The New United States-Mexico-Canada Agreement (USMCA)
On October 1, 2018, the United States, Mexico and Canada officially reached a new trade agreement that will replace the previous North American Free Trade Agreement (NAFTA). The new agreement, named the United States-Mexico-Canada Agreement (USMCA), was negotiated over the course of a year and will have a significant impact on trade between the three countries.
One of the main aims of the USMCA is to update the existing NAFTA to ensure that it reflects the current economic and technological landscape. Notably, the USMCA includes new provisions related to the digital economy, such as rules on data localization and intellectual property. It also includes new regulations related to labor and environmental standards, aimed at ensuring that workers and the environment are adequately protected.
The agreement also includes provisions related to the automotive industry, which is a significant contributor to trade between the three countries. Under the USMCA, a higher percentage of automotive content must be made in North America in order for cars to qualify for tariff-free status. Additionally, a new provision will require that a certain percentage of a car`s components be made by workers who earn at least $16 an hour.
Another significant change under the USMCA is the removal of a controversial investor-state dispute settlement mechanism, which allowed corporations to sue governments for policy changes that could impact their profits. Under the new agreement, disputes between investors and governments will be dealt with through a new dispute resolution mechanism.
Overall, the USMCA represents a significant update to the existing NAFTA. It includes new provisions related to the digital economy, labor and environmental standards, and the automotive industry. It also removes a controversial investor-state dispute settlement mechanism. While it is too early to determine the full impact of the USMCA, it is likely to have significant implications for trade between the three countries.