NAFTA FORUM SAN DIEGO

NAFTA FORUM SAN DIEGO

On September 30, 2018 a revised trilateral agreement was reached which will govern more than $1.3 trillion worth of trade between the U.S., Mexico, and Canada. If approved, the Uniter States-Mexico-Canada Agreement (USMCA) would replace the North American Free Trade Agreement or NAFTA. While the documents are largely similar, USMCA updates various chapters in NAFTA and includes additional chapters which were included in the Trans Pacific Partnership.

Pacific Coast Commercial brokers Valley Coleman and Ramin Salehi, who specialize in South County San Diego attended the National City Chamber of Commerce NAFTA Forum on November 7, 2018. The Forum provided an overview of the revised agreement, next steps in the ratification process and a discussion between private and public sector stakeholders as to the possible impacts of our binational region.

Valley Coleman (Photo Right) with Event Attendees

Some of the new elements in the USMCA are subtle, and some will have effects that could take years to feel.

Potential commercial real estate impact of USMCA (according to Bisnow):

No Resolution On Tariffs:

Looming large over commercial real estate are concerns regarding tariffs. Those that Trump has already placed on China, Canada and other nations have driven up the price of steel and lumber enough to have a significant impact on construction prices.

Increased Protections For Car Manufacturers:

NAFTA mandated that in order to avoid a 2.5% tariff, at least 62.5% of an automobile's parts must be manufactured in the U.S., Mexico or Canada. The USMCA increases that threshold to 75%, in a move that was praised by Ford Motor Co. for promoting more industrial activity in North America, CNN reports.

Though the U.S. Trade Representative released documents showing that the new agreement would bring some manufacturing jobs back from overseas, Harvard professor of international trade Robert Lawrence told CNN that the higher threshold could be less palatable than the 2.5% tariff that would come with sourcing parts from Asia.

Logistics and distribution centers have become far and away the dominant forces in industrial real estate, but manufacturing often requires more skilled, high-paid workers. That has kept many industrial jobs abroad, even as demand for industrial real estate remains sky-high.

Mexico Agrees To Labor Protections:

One of Trump's preoccupations with NAFTA was the claim that the agreement caused a significant number of jobs to move from the U.S. to Mexico. One of Mexico's appealing qualities for companies has always been its cheap labor, but the USMCA attempts to address that by mandating that 40% to 45% of all car and truck parts be made by workers making at least $16 per hour.

The agreement also contains a pledge that all three countries recognize workers' right to collectively bargain and abide by labor rights guidelines set out by the International Labor Organization. Trump touted the impact on jobs of the new deal in an announcement ceremony on Monday, but a representative for the AFL-CIO told CNN that it is too early to say whether or not the new policies will have any positive impact.

16 Years Of Trade Certainty?:

Although the U.S. pushed for an automatic five-year expiration of any new trade agreement, the three parties settled for a policy sunset after 16 years, unless they agree to an extension.

Meetings over extensions will happen every six years, if USMCA is signed into law. A longer period of consistency in trade policy would be welcome news for all forward-looking investors, as Canada and Mexico complained that five-year windows would not be enough for foreign investment to remain confident in placing their capital.

DISCLAIMER: This blog/article has been curated from an alternate source and is designed for informational purposes to highlight the commercial real estate market. It solely represents the opinion of the specific blogger/author and does not necessarily represent the opinion of Pacific Coast Commercial. 

All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.  The owner of will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

Keywords: San Diego Commercial Real Estate For Sale, Commercial Property In San Diego, Commercial Real Estate In San Diego, San Diego Investment Real Estate, Commercial Property Management In San Diego, San Diego Commercial Property Management, Commercial Property Management San Diego, Managed Commercial Property San Diego, Commercial Property For Sale San Diego, San Diego Commercial Real Estate Leasing, Top Real Estate Agents in San Diego, Commercial Property in San Diego, Property Management Company San Diego, Real Estate Agent in San Diego, San Diego Commercial Real Estate