Trade Agreement with Mexico and Canada

Trade Agreement with Mexico and Canada: What You Need to Know

The North American Free Trade Agreement (NAFTA) was replaced by the United States-Mexico-Canada Agreement (USMCA) on July 1, 2020. This new trade agreement between the United States, Mexico, and Canada is expected to have a significant impact on businesses and consumers in all three countries.

Here are some key points to understand about the USMCA:

1. Improved Labor Standards

The USMCA requires Mexico to adopt stronger labor laws and allows for independent labor inspections. This is a significant change from NAFTA, which did not include labor standards. The new agreement also includes a requirement that 40-45% of automobile parts be made by workers earning at least $16 per hour, which is expected to boost manufacturing jobs in the U.S.

2. Increased Access to Canadian Dairy Markets

Under NAFTA, Canada had a quota system that limited the amount of U.S. dairy products that could be sold in Canada. The USMCA removes these quotas, providing increased access for U.S. dairy farmers to the Canadian market.

3. Intellectual Property Protections

The USMCA includes stronger intellectual property protections, including extending the copyright term to 70 years after the death of the author (up from 50 years under NAFTA). This change will benefit U.S. creators and producers of copyrighted works.

4. Digital Trade

The USMCA includes provisions on digital trade, such as the prohibition of customs duties on digital products and the protection of cross-border data flows. This is a key area of trade growth, and the new agreement recognizes the importance of digital trade in the 21st century.

5. Sunset Clause

Unlike NAFTA, which had no expiration date, the USMCA includes a sunset clause that requires the agreement to be reviewed every six years. This provides an opportunity for the three countries to renegotiate or update the agreement if necessary, ensuring that the USMCA remains relevant and effective.

Overall, the USMCA is expected to have a positive impact on trade relations and economic growth in all three countries. By improving labor standards, increasing access to markets, and protecting intellectual property, the new agreement creates a more level playing field for businesses and workers in North America. As the three countries continue to work together, there is hope for even further growth and success in the future.

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