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McMoRan Inc., Kahala Brands, OpenText Corp., and EPCOR Water. While the agreement is debated, local leaders, including Glenn Williamson, CEO and founder of the Canada Arizona Business Council, are waiting to see how things shake out. “All we want is a rule book. If I need to do business between Arizona and Canada and Mexico, I’ll still do business. It’s still going to happen, but this is a rejiggering by the government for what we need to do,” Williamson said. “At the end of the day, the U.S. is the consumer between the three involved in the agreement. The government recognizes that and is using it as leverage to rearrange things. If this Congress goes back in and doesn’t pass the USMCA, then we end up going back to how things were before NAFTA, and then we have a big problem. That would be horrifying.” NEW AND IMPROVED USMCA CHANGES The USMCA’s stated purpose is to deepen gains from trade and preserve and expand regional trade and production by further “incentivizing the production and sourcing of goods and materials in the region.” Changes to the new agreement include: • New rules of origin: More stringent rules from the automotive industry. Seventy-five percent of vehicles, including electric vehicles, would have to be produced in North America instead of the current 62.5 percent, and 40-45 percent of vehicles would be assembled by workers who earn at least $16 an hour. These new rules could benefit Arizona, tilting automotive original equipment manufacturers (OEMs) toward the southern part of the United States and Mexico. Arizona is well positioned, given its proximity to OEMs in Northwest Mexico like Ford in Sonora, and Toyota in Baja California, and its connectivity via I-19 to Mexico’s Highway 15 corridor, leading to the Bajío automotive cluster. Binational electrical vehicle projects, such as the proposed Lucid Motors factory planned for Pinal County, also would be well positioned to meet USMCA goals and leverage research and development and auto assembly in the U.S. • Agricultural access: The agreement preserves market access for Arizona’s agricultural industry and includes additional U.S. access to Canada’s poultry, dairy and wine markets. There are additional measures to improve phytosanitary inspections. • Higher duty-free thresholds: Minimum thresholds would be increased, removing tariffs on more goods. This should allow for some additional flexibility in sourcing globally while also keeping the duty-free incentive to source in North America. This also would have a positive impact on the SkyBridge initiative at Phoenix-Mesa Gateway Airport, a new operation that capitalizes on the U.S.-Mexico Unified Cargo Processing that expedites import and export processing times of goods. 102

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Emily Anne Gullickson

Glenn Hamer

Glenn Williamson

• Stronger IP protections: New protections for intellectual property would extend patent protections to 10 years from eight in Canada, expand copyright protections, and broaden trademark rules to cover sound marks and scent marks. Penalties would increase for violating trade secrets or trading counterfeit goods. Custom rules for detaining illegal counterfeit goods would be modified. Internet service providers would be required to implement a “notice and takedown” system in Mexico when digital information infringes on ownership rights. • Digital trade and cybersecurity: New provisions for digital trade such as e-books, music, software and video games include a prohibition on tariffs on digital products distributed electronically, rules for validating e-signature and e-documents, anti-spam measures, and coordinated cybersecurity measures for the three countries’ highly integrated telecommunication systems. WHAT’S NEXT? The Trump administration is working to build congressional support for the modernized agreement. The goal is to have it approved by this summer. Meanwhile, Trump has made rumblings that he may withdraw from NAFTA to force Congress to approve the new pact. Without NAFTA and the USMCA, that could undermine infrastructure investments spurred on by Arizona’s trade and tourism with Mexico like the $244 million expansion of the Mariposa Point of Entry (POE) in Nogales, the $6 million pedestrian facility modernization at the San Luis POE, improvements for the Raúl H. Castro POE in Douglas, or the new SkyBridge-Arizona international air cargo hub. “This paper makes clear not only that trade benefits Arizona greatly, but that the USMCA is a modern trade agreement for the 21st century economy,” Arizona Chamber of Commerce and Industry President and CEO Glenn Hamer said. “The Arizona business community is pleased to join Gov. Ducey in calling for the swift ratification of the USMCA. Let’s take advantage of all that the USMCA has to offer and launch Arizona into even more robust growth in the years ahead.” Victoria Harker is a contributing writer for Chamber Business News.

Profile for AZ Big Media

AZBusiness May/June 2019  

In this issue, we spotlight the healthcare leaders and innovators of 2019 and profile the finalists for the Industry Leaders of Arizona Awar...

AZBusiness May/June 2019  

In this issue, we spotlight the healthcare leaders and innovators of 2019 and profile the finalists for the Industry Leaders of Arizona Awar...