fbpx

This is the new trade agreement between the US, Mexico, and Canada

 

It is estimated that the new agreement between the North American countries will be signed in November of this year and will go to Congress for its final approval in 2019

This is the new trade agreement between the US, Mexico, and Canada

After more than a year of tension and uncertainty regarding the Free Trade Agreement between Canada, Mexico and the US, the government of Donald Trump entered into a new trade agreement. It is estimated that this will be signed by the parties during the last days of November. It will then be presented to Congress in 2019, to obtain final approval of the agreement.

Leer en español: Este será el nuevo tratado comercial entre EE.UU., México y Canadá

In a statement issued after the agreement was announced, the Trump administration stated that it will "provide our workers, farmers, ranchers and companies with a high quality trade agreement that will result in freer markets, fairer trade and strong economic growth in our region. " But what will change with the agreement?

USMCA and trade between the United States and Canada

One of the most obvious changes of the NAFTA, which for 25 years was valid, is its name. Now the treaty will be called USMCA, a name that refers to the nations involved: Agreement United States, Mexico and Canada. In commercial matters, the US will benefit from dairy imports to Canada.

With NAFTA, Canada controlled the entry of milk, cheese, eggs and other dairy products that entered the territory sent by the United States. But with the new agreement, the quota of dairy products, eggs and poultry products imported from the US to Canada will have an increase. In return, the United States will allow the entry from Canada of sugar, peanuts, and their by-products.

In one of the documents delivered by the Office of the United States Trade Representative, it is explained that Canada also agreed to put an end to a system that allowed some milk products to maintain low prices. This regulation prevented the entry of US products to the market. But with the termination of that law, the US dairy will enter the competition without price limitations.

12% more in auto parts manufacturing

According to the new conditions of the USMCA, 75% of vehicle parts must be manufactured in the United States, Mexico or Canada. This represents 12% more than what was agreed in the NAFTA, and becomes a clear possibility of competition in the global automotive business.

In turn, the new treaty obliges Between 40% and 45% of vehicle parts are manufactured by workers who earn at least USD $ 16 per hour. In this way, production in the US it will be benefited since the automotive sector will not resort solely to Mexico to carry out the production of the parts, due to the low salaries for which the employees work in said place.

You can also read: The fourth industrial revolution: Will robots steal our jobs?

For Donald Trump, this aspect will return millions of jobs to North America. "Instead of the jobs going abroad, they will be returning to each country," said the US president, during an intervention that took place on October 1 after announcing the agreement.

However, some experts consulted by CNN indicated that the conditions of manufacture of auto parts could be after more damage than benefits, causing that the automakers go to Japan or Korea, where the manufacture continues being cheaper. Even in spite of the tariffs that imply importing from Asia.

 

A stricter intellectual property protection

As part of the renewal of the treaty, the countries agreed to double the conditions and penalties concerning the piracy of digital content. The new terms establish higher levels of security for intellectual property and more severe punishments for those who pirate movies, plagiarize music or digital books, or steal patents from those who raise electronic services in biotechnology or financial services, according to The New York Times.

16 years of validity instead of 5

One of the requirements that the United States most pressured in the new treaty was to include a clause that would disable NAFTA every five years. This in order to make more frequent changes or end the negotiation of not accepting new changes unanimously.

However, both Mexico and Canada agreed that the short period could cause uncertainty in the market and affect investment in the countries. Therefore, a lapse of 16 years of validity of the USMCA was agreed and a meeting every six years between the representatives to decide the extension of the agreement.

 

LatinAmerican Post | Krishna Jaramillo

Translated from "Ese será el nuevo tratado comercial entre EE.UU., México y Canadá"

Listen this article


E-Learning

Follow Us

We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…