The USMCA: Understanding the New Trade Agreement Between the US and Canada
In late 2018, the United States, Canada, and Mexico reached an agreement to update the North American Free Trade Agreement (NAFTA), which had been in place since 1994. The new agreement, called the United States-Mexico-Canada Agreement (USMCA), includes a number of changes that will affect trade between the three countries.
One of the most significant changes in the USMCA is the increased requirements for automobile production. Under the new agreement, a certain percentage of a vehicle`s parts must be manufactured in North America in order for it to qualify for tariff-free treatment. Additionally, a minimum percentage of a vehicle`s production must be carried out by workers earning at least $16 per hour. These changes are designed to encourage more manufacturing jobs to stay in North America and to prevent companies from outsourcing to countries with lower labor costs.
Another area where the USMCA differs from NAFTA is in its treatment of intellectual property. The new agreement includes updated rules on copyright and trademark protection, as well as provisions to prevent the theft of trade secrets. These changes are intended to better protect the intellectual property rights of businesses in all three countries.
One of the points of contention during the negotiations of the USMCA was the dairy industry. Canada had long maintained a supply management system that limited imports of dairy products from other countries. Under the new agreement, Canada agreed to increase its quota for US dairy exports, while also taking steps to eliminate certain pricing policies that had been seen as unfair to American farmers.
The USMCA also includes new provisions related to labor and environmental protections. All three countries are required to uphold the principles of the International Labor Organization, and to take steps to prevent discrimination based on gender, race, or other factors. Additionally, the agreement includes measures to promote sustainable development and to protect biodiversity.
Overall, the USMCA represents a significant update to the trade agreement between the United States and Canada, as well as with Mexico. While there are still questions about how some of the new provisions will be implemented, the agreement is seen as a positive step towards promoting trade and creating jobs in North America.