Summary of New Nafta Agreement

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For the first time, the new agreement also stipulates that 40 to 45 percent of the parts in each duty-free vehicle must come from a so-called high-wage factory. These factories must pay at least $16 per hour in average wages for production workers. That`s currently about three times the average wage at a Mexican plant, and government officials hope the provision will force automakers to buy more supplies from Canada or the U.S., or raise wages in Mexico. National procedures for ratifying the agreement in the United States are subject to the legislation of the Trade Promotion Authority, also known as the “Fast Track” authority. ==External links==The Free Trade Agreement was concluded in 1988 and NAFTA essentially extended the provisions of this agreement to Mexico. NAFTA was approved by the administrations of U.S. President George H.W. Bush, Canadian Prime Minister Brian Mulroney and the Mexican President. Carlos Salinas de Gortari negotiated. A provisional agreement on the Pact was reached in August 1992 and signed by the three Heads of State or Government on 17 December. NAFTA was ratified by the national legislators of the three countries in 1993 and entered into force on January 1, 1994.

In addition to the provisions of the original NAFTA, the USMCA borrows heavily from the Trans-Pacific Partnership (TPP) and comprehensive and progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreements. On April 3, 2020, Mexico announced that it was ready to implement the agreement and that Canada would accede to it. [15] The agreement entered into force on 1 July 2020. [16] [17] [18] [19] The agreement is referred to differently by each signatory – in the United States, it is called the Agreement between the United States, Mexico and Canada (USMCA). [1] [23] In Canada, it is officially known as the Canada-United States-Mexico Agreement (CASMAA) in English[24] and the Canada-United States-Mexico Agreement (CUSMA) in French; [25] and in Mexico, it is called Tratado entre México, Estados Unidos y Canadá (T-MEC). [26] [27] The agreement is sometimes referred to as the “New NAFTA”[28][29], in reference to the previous trilateral agreement it aims to replace, the North American Free Trade Agreement (NAFTA). In 1994, the United States, Mexico and Canada created the world`s largest free trade region with the North American Free Trade Agreement (NAFTA), which generated economic growth and helped raise the standard of living of people in all three member countries. By strengthening trade and investment rules and procedures, this agreement has proven to be a solid foundation for building Canada`s prosperity and has provided a valuable example of the benefits of trade liberalization for the rest of the world. The new agreement between Canada, the United States and Mexico will serve to strengthen Canada`s strong economic ties with the United States and Mexico. Although NAFTA did not deliver on everything its supporters had promised, it remained in force. In fact, the 2004 Central American Free Trade Agreement (CAFTA) extended NAFTA to five Central American countries (El Salvador, Guatemala, Honduras, Costa Rica and Nicaragua). In the same year, the Dominican Republic joined the group and signed a free trade agreement with the United States, followed by Colombia in 2006, Peru in 2007 and Panama in 2011.

According to many experts, the Trans-Pacific Partnership (TPP), signed on October 5, 2015, represented an extension of NAFTA on a much larger scale. NAFTA required automakers to produce 62.5% of vehicle content in North America to qualify for zero tariffs. The new agreement raises this threshold to 75% over time. This is aimed at forcing automakers to buy fewer parts for a “Mexico-mounted” car in Germany, Japan, South Korea or China. The pact also requires that 70% of a vehicle`s steel and aluminum come from North America, with steel on the continent being both melted and cast. In the 2016 U.S. presidential election, Donald Trump`s campaign included a promise to renegotiate NAFTA or cancel it if renegotiations failed. [21] After the election, Trump made a number of changes that affected trade relations with other countries. The withdrawal from the Paris Agreement, the suspension of negotiations on the Trans-Pacific Partnership and the significant increase in tariffs with China were some of the measures he was implementing, reaffirming that he was serious about seeking changes to NAFTA. [22] Much of the debate about the virtues and shortcomings of the USMCA is similar to that of all free trade agreements (FTAs), such as the nature of free trade agreements as public goods, potential violations of national sovereignty, and the role of business, labour, environmental and consumer interests in shaping the language of trade agreements.

To facilitate greater cross-border trade, the United States has entered into an agreement with Mexico and Canada to increase the value of their de minimis shipments. Canada will increase its de minimis level from C$20 to C$40 for taxes for the first time in decades. Canada will also offer duty-free shipments up to a maximum of $150 CAD. Mexico will continue to offer duty-free de minimis shipments of $50 and duty-free shipments up to the equivalent of $117. Shipping values up to these levels would be received with a minimum of formal entry procedures, which would facilitate the participation of more businesses, especially small and medium-sized enterprises, in cross-border trade. The USMCA is expected to have a very small impact on the economy. [108] An International Monetary Fund (IMF) working paper released at the end of March 2019 stated that the agreement would have a “negligible” impact on the economy as a whole. [108] [113] The IMF study predicts that the USMCA “would have a negative impact on trade in the automotive, textile, and apparel sectors while achieving modest overall wealth gains, primarily due to improved access to the commodity market, with negligible impact on real GDP.” [113] The IMF study found that the economic benefits of the USMCA would be significantly increased if Trump`s trade war ended (i.e., if the U.S. abolished tariffs on steel and aluminum imports from Canada and Mexico, and Canada and Mexico dropped retaliatory tariffs on imports from the United States).

[113] The U.S.-Mexico Cheese Agreement. (PDF, 3 pages, 0.01 MB) On May 30, U.S. Trade Representative Robert E. Lighthizer submitted to Congress a draft statement on administrative measures to implement the United States-Mexico-Canada Agreement (USMCA and the new NAFTA) under the President`s Trade Promotion Authority (TPA) (Declaration of Administrative Measures) Act, 2015. The bill will allow legislation implementing the AMCT to be submitted to Congress after 30 days, on or after June 29. In a letter[73] sent to House Speaker Nancy Pelosi and Republican Minority Leader Kevin McCarthy, Lighthizer stated that the USMCA is the gold standard of U.S. trade policy, modernizing competitive digital commerce, intellectual property, and service offerings in the United States, and creating a level playing field for businesses, American workers and farmers. an agreement that represents a fundamental realignment of trade relations between Mexico and Canada. == External links . Mr.C ==== References ===== External links ===* The official website maintains a more controversial addition from the Trump administration – a sunset clause requiring the three countries to consider whether they want to stay in the agreement after six years. If a country decides not to pursue the pact, the United states .M.C expire 16 years later. Fox News reported on December 9, 2019, that negotiators from the three countries have reached an agreement on the implementation of the law, paving the way for a final agreement within 24 hours and ratification by all three parties before the end of the year.

Mexico has agreed to impose a $16 an hour minimum wage on Mexican autoworkers by a “neutral” third party. .