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 agreement is called the United States-Mexico-Canada Agreement (USMCA) and aims to modernize and improve upon the previous agreement.
One of the main changes in the USMCA is in the automotive sector. The new agreement requires that 75% of a vehicle`s parts be made in the United States, Mexico, or Canada in order for the vehicle to be traded tariff-free between the three countries. Additionally, a certain percentage of the vehicle`s parts must be made by workers earning at least $16 per hour. This provision is aimed at ensuring that jobs remain in North America and that workers are paid a fair wage.
Another change in the USMCA is in the dairy industry. Under NAFTA, Canada had restricted access to its dairy market for U.S. farmers. However, under the USMCA, Canada has agreed to open up its market to U.S. dairy farmers, allowing them access to 3.6% of Canada`s dairy market.
The USMCA also includes provisions related to intellectual property, digital trade, and labor and environmental standards. The agreement includes new protections for intellectual property, including copyrights and patents. It also addresses digital trade, such as e-commerce, and ensures that data can be transferred between the three countries without facing tariffs or restrictions. The agreement also includes provisions that require Mexico to strengthen its labor laws and ensure that workers have the right to unionize and engage in collective bargaining. Additionally, the agreement includes provisions aimed at protecting the environment and reducing pollution.
Overall, the USMCA represents a significant update to NAFTA and aims to benefit all three countries involved. The agreement will need to be ratified by each country`s legislature before it can go into effect. However, the new trade agreement is a step forward in modernizing trade between the United States, Mexico, and Canada.