The new trade agreement between Mexico and Canada is called the United States-Mexico-Canada Agreement (USMCA), and it has replaced the North American Free Trade Agreement (NAFTA) that was signed in 1994. This agreement was signed on November 30, 2018, but it was not ratified until July 1, 2020. The USMCA has brought in significant changes in trade relations among the three countries, and it covers many areas such as intellectual property, labor laws, trade in dairy products, and the automotive sector.
One of the significant changes brought by the USMCA is that it requires that 75% of automobile components be made in North America for the cars to be traded duty-free. This is up from the 62.5% required by NAFTA. Additionally, 40 to 45% of automobile components must be made by workers earning at least $16 an hour. This provision is meant to boost wages in Mexico and reduce the incentive for American companies to move their jobs across the border.
Another critical area that the USMCA covers is intellectual property. The agreement strengthens the protection of patents, trademarks, and copyrights. It also extends the length of copyright protection from 50 to 70 years after the death of the author. The USMCA also addresses digital trade by prohibiting duties on products transmitted electronically as well as prohibiting requirements for companies to store data locally.
The agreement also includes provisions to address labor abuses in Mexico. The USMCA includes provisions that strengthen labor laws and enforcement mechanisms in Mexico. It also requires that Mexico provide greater protection for workers` rights to join unions and to engage in collective bargaining.
In the area of agriculture, one of the notable provisions of the USMCA is the opening of the Canadian dairy market to American farmers. The USMCA allows American farmers access to 3.6% of Canada`s dairy market, which is a significant increase from the minimal access granted under NAFTA.
Overall, the USMCA represents a significant change in trade relations among the three North American countries. It is hoped that this new agreement will lead to increased economic growth and job creation in the region.