NAFTA: Understanding the New Trade Agreement
The North American Free Trade Agreement (NAFTA) has undergone a significant overhaul, and the new trade deal, which has been renamed as the United States–Mexico–Canada Agreement (USMCA), is a major deal for the three North American countries. The new agreement is a revision of the 25-year-old NAFTA deal and aims to modernize trade relations between the US, Mexico, and Canada.
The USMCA comes after months of intensive negotiations and discussions between the representatives of the three North American countries. It covers a wide range of issues, including intellectual property rights, digital trade, labor, and environmental standards.
One of the most significant changes that the new agreement brings is in the automobile industry. Under the USMCA, automakers must source at least 75% of their vehicle components in North America to qualify for zero tariffs. The previous NAFTA deal only required 62.5%. The new agreement also mandates that 40-45% of the auto parts must be made by workers earning at least $16 per hour, which is expected to encourage manufacturers to move their production back to North America.
The new agreement also brings changes in the dairy industry. The US will gain increased access to the Canadian dairy market, and Canada`s supply management system will be changed, allowing US dairy farmers to export more products to Canada. In exchange, the US has agreed to give Canada greater access to the US market for peanut butter, sugar, and other dairy products.
The USMCA also includes new provisions for intellectual property protection. The new agreement will require Canada and Mexico to extend their copyright terms to 75 years. The deal also includes new protections for digital trade, including provisions to protect internet service providers from liability for their users` content and to prohibit customs duties on digital products such as e-books and music downloads.
Another important aspect of the USMCA is labor standards. The new agreement requires Mexico to reform its labor laws to ensure that workers have the right to collective bargaining and to form unions. This is expected to increase wages for Mexican workers and level the playing field for North American workers.
However, the USMCA is not without its critics. Some have argued that the new agreement does not go far enough in addressing issues related to the environment and climate change. Others have expressed concerns about the level of protection given to US intellectual property rights.
Despite its shortcomings, the USMCA represents a significant step forward for North American trade relations. The new agreement is expected to boost economic growth and create new jobs across the continent. The US, Mexico, and Canada are expected to ratify the agreement in the coming months, and it is expected to come into effect by 2020.