On July 1, 2020, the United States-Mexico-Canada Agreement (USMCA) went into effect, replacing the North American Free Trade Agreement (NAFTA) that had been in place since 1994. The USMCA is a comprehensive trade agreement that seeks to modernize and enhance trade between the three North American nations.
The USMCA negotiations began in May 2017 and concluded in September 2018. The agreement was signed on November 30, 2018, by the leaders of all three countries, but it took over a year for it to be ratified by their respective legislatures.
The USMCA includes provisions that address intellectual property, digital trade, labor, environmental standards, and agriculture. One of the most significant changes from NAFTA is in the automotive industry, where the USMCA requires a higher percentage of North American parts in vehicles to qualify for duty-free treatment.
Another significant change is in the labor chapter, designed to ensure that workers in each country have the right to form and join unions and to bargain collectively. The agreement requires that a certain percentage of auto parts be made by workers earning at least $16 per hour.
The USMCA also includes provisions to protect intellectual property, including patents, trademarks, and copyrights. It also addresses digital trade, including provisions on cross-border data flows and prohibitions on data localization requirements.
Environmental standards are another key aspect of the USMCA. The agreement includes commitments to combat illegal fishing, promote sustainable fisheries, and protect marine mammals and sea turtles. It also includes provisions to address air pollution and hazardous waste management.
The agriculture chapter of the USMCA includes provisions related to biotechnology, sanitary and phytosanitary measures, and geographical indications. The agreement also includes a new chapter on good regulatory practices, designed to promote transparency and reduce unnecessary regulatory barriers.
Overall, the USMCA seeks to promote fair and reciprocal trade between the three North American nations while protecting workers, the environment, and intellectual property. The agreement is expected to provide stability and certainty for businesses that rely on trade in North America while also helping to create new opportunities for American workers and farmers.