New Trade Agreement-USMCA to Replace NAFTA

SEATTLE (Scrap Monster): Trade negotiators in September reached agreement on a revised version of NAFTA, which will be known as the United States-Mexico-Canada Agreement (USMCA).

According to The Washington Post, the new agreement will, among other things:

• Increase from 62.5 percent to 75 percent the amount of a vehicle’s components that must be made in North America for it to be tariff-free. In addition, it will require that at least 30 percent of the labor that goes into a vehicle be done by workers earning at least $16 an hour, well above what autoworkers in Mexico typically make.

• Provide U.S. dairy farmers with greater access to the Canadian market.

• Maintain NAFTA’s dispute resolution process, which involves the use of a panel of representatives from each country. The United States wanted to change it, but keeping it was one of Canada’s priorities.

• Enhance intellectual property protections.

• Increase certain environmental, safety, and labor requirements.

The USMCA will have no direct impact on the Trump administration’s 25 percent tariffs on steel imports from Canada and Mexico. A White House official reportedly said that talks regarding those levies are on a “completely separate track.”

The agreement, which is expected to go into effect in 2020, is to be in place for 16 years, but a review by all three countries is planned at the six-year mark.

President Trump, Canadian Prime Minister Trudeau, and Mexican President Peña Nieto are expected to sign the agreement at the end of November, in keeping with Trade Promotion Authority requirements. It will then be submitted to Congress.

 Courtesy: AIIS