USMCA Trade Deal and Its Impact on Industries

Key Findings

What is USMCA?

The United States-Mexico-Canada Agreement (USMCA) is the new trade agreement between the US, Mexico and Canada. The new trade deal is expected to supersede the North American Free Trade Agreement (NAFTA), and, indeed, is often termed the “New NAFTA”.

USMCA was created following the 2017-2018 negotiations among the three member states. As of 2019, the agreement had been ratified by Mexico, although ratification in Canada and the US is still pending.

In comparison to NAFTA, USMCA increases labour regulation and protection of intellectual property, and provides more regulations on certain economic sectors, such as automotive production, metal products, agriculture and trade. USMCA is also the first trade agreement which includes regulation of cross-border e-commerce. The core updates of USMCA include:

Country of origin rules: Cars must have 75% of components manufactured in Mexico, Canada or the US to qualify for zero tariffs.

Labour: USMCA requires that 40-45% of car parts must be made by workers earning at least USD16 per hour by 2023.

US farmers will get more access to the Canadian market.

Intellectual property: USMCA extends property rights to 70 years beyond the life of an author.

Sunset clause: The new deal will expire after 16 years and is subject to review every six years.