United States-Mexico-Canada Agreement (USMCA): The New NAFTA
At this time, trade will continue to operate under the rules of NAFTA. We strongly encourage our partners to continue maintaining all records related to NAFTA. This includes maintaining exporter, supplier and vendor certificates, as well as historical information relating to the products your company ships into Canada, The United States, and Mexico. Please remember to send your 2020 NAFTA certificates to email@example.com to ensure uninterrupted NAFTA preferential treatment when applicable.
Earlier this week, the U.S. Ways and Means Committee finalized their changes to the USMCA. The trade deal is expected to move through Congress and be signed by President Trump. Prime Minister Trudeau and Mexican President Enrique Pena-Nieto will also need to approve the changes made through the committee before the deal is finalized.
There are a few key points that Willson International would like to highlight for our clients.
Much has been made regarding the differences between the agreements through the political negotiation process. The truth is the new agreement preserves large portions of NAFTA. USMCA could be better described as an update to NAFTA rather than a completely new trade agreement.
There are some key changes within USMCA which include:
- 75% of an automobile must be produced in a NAFTA country, when 62.5% was sufficient under NAFTA.
- 40% of the automobile must be produced by workers that earn $16.00 or more an hour.
- Intellectual property rights have increased from 50 years to 70 years for Canadian creators to move that standard in line with the U.S. standard.
- Canada has increased the dollar value of goods a person can take back to Canada from $20.00 to $40.00 Canadian dollars (CAD). E-commerce will allow duty free entry up to $150.00 CAD.
- Increased access to agricultural markets which includes, dairy, turkey and chicken.
One of the most important takeaways from this news is that we will soon have certainty in trade policy amongst our three nations. The new agreement not only links us together for sixteen (16) years, but also allows for a review every six years to determine if the deal will be extended further. We will soon no longer have to be concerned with the United States withdrawing from NAFTA.
Willson will continue to follow this developing story and publish updates in our eNews distribution. If you are not signed up to receive notifications, you can do so here.