The trade agreement between Mexico, Canada, and the United States is one of the most significant free trade agreements in the world. This agreement, often referred to as the USMCA, was signed on November 30, 2018, and went into effect on July 1, 2020.
The USMCA is designed to replace the North American Free Trade Agreement (NAFTA), which had been in place since 1994. The new agreement provides updated rules and regulations for trade between the three countries and includes provisions for labor, intellectual property, and environmental protection.
One of the most significant changes in the USMCA compared to NAFTA is the new rules for automobile manufacturing. Under the new agreement, a higher percentage of a car`s content must be manufactured in North America to qualify for duty-free status.
Another key change in the USMCA is the increase in the minimum wage for workers in Mexico`s automotive sector. The agreement requires that at least 40% of the work in the manufacturing of cars must be done by workers who earn at least $16 per hour.
The USMCA also includes provisions for increased access to the Canadian dairy market by American farmers. Canada has agreed to allow American farmers to sell more dairy products in their country, while the United States will eliminate tariffs on Canadian aluminum and steel.
Additionally, the USMCA strengthens intellectual property protections for biologic drugs, requires that digital companies have protections for their intellectual property and trade secrets, and requires a certain percentage of a vehicle`s steel and aluminum be sourced from North America.
Overall, the USMCA is a significant agreement that updates and modernizes the trade relationship between the three North American countries. While there are still concerns and criticisms about the agreement, it represents a significant step forward in trade between Mexico, Canada, and the United States.