Don’t be calling it NAFTA anymore.
Canada, Mexico, and the United States have officially reached a new trade agreement, which they are now calling the United States-Mexico-Canada Agreement (USMCA).
According to a joint statement between the nations, “USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region. It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”
Prime Minister Justin Trudeau said he spoke with the US President Donald Trump this morning.
A statement from Trudeau’s office said that the Prime Minister and President “stressed that the agreement would bring the countries closer together, create jobs and grow the middle class, enhance North American competitiveness, and provide stability, predictability, and prosperity to the region.”
The leaders agreed to keep in close touch and move the agreement forward.
On Monday, Trump tweeted a congratulatory message to Mexico and Canada.
“Late last night, our deadline, we reached a wonderful new trade deal with Canada, to be added into the deal already reached with Mexico,” he said.
“It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our farmers and manufacturers, reduces trade barriers to the US and will bring all three great nations together in competition with the rest of the world. The USMCA is a historic transaction.”
Congratulations to Mexico and Canada!
— Donald J. Trump (@realDonaldTrump) October 1, 2018
Additionally, while speaking to reporters, Trump said that USMCA, which “has a good ring to it,” is about fairness and reciprocity. He sent his “highest regards” to Trudeau, and said that the new deal has created a great partnership with Mexico and Canada.
Trump said he plans to sign the new agreement by end of November.
Here are some of the changes to the trade deal:
All food and agricultural products that have zero tariffs under the North American Free Trade Agreement (NAFTA) will remain at zero tariffs, according to the office of US Trade Representatives.
Since the original NAFTA did not eliminate all tariffs on agricultural trade between the United States and Canada, the USMCA will create new market access opportunities for exports to Canada of dairy, poultry, and eggs, and in exchange the US will provide new access to Canada for dairy, peanuts, processed peanut products, and a limited amount of sugar and sugar-containing products.
Canada will eliminate what is known as its milk classes 6 and 7. In addition, Canada will apply export charges to its exports of skim milk powder, milk protein concentrates and infant formula.
The new agreement is meant to modernize NAFTA, which is a 24-year-old agreement, and is meant to “support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.”
There is now a high-standard Intellectual Property (IP) chapter that provides strong and effective protection and enforcement of IP rights critical to driving innovation and creating economic growth. This also covers things like business patents.
There will be a requirement for strong standards against the circumvention of technological protection measures that often protect works such as digital work. The new Digital Trade chapter will also prohibit customs duties and other discriminatory measures from being applied to digital products distributed electronically (including e-books, videos, music, software, games, etc.).
There are new rules of origin and origin procedures, including product-specific rules for passenger vehicles, light trucks, and auto parts. This update to the rules of origin will provide greater incentives to source goods and materials in North America.
As per the US USMCA fact sheet, this deal encourages manufacturing and regional economic growth by requiring that 75% of auto content be made in North America.
It’s also said that the new rules will encourage more investment by auto companies in research and development in the region.