U.S., Mexico and Canada reach trade agreement
USMCA would also benefit Puerto Rico, which exported $1.4 billion to Canada, Mexico in 2018
SAN JUAN — The United States, Mexico and Canada have reached an agreement to modernize the 25-year-old North American Free Trade Agreement (Nafta), to better serve businesses and workers by supporting “mutually beneficial trade,” leading to “freer markets, fairer trade, and robust economic growth” in the three countries, according to the Office of the U.S. Trade Representative (USTR).
The agency said the deal includes key achievements in matters of intellectual property, digital trade, the de minimis chapter, financial services and the environment.
“Thanks to President Trump’s leadership, we have reached an historic agreement on the USMCA. After working with Republicans, Democrats, and many other stakeholders for the past two years we have created a deal that will benefit American workers, farmers, and ranchers for years to come. This will be the model for American trade deals going forward,” U.S. Trade Representative Robert Lighthizer said in a statement.
The announcement Tuesday in favor of the deal by U.S. House Speaker Nancy Pelosi makes approval of the USMCA more likely; however, “pockets of resistance remain and powerful business lobbies said they still needed to study the details of the latest version,” according to the Associated Press.
“There is no question, of course, that this trade agreement is much better than NAFTA, but in terms of our work here, it is infinitely better than what was initially proposed by the Administration,” Pelosi said of the concessions the Democrats got.
According to the USTR, Puerto Rico exported $886 million to Canada and $495 million to Mexico in 2018, for a combined $1.4 billion.
The island’s top exports to those countries were chemicals ($1 billion), “miscellaneous manufactured commodities” ($103.6 million), machinery ($52.4 million) , transportation equipment ($42.4 million), electrical equipment, appliances and components ($39.4 million), waste and scrap ($35.5 million), processed food ($19.2 million), beverages and tobacco products ($16.5 million), computer and electronic products ($12.4 million), and plastics and rubber products ($12.1 million).
The USMCA’s Intellectual Property (IP) chapter provides protection and enforcement of IP rights to back innovation, “creating economic growth, and supporting American jobs.” This includes 10 years of data protection for biologic drugs. It requires “full national treatment for copyright and related rights” so U.S. creators are not “deprived of the same protections that domestic creators receive in a foreign market,” the USTR explains.
“New commitments for market access address non-tariff barriers related to trade in remanufactured goods, import licensing, and export licensing,” the USTR said.
The agency described the digital trade chapter as containing “the strongest disciplines on digital trade of any international agreement, providing a firm foundation for the expansion of trade and investment in the innovative products and services.”
The USMCA maintains Nafta’s zero-tariff treatment, expands U.S. access to Canada’s dairy market, and includes other improvements that, if fully implemented, would increase U.S. agricultural exports to the world by $2.2 billion, according to the U.S. International Trade Commission.
New trade rules of origin should encourage more goods and materials to be manufactured in the United States and ensure the benefits of USMCA flow to North American workers. The deal contains new rules to drive higher wages by requiring that 40-45 percent of auto content be made by workers earning at least $16 per hour.
USMCA’s Labor chapter makes new enforceable labor standards a core part of the agreement. It includes an Annex on Worker Representation in Collective Bargaining in Mexico, under which Mexico commits to specific legislative actions to provide for the recognition of the right to collective bargaining.
Parties are also required to adopt labor rights as recognized by the International Labor Organization. The chapter also includes new provisions to prohibit the importation of goods produced by forced labor, to address violence against workers exercising their labor rights, and to ensure that migrant workers are protected under labor laws.
“New customs and trade rules will cut red tape and make it easier for small businesses to tap into foreign markets and participate in cross-border trade,” the USTR assured.
The Environment chapter brings all environmental provisions into the core of the agreement and makes them enforceable, “including obligations to combat trafficking in wildlife, timber, and fish; to strengthen law enforcement networks to stem such trafficking; and to address pressing environmental issues such as air quality and marine litter.”