A very simple explanation of the new trilateral trade deal.
The US, Canada, and Mexico struck a new trade deal to replace NAFTA on Sunday. It’s known as the United States-Mexico-Canada Agreement, or USMCA. The three countries reached a consensus after more than a year of talks, which began after President Donald Trump made good on his campaign promise to renegotiate the nearly 25-year-old agreement.
It’s basically NAFTA 2.0, with major changes on cars and new policies on labor and environmental standards, intellectual property protections, and some digital trade provisions.
Here are the biggest changes:
Country of origin rules: Automobiles must have 75 percent of their components manufactured in Mexico, the US, or Canada to qualify for zero tariffs (up from 62.5 percent under NAFTA). Labor provisions: 40 to 45 percent of automobile parts have to be made by workers who earn at least $16 an hour by 2023. Mexico has also agreed to pass laws giving workers the right to union representation, extend labor protections to migrant workers, and protect women from discrimination. The countries can also sanction one another for labor violations. US farmers get more access to the Canadian dairy market: The US got Canada to open up its dairy market to US farmers, which was a big issue for Trump. Intellectual property and digital trade: The deal extends the terms of copyright to 70 years beyond the life of the author (up from 50). It also extends the period that a pharmaceutical drug can be protected from generic competition.
It also includes new provisions to deal with the digital economy, including prohibiting duties on things like