USMCA Trade Milestone in Manufacturing

Published on: January 31, 2020

Categorized in:


The President of the United States, Donald Trump, just signed the USMCA into law, which is just 2 weeks after the Senate has approved it, and a month after passing in the House of Reps. This agreement is a trilateral one, which requires the signatures of all 3 countries to be in effect. Even though this signing is the last step prior to the agreement becoming law in the US, the Parliament of Canada hasn’t approved it yet. According to some reports, they’ll most likely do it in days.
As soon as these 3 counties signs, the aggregate won’t be effected until the initial day of the 3rd month after the last country signed. Therefore, if the agreement is signed by Canada in February, USMCA will be official from June 1st. The 3-month is established to give the government a transactional period to implement languages and determine a plan to execute the agreement.

Below are some highlights from the United States-Canada-Mexico Agreement.

Making the United States produce more car
According to NAFTA, automakers are needed to produce 62.5% of the content of a vehicle in North America in order for them to qualify for 0 tariffs. With this new agreement, the threshold will be raised over time to 75%. With this, automakers will be forced to source minimal parts for an “Assembled in Mexico” car from China, South Korea, Japan, or Germany. It also needs 70% of the aluminum and steel of a vehicle to come from North America.

Tougher Labor Rules in Mexico
In the USMCA, there’s a great chance that it will assist in leveling the playing field between workers in Mexico, Canada, and the United States. The original provisions of NAFTA on environment and labor were included as side letters after the signing of the original agreement, to get support from Democrats and ensure the passage of the deal during the administration of Clinton. This agreement migrates these chapters to the major body of the trade agreement, denoting problems such as the right to organize are now subject to the normal procedures of the pact for settling disputes.
With this deal, these commitments will also be expanded, needing more security for workers, stop imports of goods that are carried out with forced labor, and creating a mechanism to make sure that rules are enforced.

Reduced production for drug firms
In a great concession to Democrats, the administration of Donald Trump has accepted to pare back some particular protections for a costly and advanced class of drugs, which are called biologics. The last agreement gets rid of a provision that had given the drugs ten years of security from less costly alternatives in both Mexico and Canada.
This agreement maximizes other security measures for intellectual property rights. For instance, extending the fifty years of protection for copyrights in NAFTA to seventy years. In addition, it includes some criminal penalties for theft of trade secrets, which includes cybertheft.

But the USCMA retains an addition that’s more controversial by the administration of President Donald Trump – a clause which needs the 3 countries to review, after 6 years, if they still want to be in the agreement. If a particular county doesn’t want to continue with the pact, the USMCA will expire after sixteen years.

https://www.mhlnews.com/global-supply-chain/article/21121690/manufacturers-welcome-usmca-as-trade-milestone
https://www.forbes.com/sites/taxnotes/2020/01/22/nafta-versus-usmca-taxes-tariffs-and-trade-in-north-america/amp/
https://www.thepacker.com/article/usmca-brings-clear-roadmap-future

Other News Articles