USMCA: Is The New Trade Deal Better?

USMCA is not about the MCA in the U.S. – but sometimes you may think they (MCA) are better off in the U.S.!

USMCA is the renamed NAFTA and called the “U.S.-Mexico-Canada Agreement”. The deal updates the 1994 North American Free Trade Agreement.

Hadrian Mertins-Kirkwood, a researcher with the Canadian Centre for Policy Alternatives described the agreement as a “mash up between the Old NAFTA and the new TPP”. TPP is the Trans Pacific Partnership (“TPP”) Agreement amongst 12 nations which Trump withdrew from.

The key points of the USMCA include:

·       USMCA will expire in 16 years unlike NAFTA which was infinite;

·       It increases U.S. footprint in agriculture in Mexico and Canada;

·       USMCA allows Mexico and Canada to continue exporting vehicles to U.S. with a cap. Car parts that must be manufactured in North America increases from 62.5% to 75%;

·       Intellectual property regimes are strengthened with patents and copyrights now ranging from 10-20 years. Great news for big pharma!

·       Suing government (by companies) on potential future profits have been scrapped between Canada and U.S.; and

·       USMCA does not mention about climate change.

So who are the winners and losers? Analysts say big corporations stand to gain the most (in all three countries).

What next? All three countries are expected to sign before end November 2018. And if ratified, most of the provisions of the agreement are expected to go into effect in 2020.

Reference

1. NAFTA out, USMCA in: What’s in the Canada, Mexico, US trade deal? – Heather, Gies, Al Jazeera News

2. Advantages of NAFTA – The Hidden Benefits of NAFTA, Kimberly Amadeo, The Balance