The USMCA (United States-Mexico-Canada Agreement) is a trade agreement that was negotiated between the United States, Mexico, and Canada to replace the previous North American Free Trade Agreement (NAFTA). The USMCA was signed into law on November 30, 2018, and went into effect on July 1, 2020.
The USMCA was designed to modernize and improve NAFTA, which was originally signed in 1994. The agreement includes updates to various areas, including labor, intellectual property, digital trade, and the environment.
One of the biggest changes in the USMCA is the new rules on automotive production. Under the previous NAFTA agreement, at least 62.5% of the parts in a car had to be made in North America to qualify for duty-free treatment. Under the USMCA, that threshold has been increased to 75%. Additionally, 40-45% of the parts in a car must be made by workers who earn at least $16 per hour.
In terms of labor, the USMCA includes provisions designed to improve working conditions in Mexico. This includes allowing workers to form unions and bargain collectively, as well as requiring Mexico to pass new labor laws to protect workers` rights.
The USMCA also includes new protections for intellectual property, including stronger patent protections for pharmaceuticals and new rules on copyright infringement. These provisions aim to protect American businesses from intellectual property theft and ensure fair competition.
Another area where the USMCA differs from NAFTA is in digital trade. The agreement includes provisions that protect cross-border data flows and prevent countries from requiring companies to store data locally. This is designed to promote innovation and growth in the digital economy.
Finally, the USMCA includes provisions designed to protect the environment. This includes new rules on air and water pollution, as well as provisions designed to combat illegal fishing and wildlife trafficking.
Overall, the USMCA is designed to modernize and improve the North American trade relationship. While there are some significant changes from NAFTA, much of the previous agreement remains intact. However, the USMCA`s focus on labor, intellectual property, digital trade, and the environment represents a significant step forward for North American trade.