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United States–Mexico–Canada Agreement

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United States-Mexico-Canada Agreement
  • Acuerdo Estados Unidos-México-Canadá (Spanish)
  • Accord États-Unis-Mexique-Canada (French)
Location of United States–Mexico–Canada Agreement
Languages
TypeFree trade area
Member states
EstablishmentAs NAFTA: January 1, 1994; 30 years ago (1994-01-01)[1] As USMCA: September 30, 2018; 5 years ago (2018-09-30)[2] (pending ratification)
Area
• Total
21,578,137 km2 (8,331,365 sq mi)
• Water (%)
7.4
Population
• 2018 estimate
490,000,000
• Density
22.3/km2 (57.8/sq mi)
GDP (PPP)2018 estimate
• Total
$24.8 trillion[3]
• Per capita
$50,700
Website
USTR page

The United States–Mexico–Canada Agreement (USMCA; Spanish: Acuerdo Estados Unidos-México-Canadá, AEUMC; French: Accord États-Unis-Mexique-Canada, AÉUMC) is a pending free trade agreement between Canada, Mexico, and the United States, intended to replace the current North American Free Trade Agreement (NAFTA). The USMCA is the result of the 2017-2018 renegotiation of NAFTA by its member states. The countries informally agreed to the terms on September 30, 2018 and formally agreed to the terms on October 1, 2018.

Background

The United States-Mexico-Canada Agreement is based on the North American Free Trade Agreement which originally came into effect on on January 1, 1994. The agreement was the result of more than a year of negotiations including threats of tariffs by the United States against Canada in addition to the possibility of separate bilateral deals instead.

During the 2016 US Elections, Donald Trump's campaign included the promise to re-negotiate the North American Free Trade Agreement. Upon election, President Trump proceeded to make a number of changes affecting trade relations with other countries. Withdrawing from the Paris Agreement, ceasing to be part of negotiations for the Trans-Pacific Partnership, and significantly increasing tariffs with China, were some of the steps taken before NAFTA was agreed upon.

Negotiations

An initial agreement with Mexico was reached before finalization with Canada. Since Mexico’s outgoing president, Enrique Peña Nieto, will leave office on December 1, 2018, and 60 days are required as a review period, the deadline for providing the agreed text was the end of September 30, 2018. Negotiators worked around the clock to complete the agreement less than 1 hour before midnight of that date. The agreement will take effect after being passed into law and signed by each country. On October 1st 2018, Canada and US agreed on the terms for the USMCA.

Provisions

Provisions of the agreement cover a wide range, including agricultural produce, manufactured products, labor conditions, digital trade, among others. More prominent aspects of the agreement gave US dairy farmers greater access to the Canadian market, guidelines to have a higher proportion of automobiles manufactured in the US or Mexico, and a retaining of the dispute resolution system similar to what was included in NAFTA. The dairy provisions are similar, but slightly higher, to those Canada agreed to in the Trans-Pacific Partnership (TPP), giving the U.S. access to 3.6%, up from 3.25% under TPP, of the $15.2 billion (as of 2016) Canadian dairy market.[4][5] Canada agreed to eliminate Class 7 pricing provisions on certain dairy products, while Canada's domestic supply management system remains in place.[6] Canada agreed to raise the duty-free limit to $150 from the previous $20 level.[7]

To qualify for zero tariffs, a car or truck must have 75 percent of its components manufactured in Canada, Mexico or the United States, a substantial boost from the current 62.5 percent requirement. Additionally, at least 30 percent of the work on the vehicle done by workers earning $16 an hour. [8]

See also

References

  1. ^ NAFTA Secretariat Archived April 12, 2013, at the Wayback Machine. Nafta-sec-alena.org (June 9, 2010). Retrieved on July 12, 2013.
  2. ^ "U.S. and Canada Reach Nafta Deal" Retrieved on 1 October 2018.
  3. ^ "Report for Selected Countries and Subjects". Retrieved September 5, 2017.
  4. ^ Dale, Daniel; MacCharles, Tonda (September 30, 2018). "Canada, U.S. reach new NAFTA". The Star. Ottawa, Ontario. Retrieved October 1, 2018.
  5. ^ "Canada's Dairy Industry at a Glance". Canadian Dairy Information Centre. Agriculture and Agri-Food Canada. Retrieved 2018-10-01.
  6. ^ Blanchfield, Mike (October 1, 2018). "Trump approves of new continental trade deal as winners and losers are assessed". Times Colonist via The Canadian Press. Retrieved October 1, 2018.
  7. ^ "'It could have been worse': Canadian retailers say they can live with new $150 duty-free limit | CBC News". CBC.
  8. ^ "Analysis | U.S., Canada and Mexico just reached a sweeping new NAFTA deal. Here's what's in it". Washington Post. Retrieved 2018-10-01.
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