President Donald Trump and Democratic leaders agreed on a deal to pass a new trade agreement between the U.S., Mexico and Canada that will update NAFTA. So how is the USMCA different from the North American Free Trade Agreement, and why should you care? The deal as detailed in May 2019 contains numerous tweaks from its predecessor, both big and small. Three changes are especially noteworthy. 1) Curbing protectionist policies, such as subsidizing dairy farmers and setting import quotas on milk. Canadian tariffs on some products can be as high as 300%. Under the new accord, Canada will curb some of the ways it protects its dairy industry, such as allowing more American milk, butter, cheese and other dairy products to enter Canada duty-free, with reciprocal treatment for Canadian dairy exports to the U.S. 2) Starting as early as 2020, to qualify for zero tariffs when crossing borders, a car or truck must have 75% of its components manufactured in Canada, the U.S. or Mexico, up from 62.5% currently. Further, 40% to 45% of a vehicle’s components must be made by workers earning at least US$16 per hour. 3) Including stronger protections for patents and trademarks in areas such as biotech, financial services and domain names – all of which have advanced considerably over the past quarter-century. It also contains new provisions governing the expansion of digital trade and investment in innovative products and services.
USMCA: The 3 most important changes in the new NAFTA and why they matter, January 3, 2020, www.ctl.ca