NAFTA
NAFTA
NAFTA
This new agreement will continue to accommodate mutually beneficial trade between the
three nations while addressing several concerns including job losses and the suppression of
wages in the U.S., worker exploitation in Maquiladoras, the rise of e-commerce, and
intellectual property protection.
The USMCA was largely driven by the Trump administration’s approach to trade and a desire
to return manufacturing, and manufacturing jobs, to U.S. soil.
In addition, between 40% and 45% of automobile parts must be manufactured by employees
who earn more than $16 an hour.
3. Intellectual Property
A few additions have been made to address intellectual property and the digital economy.
For example, the USMCA will extend the terms of copyright from 50 to 70 years beyond the
life of the author. Other clauses will protect internet companies to ensure they’re not liable
for the content their users produce and the prohibition of duties on eBooks and music.
4. De Minimis Threshold
The de minimis (duty-free) threshold has been increased from $20 to $150 for imports into
Canada and from $50 to $100 for imports into Mexico. This might adversely impact retailers
in Canada and Mexico, who will be harder hit financially when importing low-value goods.
5. Government Procurement
The USCMA will allow all parties to maintain protocols allowing the preferential treatment of
small and medium-sized enterprises (SMEs). The agreement also recognizes the use of
electronic tendering procedures and protections against corruption and fraud for businesses
partaking in government procurement.
6. Environmental Standards
When a project has the potential to have a detrimental impact on the environment, the
USMCA specifies that an environmental impact assessment must be completed to minimize
or mitigate the effects. In the U.S., compliance with the National Environmental Policy Act
should satisfy this requirement.
8. Certification of Origin
Under the USMCA, participating countries can attain a certification of origin through
informal documentation, including commercial invoices. This will negate the need for
businesses to complete a formal certificate of origin and can be completed by the importer,
exporter, or producer.
9. Sunset Clause
NAFTA did not include an Update Deadline or a Sunset Clause. USMCA’s Sunset Clause will
require the participating parties to revisit and renegotiate their terms — or withdraw from
the agreement entirely — on or before its 16th year post-implementation. This ensures trade
issues are not neglected.