The New US-Mexico-Canada Trade Agreement: What You Need to Know
After months of negotiations, the United States, Mexico, and Canada have reached a new trade agreement to replace the North American Free Trade Agreement (NAFTA). The new deal, called the United States-Mexico-Canada Agreement (USMCA), was signed by the leaders of the three countries on November 30, 2018.
So, what does the USMCA mean for businesses and consumers in North America? Here are some key points to keep in mind:
1. Auto industry: The USMCA includes new rules for the auto industry that require a larger percentage of a vehicle`s parts to be made in North America in order to qualify for duty-free treatment. The deal also requires that a certain percentage of a vehicle`s parts be made by workers earning at least $16 per hour.
2. Digital trade: The USMCA includes new provisions for digital trade, including rules that prevent countries from requiring businesses to store data within their borders. The deal also includes new protections for intellectual property rights.
3. Dairy: The USMCA opens up more of Canada`s dairy market to US farmers. Under the deal, Canada will allow American farmers to export 3.6% of its dairy market, up from the current 1%.
4. Sunset clause: The USMCA includes a provision that requires the agreement to be reviewed every six years, with a possible extension of another six years. If the three countries do not agree to extend the deal, it will expire after 16 years.
5. Labor and environmental standards: The USMCA includes new provisions aimed at strengthening labor and environmental standards. Among other things, the deal requires Mexico to pass labor reforms that give workers greater rights to unionize and bargain for higher wages.
So, what`s next? The USMCA still needs to be ratified by each country`s legislature before it can go into effect. In the US, the deal is likely to face some opposition from Democrats in Congress, who are pushing for stronger labor and environmental protections.
Overall, the USMCA represents a significant update to NAFTA and is expected to have a major impact on trade and commerce in North America. Stay tuned for further developments as the deal moves through the ratification process.
