Usmca Agreement Meaning
The United States, Mexico and Canada have reached agreement on a modernized, quality chapter of intellectual property (IP) that provides effective protection and protection and intellectual property rights essential to promoting innovation, economic growth and supporting American jobs. NAFTA required automakers to produce 62.5 per cent of the vehicle`s content in North America in order to qualify for a zero tariff. With the new agreement, this threshold will be increased to 75 per cent over time. This should force automakers to buy fewer parts for a “Assembled in Mexico” car in Germany, Japan, South Korea or China. The pact also requires that 70 per cent of a vehicle`s steel and aluminum come from North America, with steel both melted and poured onto the continent. On March 1, 2019, many organizations representing the agricultural sector in the United States announced their support for the USMCA and asked Congress to ratify the agreement. They also called on the Trump administration to continue to support NAFTA until the new trade agreement is ratified.  On March 4, House Ways and Means President Richard Neal predicted a “very hard” path through Congress for the agreement.  Starting March 7, senior White House officials met with members of the Ways and Means House of Representatives, as well as moderate cackles from both parties, such as the Solver Caucus, the Tuesday Group and the Blue Dog Coalition, to seek ratification support. The Trump administration also withdrew from the threat to withdraw from NAFTA as negotiations with Congress continued.  In addition, there is the provision that the agreement itself must be reviewed every six years by the three nations, with a 16-year forfeiture clause.
The contract may be renewed for a period of 16 years during the six-year review period.  The introduction of the Sunset clause gives more control in the organization of the future of the USMCA in the hands of national governments. However, there is concern that this could lead to greater uncertainty. Sectors such as automotive require significant investment in cross-border supply chains.  Given the dominant position of the U.S. consumer market, it is likely that this will put pressure on companies to establish more production in the United States, with a higher probability of higher production costs for these vehicles.  The Governor General of Canada, Julie Payette, announced on September 11, 2019 the dissolution of Canada`s 42nd Parliament and officially announced registration for the 2019 Canadian Legislative Election.  All outstanding legislation will be abolished after each dissolution of Parliament, meaning that the USMCA Transposition Act was to be reintroduced to the 43rd Canadian Parliament, which began on December 5, 2019.
  Negotiations focused “primarily on car exports, steel and aluminum tariffs, as well as the milk, egg and poultry markets.” A provision “prevents any party from enacting laws that restrict the cross-border flow of data.”  Compared to NAFTA, the USMCA increases environmental and labour standards and encourages domestic production of cars and trucks.  The agreement also provides up-to-date intellectual property protection, gives the United States more access to the Canadian milk market, imposes a quota for Canadian and Mexican auto production, and increases the tariff limit for Canadians who purchase U.S. purchasing countries.