The United States Mexico Canada Agreement (USMCA) is a free trade agreement between the United States, Mexico, and Canada that replaced the North American Free Trade Agreement (NAFTA) in 2020. The USMCA governs trade between the three countries and modernizes NAFTA to reflect the changes in trade since it was signed in 1994. Here are some of the key details of the USMCA.
1. Rules of Origin: The USMCA requires that vehicles and auto parts have a higher percentage of North American content than under NAFTA. Under the USMCA, 75% of a vehicle`s content must be produced in North America, up from 62.5% under NAFTA. In addition, 40-45% of a vehicle`s content must be produced by workers making at least $16 per hour.
2. Dairy: The USMCA gives U.S. dairy farmers greater access to the Canadian market. Canada agreed to eliminate the pricing system that limited the amount of U.S. dairy products that could be sold in Canada. The U.S. will now be able to sell more dairy products to Canada, including fluid milk, cream, butter, cheese, and ice cream.
3. Intellectual Property: The USMCA includes provisions to protect intellectual property, including patents, trademarks, and copyrights. The agreement requires all three countries to provide legal protections for these types of intellectual property and to enforce those protections.
4. Labor: The USMCA includes provisions to protect workers` rights and improve working conditions in all three countries. The agreement requires all three countries to provide protections for workers` rights, including the right to join a union and to engage in collective bargaining. The USMCA also requires Mexico to increase wages for workers in the auto industry.
5. Environment: The USMCA includes provisions to protect the environment and promote sustainable development. The agreement requires all three countries to implement laws to protect the environment, including laws on air and water pollution and the protection of endangered species. The USMCA also establishes a new environmental commission to monitor and enforce the environmental provisions of the agreement.
6. Digital Trade: The USMCA includes provisions to promote digital trade and protect the free flow of data across borders. The agreement prohibits customs duties on digital products and prohibits requirements for companies to store data on servers located in a particular country.
Overall, the USMCA is designed to modernize NAFTA and address some of the concerns that have arisen since NAFTA was signed in 1994. The USMCA includes provisions to protect workers` rights, improve working conditions, protect the environment, and promote digital trade. It is a significant step forward in North American trade relations and is expected to benefit all three countries.