Everything you need to know
The United States-Mexico-Canada Agreement (USMCA) is a trade agreement that governs trade and economic relations between the United States, Mexico, and Canada. The USMCA is also known as CUSMA (Canada-United States-Mexico Agreement) in Canada and T-MEC (Tratado entre México, Estados Unidos y Canadá) in Mexico. It was negotiated as a replacement for the North American Free Trade Agreement (NAFTA) and officially entered into force on July 1, 2020. It`s designed to promote fair and open trade among the three North American countries while addressing various economic, labor, and environmental concerns.
The USMCA includes updated and more stringent rules of origin, which determine whether a product qualifies for preferential treatment under the agreement. These rules encourage the support domestic industries to support the North American industry and protect jobs.
Key Benefits and provisions of the USMCA:
- Market Access: The USMCA provides continued access to the vast North American market for businesses in the United States, Mexico, and Canada. This access helps boost exports and economic growth in all three countries.
- Tariff Reductions: The agreement maintains and, in some cases, eliminates tariffs on various goods traded between the member countries. This reduction in tariffs helps lower the cost of imported goods and promotes trade.
- Intellectual Property Protection: The USMCA strengthens intellectual property protection by extending copyright terms, protecting against the theft of trade secrets, and enhancing patent and trademark protections.
- Digital Trade: The agreement addresses the challenges and opportunities of the digital economy, promoting cross-border data flows and prohibiting data localization requirements, which can benefit the technology and e-commerce sectors.
- Agricultural Trade: The USMCA provides greater access to Canadian and Mexican markets for American agricultural products, including dairy, poultry, and grains.
- Dispute Resolution: The agreement includes mechanisms for resolving trade disputes between the member countries, ensuring a fair and rules-based trading system.
- Sunset Clause: Unlike NAFTA, the USMCA includes a sunset clause that requires the three countries to review and potentially renew the agreement every 16 years, providing more certainty for businesses.
- Currency Manipulation: The USMCA includes provisions to address currency manipulation, a practice that can distort trade by artificially lowering a country’s currency value to make its exports cheaper.
- Labour and Environmental Standards: The agreement includes provisions aimed at improving labor conditions and environmental protection. These provisions promote fair labor practices and environmental sustainability.
- Pharmaceuticals: The USMCA provides for a 10-year period of data protection for biologic drugs, which can benefit the pharmaceutical industry.