What we know about the new NAFTA

Business Politics

Buenos Aires | A new name, cars, milk and poultry at the heart of the negotiations, a possible review every ten years … Here’s what you need to know the new trade treaty linking the United States, Canada and Mexico signed Friday in Buenos Aires , on the sidelines of the G20 summit.

NEW NAME

Sealed at the end of September after laborious negotiations, the new agreement is called the “United States-Mexico-Canada Agreement” (USMCA – United States-Mexico-Canada Agreement). It succeeded the North American Free Trade Agreement NAFTA, which dated back to 1994. US President Donald Trump promised to change the name of Nafta (the acronym for NAFTA) he hated.

Funny detail, each of the three countries renamed the treaty by placing itself at the top of the acronym: USMCA for the United States, TMEC (Mexico-USA-Canada Treaty) for Mexico and CUSMA (Canada-United States- Mexico Agreement, in English) for Canada.

AUTOMOBILE

One of the most important components is the auto sector, which has been totally revolutionized by NAFTA. The new text provides rules for sourcing materials and components in the United States and North America. It also provides for a provision forcing Mexico to raise sector wages to narrow the gap with better paid northern neighbors.

Some 2.6 million vehicles assembled in Canada are exempt from US customs.

MILK AND POULTRY

Ottawa agrees to relax its so-called “supply management” system, which controls the production and price of milk and poultry and ensures stable incomes for Canadian farmers through annual quotas and taxes. import reaching 275%. This easing will give US producers better access to the Canadian market, as demanded by Washington. Trump demanded complete dismantling, and Ottawa opened 3.4 percent of its market, “similar to TPP,” the Trans-Pacific Partnership that Canada signed in March with 10 Asia-Pacific countries.

LITIGATION, CULTURE AND ENVIRONMENT

In exchange, the commercial dispute resolution mechanism, known as “Chapter 19” and hated by Washington, remains “intact” on the merits even if it changes its name.

The Canadian cultural exception, which sees Canada subsidize the cultural sector, is also maintained despite the protests of the United States.

A chapter on the environment is created and includes “strict rules”.

DIGITAL, INTELLECTUAL PROPERTY, CURRENCIES

The digital economy is for the first time covered, while from Mexico City to Ottawa, via Washington, the GAFA tax system has been denounced for years.

“Unprecedented” protections in terms of intellectual property are established.

The new treaty provides for provisions to prevent “manipulations” of trade either by foreign exchange or by ensuring that countries that are not party to the text do not derive undue benefits from this free market.

REVIEW

The agreement is signed for 16 years, with the possibility to review it every six years.

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