement with our closest neighbors was clearly a good thing. However, we must also acknowledge that a lot has changed since 1994. Other countries have figured out how to circumvent NAFTA over the course of the past 25 years. People are taking advantage of us and Michigan workers are losing out as a result.
It’s time to replace the outdated agreement.
Our leaders in the federal government have already negotiated the new U.S.-Mexico-Canada Agreement (USMCA). It’s a better and stronger deal that levels the playing field for Michigan workers and businesses across both peninsulas.
Earlier this year I co-sponsored a resolution in the Michigan House urging Congress to speedily approve the agreement. Congress has yet to act.
Our state stands to lose greatly if there are any complications that prevent the USMCA from moving forward. The U.P. timber, mining and fishing industries all have a large vested interest in the acceptance of this new deal.
Downstate, the new trade agreement will greatly benefit the auto industry, which we all know is heavily reliant on iron ore from the U.P. The USMCA levels the playing field for American autoworkers by improving labor standards in Mexico and increasing the threshold for the use of domestic parts and assembly. If the new rules are adopted, vehicles must be built with at least 75 percent of parts made in North America in order to qualify for zero tariffs. This is up from 62.5 percent under NAFTA. Also, 40 to 45 percent of an automobile will have to be made by workers earning at least $16 an hour.
If Congress fails to approve the new trade agreement and NAFTA is canceled, it could have devastating effects on our economy. New tariffs would be added to all of the products Michigan businesses send to Mexico and Canada, likely resulting in businesses closing and thousands of workers losing their jobs.
It’s time for our members of Congress to put politics aside and get the USMCA across the finish line.
State Rep. Greg Markkanen, of Hancock, is serving his first term in the Michigan House representing residents of Baraga, Gogebic, Houghton, Iron, Keweenaw and Ontonagon counties, as well as Powell and Ishpeming townships in Marquette County. He previously taught high school civics, history and geography for Baraga Area Schools and served on the Hancock City Council.