Here’s a brief summary of what’s in the USMCA trade deal
New name: Goodbye NAFTA. The new deal will be known as USMCA. U.S President Donald Trump, who cares deeply about branding, wanted a new name since he campaigned on ripping up NAFTA. He suggested “USMC,” in honour of the U.S. Marine Corps, but in the end, USMCA won out.
Big changes for cars: The goal of the new deal is to have more cars and truck parts made in North America. Soon, to qualify for zero tariffs, a car or truck must have 75 per cent of its components manufactured in Canada,
Mexico or the United States, a substantial boost from the current 62.5 per cent requirement.
Changes for workers:
USMCA requires Mexico to change its laws to make it easier for workers to unionize. The Trump Administration pushed hard for this because it should cause wages to rise in Mexico, making it less attractive for companies to move factories south of the U.S. border. USMCA also stipulates that Mexican trucks that cross the U.S. border must meet higher safety regulations.
Increased intellectual
property protections: The new IP chapter is over 60 pages and contains more-stringent protections for patents and trademarks, including for biotech, financial services and even domain names. Many business leaders and legal experts believed updates were necessary given that the original agreement was negotiated 25 years ago.
Increased environmental protections: The latest iteration of the environmental chapter is 30 pages long and makes a number of advancements, especially around protecting whales, fish and other marine wildlife from pollution and overfishing. In particular, Mexico agrees to enhance monitoring to stop illegal fishing and all three countries agree to no longer subsidize fishing of overfished species.
Enhanced protections against currency manipulation: This is a big one for the Trump administration. The president tweets often about how other countries are devaluing their currencies so they can sell their goods cheaply on the global market (and undercut American products). USMCA spells out that Canada and Mexico agree to “market-determined exchange rates” and that all three countries will get regular updates (typically monthly) on any government intervention in the currency markets. Canada and Mexico have generally been good about this already, but this is a clear signal to the Chinese of what Trump wants in other deals.
Deal must be reviewed after six years: The USMCA stipulates that the three nations will review the agreement after six years. If all parties
agree it’s still good, then the deal will continue for the full 16-year period (with the ability to renew after that for another 16 years).
Chapter 11, giving investors a special way to fight government decisions, is
(mostly) gone: Chapter 11 is eliminated entirely for Canada and mostly for Mexico, except for some key industries such as energy and telecommunications. Chapter 11 gave companies and investors a special process to resolve disputes with one of the governments in NAFTA.