From the car you drive to the food you eat, domestic and international trade helps make American life possible.
This trade, which happens across North America, depends on manufacturing and services, transporting goods to market and then selling them via various physical and digital retail means. American businesses and major rail shippers — including automobile makers, energy producers, agricultural growers and even beer makers — need the certainty and benefits of tariff-free trade across North America to keep delivering for the American people.
With the U.S.-Mexico-Canada Agreement (USMCA) now law governing trade between the United States, Canada and Mexico, freight railroads will continue their work to keep supply chains moving, fuel economic recovery from the coronavirus pandemic and execute a vision toward the future.
Freight rail plays a fundamental role in trade.
A staggering 42% of all rail traffic is connected to international trade, much of which occurs across Canada, Mexico and the United States. Because of this connection, capital intensive railroads — which privately invest $26 billion annually to maintain and modernize their 140,000-mile network — have focused part of their investments towards some of the busiest regions for cross-border trade. These investments include an intermodal facility in Santa Teresa, New Mexico that handles 225,000 containers a year and Florida’s PortMiami where new rail tracks help create a global gateway for trade.
U.S. trade with Mexico and Canada benefits the nation in many ways.
As outlined by a trade coalition of U.S. companies and associations, U.S. trade with Mexico and Canada:
- Supports millions of jobs: Trade with Canada and Mexico supports 11 million American jobs in every state in the Union and 49 U.S. states count Canada or Mexico as one of their top three merchandise export markets.
- Drives U.S. export growth: U.S. goods exports to Canada and Mexico have expanded far more since the 2007-2009 recession than U.S. exports to any other country in the world, accounting for about 40% of the growth in overall U.S. goods exports in dollar terms.
- Quadrupled in the past 25 years: Trade with Canada and Mexico reached nearly $1.3 trillion in 2017, and the two countries buy more than one-third of U.S. merchandise exports.
- Is vital for U.S. manufacturers: U.S.-manufactured goods exported to Canada and Mexico support the jobs of more than two million men and women at more than 43,000 manufacturing firms across the United States. Most U.S. manufacturing sectors (38 out of 42) and most states (46 out of 50) count Canada or Mexico as their first- or second-largest foreign purchasers.
- Is essential for farmers and ranchers: U.S. agricultural exports to Canada and Mexico quadrupled from $8.9 billion in 1993 to $39 billion in 2017 and the two countries are top markets for U.S. grains, dairy products, meats, fresh fruits and vegetables. Nearly one-third of U.S. agricultural exports went to our North American neighbors in 2017.
The USMCA provided a much-needed update to NAFTA and modernized North American trade.
The North American Free Trade Agreement (NAFTA) made the trade that freight rail supports possible. Passed in 1993, NAFTA has boosted U.S. manufacturing, opened new markets for farmers and positively transformed supply chains. Yet that agreement needed to be updated, which leaders from United States, Canada and Mexico did through the USMCA.
As U.S. Chamber of Commerce President and CEO Tom Donohue argued, “this new agreement preserves and strengthens the benefits of these trade ties and brings our commercial relationship into the 21st century.” The USMCA includes essential provisions related to e-commerce and digital trade, both of which help drive intermodal rail shipments — one of the most important parts of the rail business.
To help pass USMCA, AAR joined forces with more than 250 other companies and organizations to form the USMCA Coalition, which urged Congress to consider how USMCA modernized the rules for trade in North America with multiple, state-of-the-art provisions. These provisions included the following, as outlined by the coalition:
- Market Access: Maintains tariff-free access to the Mexican market for all U.S. goods exports. For Canada, maintains the current tariff-free access for nearly all U.S. products and eliminates some remaining barriers facing U.S. dairy and poultry exports. Also prohibits import restrictions on re-manufactured goods.
- Agriculture: In addition to securing outstanding market access, establishes modern, science-based sanitary and phytosanitary standards that are the strongest achieved in any trade agreement. Provides transparency and information sharing on measures impacting trade in the products of biotechnology.
- Regulatory and Technical Barriers to Trade: Promotes regulatory compatibility and best regulatory practices s, while also improving rules prohibiting discriminatory technical barriers to trade.
- Customs: Modernizes customs procedures regarding advanced rulings, simplified entry, risk management, single window, e-signatures, and self-certification of origin.
- Competition Policy: Ensures that antitrust investigations are fair, transparent, and based on sound economic analysis.
- Enforcement: Raises the bar with binding enforcement for all chapters, including labor and the environment.