Staff Seminar

Modeling USMCA: beyond tariffs and into regulation and policy uncertainty — Serge Shikher

02 Aug 2019

Institut für Weltwirtschaft


Serge Shikher (Lead International Economist, United States International Trade Commission)


USMCA is a broad trade and investment agreement between the United States, Mexico, and Canada. Being a second trade agreement between its members, it includes many rules changes and no tariff reductions, requiring innovative approaches to modeling its impact. Many of the new rules included in USMCA bind the policies already in effect on the ground. Therefore, these new rules do not represent liberalization in a traditional sense, but constitute commitments by the parties not to make rules more restrictive in the future. These commitments reduce policy uncertainty, which is known to increase trade. USITC’s modeling of USMCA includes 8 distinct components, which are integrated into the economy-wide model. The components provide detailed modeling of certain issues, such as automotive, data transfer, labor, and investment. USITC’s analysis estimates that USMCA would increase U.S. real GDP by $68.2 billion (0.35%), increase real output in all broad sectors of the U.S. economy, increase U.S. employment by 176,000 jobs (0.12%) and wages by 0.27%, increase trade within the USMCA region, and decrease U.S. trade deficit with Mexico.


Mediaroom (A-211)