Usmca Agreement Highlights
For the first time, the new agreement also stipulates that 40-45% of parts of a non-tariff vehicle must come from a so-called high-wage plant. These plants must pay at least $16 per hour in average wages for production workers. That`s about three times the average wage at a Mexican plant right now, and government officials hope that this provision will force automakers to buy more supplies from Canada or the United States, or raise wages in Mexico. The “Environment” chapter contains the most comprehensive environmental commitments applicable to a previous U.S. agreement, including obligations to combat trade in wild plants, wood and fish; Strengthen law enforcement networks to curb human trafficking; and address pressing environmental issues, such as air quality and marine waste. To facilitate the strengthening of cross-border trade, the United States has reached an agreement with Mexico and Canada to increase the value of de minimis delivery. For the first time in decades, Canada will increase its de minimis level from $20 to $40 for taxes. Canada will also offer duty-free shipments of up to 150 $US. Mexico will continue to provide $50 of tax-exempt de minimis and will also provide duty-free shipments up to the equivalent of $117. Shipping rates to this level would be achieved with minimum formal entry procedures, which would allow more businesses, particularly small and medium-sized enterprises, to be part of cross-border trade. As we have seen in our previous international trade briefings, the negotiations have been laborious and at times it seemed that an agreement was unresolved. However, the parties have reached compromises that appear to reduce the more radical changes originally proposed by the U.S.
government, while maintaining some provisions that were fundamental to Canada`s approval of a renegotiated trilateral agreement. For the first time, a trade agreement requires that the text of the agreement published by the USTR be subject to a legal review to ensure accuracy and consistency. The release of the text by the USTR triggers the 60-day review period before US President Donald Trump can sign the agreement. The review period expires at the end of November, so that the agreement can be signed by the current Mexican government before the newly elected Mexican president is sworn in on December 1. The terms of the USMCA remain in effect for a period of 16 years during which the parties may decide to review and/or renegotiate the terms or withdraw from the agreement. However, after six years, the duration of the sinking of the USMCA (16 years) may be revised and possibly extended if the parties believe that this would be beneficial. The agreement gives U.S. farmers additional access to foreign markets, particularly in Canada. It does not dismantle Canada`s “supply management system,” which imposes the amount of production on Canadian farmers so that they can be profitable. But Canada has agreed to abolish a program that helps sellers of certain dairy products in Switzerland and abroad and opens its market to milk, cream, butter, cheese and other U.S.