Jul102019

Opinion: Passage of NAFTA Successor USMCA Is Critical to California Economy

Posted by Kassy Perry

By Ziad Alaywan
Times of San Diego
July 10, 2019

Like much of the country, California has enjoyed a healthy economy over the last several years. In fact, WalletHub recently found that California has the fourth-best economy in the United States, with an incredible percentage of high-tech jobs and a larger GDP than most other countries.

But to keep our economy thriving, we must look to our state and federal representatives to pass legislation that will bolster the Golden State.

International trade is an important component of the California economy, supporting hundreds of thousands of jobs across the state and stewarding billions of dollars in investments. And our two largest trading partners are Mexico and Canada.

According to a new analysis by the National Association of Manufacturers, three out of four California manufacturing firms export to Canada and Mexico, which purchase about one-quarter of our state’s manufacturing exports and about $44 billion worth of goods from information and communications equipment and food products to automotive parts and textiles and apparel.

That is why it is critically important for our federal representatives to work to ratify a new trade agreement that strengthens our relationship and promotes free trade with our nearest neighbors and close allies, Canada and Mexico.

When NAFTA was enacted, it was the first trade agreement among all three North American countries. NAFTA ensured free trade across the continent, increasing trade-supported jobs, raising wages, and expanding exports from our state. But with a rapidly changing economy and increased challenges overseas, an update to NAFTA is necessary.

Leaders in the United States, Canada and Mexico signed the new trade deal last November, signaling their support for a modernized economic relationship between the three countries. And Mexico recently became the first nation to ratify the deal. It is now up to Congress to approve the agreement.

One of the most critical provisions in the USMCA would expand significantly the intellectual property protections included in NAFTA. As technology and the digital age continue to change economic landscapes throughout the world, it is more important than ever that the United States protects its innovators and creators. Strong, effective IP protections are the bedrock of our economy and our place as a world leader in research and development.

The USMCA also includes best-in-class digital provisions that set strong standards to foster continued innovation and enable more of our manufacturers and small businesses to export using the internet as their digital storefront.

For California, the tech sector is one of our most dynamic industries, fueling modern manufacturing and putting our state at the forefront of innovation and energy efficiency. And each of these tech companies, including manufacturers, relies on a strong digital economy and IP protections to optimize production and the supply chain—leading to more robust productivity, higher quality jobs, a cleaner environment, and more employment opportunities.

The new USMCA also protects U.S. and California businesses from unfair trade barriers and anti-competitive behavior by state-owned entities. It would allow businesses, many of which are small and medium-sized, to broaden their reach into our neighboring countries and their businesses with a more level playing field. These are the kind of economic policies that we need to ensure more economic stability and growth well into the future.

Congress has already begun reviewing the USMCA. For the sake and stability of California’s economy, I would encourage them to ratify the agreement as soon as possible. It would bring much-needed certainty to the North American market, and it would show lawmakers’ commitment to the American economy.

Ziad Alaywan is president and CEO of ZGlobal Power Engineering & Energy Solutions, an energy consulting firm with offices in El Centro and Folsom.