The new trade agreement between Canada and Mexico, also known as the United States-Mexico-Canada Agreement (USMCA), is a significant development in the global trade landscape. The agreement, which was signed in November 2018, replaced the 25-year-old North American Free Trade Agreement (NAFTA). The USMCA aims to modernize and strengthen economic ties between the three North American countries.
One of the major changes brought about by the USMCA is the updated rules for the automobile industry. Under the new agreement, automakers will have to produce a higher percentage of vehicles within North America to qualify for duty-free status. In addition, a significant portion of the car`s value must be produced by workers that earn at least $16 per hour. These new provisions are expected to benefit the North American automobile industry and create new jobs in the region.
Another important change is in the dairy sector. Canada`s supply management system for dairy products has been a contentious issue in previous trade negotiations. Under the USMCA, Canada has agreed to provide greater market access to U.S. dairy producers. In return, the U.S. will eliminate tariffs on Canadian steel and aluminum.
The USMCA has also strengthened labor protections and environmental standards. The agreement includes provisions requiring companies to adopt more stringent environmental practices and to comply with labor laws, including the right to collective bargaining. These changes are aimed at ensuring that the benefits of trade are shared more fairly and that workers and the environment are protected.
Overall, the USMCA represents a significant step forward in North American trade relations. The agreement modernizes and strengthens the rules governing trade, while also promoting job creation, protecting labor rights, and preserving the environment. The USMCA is set to enter into force on July 1, 2020, and is expected to have a positive impact on the economies of all three countries.