| | | USMCA hasn't been ratified and makes few changes from NAFTA and TPP. Big deal. Much ado about little.
Provisions[ edit]Provisions of the agreement cover a wide range, including agricultural produce, manufactured products, labour conditions, digital trade, among others. Some of the more prominent aspects of the agreement include giving US dairy farmers greater access to the Canadian market, guidelines to have a higher proportion of automobiles manufactured amongst the three nations rather than imported from elsewhere, and retention of the dispute resolution system similar to that included in NAFTA. [17] [19]
Dairy[ edit]The dairy provisions are similar, but slightly higher, to those Canada agreed to in the never-ratified Trans-Pacific Partnership (TPP), giving the U.S. tariff-free access to 3.6%, up from 3.25% under TPP, of the $15.2 billion (as of 2016) Canadian dairy market. [20] [21] Canada agreed to eliminate Class 7 pricing provisions on certain dairy products, while Canada's domestic supply management system remains in place. [22] Canada agreed to raise the duty-free limit on purchases from the U.S. to $150 from the previous $20 level, allowing Canadian consumers to have greater duty-free access to the U.S market. [23]
Automobiles[ edit]Automobile rules of origin (ROO) requirements mandate that a certain portion of an automobile's value must come from within the governed region. In NAFTA, the required portion was 62.5 percent. The USMCA increases this requirement by 12.5 percentage points, to 75 percent of the automobile's value. The initial proposal from the Trump administration was an increase to 85 percent, and an added stipulation that 50 percent of the automotive content be made by United States auto manufacturers. [15] While the deal's text did not include the more demanding version of this provision, there is concern that the increased domestic sourcing, aimed at promoting US employment, will come with higher input costs and disruptions to existing supply chains. [24]
Labor[ edit]USMCA Annex 23-A requires Mexico to pass legislation that improves the collective bargaining capabilities of labor unions. [25] The specific standards Mexico is required to comply with are detailed in the International Labour Organization's Convention 98 on freedom of association and collective bargaining. The administration of Mexico's President, Andrés Manuel López Obrador, introduced legislation in late 2018 which pursues compliance with these international standards.
Other labor related measures include a minimum wage requirement in the automotive industry. Specifically, 40 to 45 percent of the automobiles manufactured in North America must be made in a factory that pays a minimum of $16 per hour. [24] This measure will be phased in during the first five years after USMCA ratification.
Intellectual Property[ edit]The USMCA will extend the copyright length in Canada to life plus 70 years, and 75 years for sound recordings. [26] This extension mirrors the same IP policy captured in the text of the Trans-Pacific Partnership, paragraph 18.63. [27] USMCA also extends the patent for biologics such as vaccines to 10 years. This is relative to the existing standard in Canada of 8 years and Mexico of 5 years. [28]
Dispute Settlement Mechanisms[ edit]There are three primary dispute settlement mechanisms contained in NAFTA. Chapter 20 is the country-to-country resolution mechanism. It is often regarded the least contentious of the three mechanisms, and it was sustained in its original NAFTA form in USMCA. Such cases would involve complaints between USMCA member states that a term of the agreement had been violated. [29] Chapter 19 disputes manage the justifications of anti- dumping or countervailing duties. Without Chapter 19, the legal recourse for managing these policies would be through the domestic legal system. Chapter 19 specifies that a USMCA Panel will hear the case and act as an International Trade Court in arbitrating the dispute. [29] The Trump administration attempted to remove Chapter 19 from the new USMCA text, though it has thus far endured in the agreement.
Chapter 11 is the third mechanism, known as investor-state dispute settlement, wherein multinational corporations are enabled to sue participating governments over allegedly discriminatory policies. Chapter 11 is broadly considered the most controversial of the settlement mechanisms. [30] The Canadian negotiators effectively removed themselves from Chapter 11 in the USMCA version of this measure, Chapter 14. Canada will have full exemption from ISDS three years after NAFTA has been terminated. [30] |
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