After months of negotiations, Canada, Mexico, and the United States have finally signed a new trade agreement known as the United States-Mexico-Canada Agreement (USMCA), which will replace the North American Free Trade Agreement (NAFTA).
The agreement, which was signed on November 30, 2018, has been hailed by the leaders of the three countries as a major step forward for North American trade. However, the USMCA is not identical to NAFTA, and there are some key differences between the two agreements.
One of the most notable changes in the USMCA is in the automobile industry. Under NAFTA, carmakers were required to produce at least 62.5 percent of their vehicles` content in North America in order to qualify for duty-free treatment. Under the USMCA, that requirement has been raised to 75 percent.
In addition, the USMCA includes a provision that requires a certain percentage of a vehicle`s content to be produced by workers who are paid at least $16 an hour. This is aimed at improving workers` wages and working conditions in the automobile industry.
Another major change in the USMCA is in the dairy industry. Under NAFTA, American dairy farmers were allowed to export a certain amount of dairy products to Canada without facing tariffs. However, that agreement has been replaced with a new system under the USMCA that will give American dairy farmers greater access to the Canadian market.
The USMCA also includes a number of provisions related to intellectual property, digital trade, and labor and environmental standards. These provisions are aimed at updating the agreement to reflect changes in technology and global trade since NAFTA was signed in 1994.
Although the USMCA has been signed by the three countries` leaders, it still needs to be ratified by their respective legislatures. In the United States, this could be a challenging process, as the new agreement has already faced criticism from both Democrats and Republicans.
Overall, the USMCA represents a significant change from NAFTA, and its impact on North American trade will be closely watched in the coming years. However, it remains to be seen whether the new agreement will be ratified and fully implemented, or whether it will face further challenges along the way.