The trade agreement with the United States and Mexico is a significant development in the international trade sector. This agreement is a replacement for the North American Free Trade Agreement (NAFTA). The new agreement is known as the United States-Mexico-Canada Agreement (USMCA). The USMCA has been in the making for some time. Negotiations began in August 2017, and the agreement was finally signed on November 30, 2018. The agreement is expected to come into full force in July 2020.
The USMCA is a comprehensive trade agreement that covers various aspects of trade, including intellectual property, digital trade, the environment, labor, and agriculture. The agreement aims to modernize NAFTA by addressing the issues that have arisen since its inception over 20 years ago.
One of the significant changes in the USMCA is the new rules of origin for the auto industry. The agreement requires that 75% of the components used in auto manufacturing be made in North America to qualify for duty-free treatment. The new rules are intended to increase the production of auto parts in the US, Canada, and Mexico.
Another significant change in the USMCA is the labor provisions. The agreement requires that at least 40% of auto manufacturing be produced by workers earning at least $16 per hour. The provision is aimed at reducing the wage gap between the US and Mexico.
Additionally, the USMCA includes provisions that aim to promote digital trade in North America. The agreement prohibits the imposition of customs duties on digital products transmitted electronically, such as music and software. The provisions are intended to promote the growth of the digital economy in North America.
The trade agreement with the United States and Mexico is a significant development that aims to modernize NAFTA. The USMCA is expected to have a positive impact on the economies of the United States, Mexico, and Canada. The agreement is expected to increase trade, create jobs, and promote economic growth in the region.