Sen. Elizabeth Warren, in discussing trade, slammed trade deals like “the new NAFTA 2.0.”
Here’s what you need to know about NAFTA: The North American Free Trade Agreement went into effect in 1994, eliminating most tariffs on goods traded between the United States, Canada and Mexico.
The deal was sold as a way to make it easier for American farmers and businesses to sell their produce and goods across the northern and southern borders. But union groups and other critics say it ended up destroying more jobs than it created. Economists have reached different conclusions about the impact, but a Congressional Research Service report published in 2017 said the net overall effect on the US economy has been “relatively modest.”
But NAFTA was politically controversial from the start and ultimately won more votes from Republicans than Democrats. Joe Biden, then still a senator for Delaware, voted for the deal, and Vermont Sen. Bernie Sanders, then a congressman, voted against it.
NAFTA remains a political punching bag: It is blamed for destroying US jobs and hurting American manufacturing. President Trump has called it “the worst trade deal ever” and spearheaded a new deal between the three countries, known as the US-Mexico-Canada Agreement, or USMCA.
More about USMCA — or, as Warren called it, “NAFTA 2.0”: The agreement adds a brand-new chapter on digital trade. The new agreement would also change the way cars and trucks are manufactured, requiring more of a vehicle’s parts to be made in the United States and by workers earning at least $16 an hour in order to remain free from tariffs. Democratic critics say the USMCA doesn’t do enough to protect workers’ rights or set higher environmental standards. Meanwhile, staunch free-traders argue the car manufacturing requirements are too restrictive.
The deal needs to be approved by Congress before going into effect, but some Democrats have said they want to see some changes, particularly to labor standards, to before voting in favor of adoption.