An Initial Take on the USMCA
Just before a midnight deadline on September 30, Canada and the United States concluded their part of the talks following the earlier tentative deal for a new, revised Nafta that has at least tentatively been branded the United States-Mexico-Canada Agreement or USMCA. The consensus reached after more than a full year of talks that began after US President Donald Trump made good on his campaign promise to renegotiate what he termed “the worst trade deal ever,” in many respects is an updated version of the North American Free Trade Agreement rather than the “brand new deal” Trump has labeled it, although we will leave it to others to decide whether there is a basis for his insistence that it is “the most important trade deal we’ve ever made, by far.” But the new tentative deal clearly introduces many significant changes, including on matters dealing with the automotive industry, new policies on labor and environmental standards, intellectual property protections, and some digital trade provisions.
It may still take some time for the terms of this proposed treaty to take effect. There has been talk that the three heads of government will take the next step and formally sign it during the meetings of heads of state at the G-20 meeting in Buenos Aires, but thereafter it would have to be ratified by the congresses of all three countries.
It is a very extensive document, with chapters that are typical of international trade agreements, including environmental issues, as well as extensive annexes dealing with specific sectors and a dozen parallel documents. Moreover, and in keeping with many of the largest and more recent trade deals, the USMCA directly addresses labor rights and pay, something that was not dealt with under Nafta. Given all these complexities, it will take time to conclude a comprehensive analysis of the new deal, however, in this report we summarize some of its most important aspects.
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