Background and Negotiation Process:
– USMCA is a modernization of NAFTA, initiated due to promises made by Donald Trump during the 2016 U.S. presidential election.
– Negotiations for USMCA lasted over a year, with the U.S. threatening potential tariffs against Canada.
– The negotiation process involved eight rounds of talks from May 18, 2017, to April 8, 2018, culminating in the final agreement signed on November 30, 2018.
Country Comparison:
– USA: Population around 345 million, land area of 9.1 million sq. km, with a population density of 37.5/km².
– Mexico: Population around 129 million, land area of 2 million sq. km, with a population density of 66.1/km².
– Canada: Population around 40.5 million, land area of 9.1 million sq. km, with a population density of 4.3/km².
Key Provisions and Provisions Summary:
– USMCA focuses on intellectual property, digital trade, and environmental regulations.
– Notable changes include increased access to Canada’s dairy market, incentives for U.S. automobile production, and higher duty-free limits for Canadians.
– Provisions cover agricultural produce, manufactured products, labor conditions, and digital trade, aiming to enhance trade relations.
International Perspectives and Nomenclature:
– Known as USMCA in the U.S., CUSMA in Canada, ACEUM in French in Canada, and T-MEC in Mexico.
– The agreement is sometimes referred to as the New NAFTA, highlighting its roots in the original NAFTA.
Specific Provisions – Dairy, Automobiles, Labor Conditions, and Digital Trade:
– Dairy provisions grant U.S. tariff-free access to a portion of the Canadian market and raise duty-free limits for consumers.
– Automobile rules of origin mandate a higher percentage of regional value, with concerns over increased domestic sourcing.
– Labor conditions provisions focus on fair treatment, preventing exploitation, and monitoring labor regulations.
– Digital trade provisions ensure a conducive environment, protect intellectual property, and promote innovation in the digital economy.
The Agreement between the United States of America, Mexico, and Canada (USMCA) is a free trade agreement between the United States, Mexico, and Canada. It replaced the North American Free Trade Agreement (NAFTA) implemented in 1994, and is sometimes characterized as "NAFTA 2.0", or "New NAFTA", since it largely maintains or updates the provisions of its predecessor. USMCA is one of the world's largest free trade zones, with a population of more than 510 million people and an economy of $30.997 trillion in nominal GDP — nearly 30 percent of the global economy.
| |
|---|---|
.svg) | |
| Type | Free trade agreement |
| Drafted | 30 September 2018 |
| Signed | 30 November 2018 10 December 2019 (revised version) |
| Location | Mexico City, Mexico |
| Effective | 1 July 2020 |
| Condition | 3 months after notification of each state that all internal procedures have been completed |
| Expiration | Upon end of 16-year term (renewable) |
| Ratifiers | |
| Languages | |
All sides came to a formal agreement on October 1, 2018, and U.S. president Donald Trump proposed USMCA during the G20 Summit the following month, where it was signed by himself, Mexican President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau. A revised version reflecting additional consultations was signed on December 10, 2019 and ratified by all three countries, with Canada being the last to ratify on March 13, 2020. Following notification by all three governments that the provisions were ready for domestic implementation, the agreement came into effect on July 1, 2020.
USMCA is primarily a modernization of NAFTA, namely with respect to intellectual property and digital trade, and borrows language from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Canada and Mexico are signatories. Key changes from its predecessor include increased environmental and working regulations; greater incentives for automobile production in the U.S. (with quotas for Canadian and Mexican automotive production); more access to Canada's dairy market; and an increased duty-free limit for Canadians who buy U.S. goods online.
