North American Free Trade Agreement (NAFTA):
- NAFTA is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
- The agreement came into force on January 1, 1994.
- According to Donald trump, NAFTA is the “worst trade deal ever made by United States”. Thus, he initiated negotiations to replace it. In August 2018, U.S. reached an agreement with Mexico to replace the NAFTA, with agreement with Canada remaining pending.
U.S.-Mexico-Canada Agreement (USMCA):
- The U.S.-Mexico-Canada Agreement (USMCA) updates and replaces the nearly 25-year-old NAFTA. USMCA is intended to last 16 years and will be reviewed every 6 years.
- USMCA gives the U.S. greater access to the dairy markets of Canada. Tariffs of up to 275% have kept most foreign milk out of the Canadian market.
- If the U.S. imposes a 25% global tariff on car imports, Canada and Mexico will have a quota of 2.6 million cars they can export to the U.S. as a protection for their car industry.
- Canada managed to preserve the dispute-settlement mechanism as a protection for its wood industry.
- It also includes stronger protections for workers, tough environmental rules, updates the trade relationship to cover the digital economy and provides tougher intellectual property protections.
- it also adds provisions to prevent “manipulation” of the trade rules, including covering currency values, and controls over outside countries trying to take advantage of the duty-free market.
- Comment: The agreement, covering a region of 500 million residents and conducting $1 trillion in trade a year, will result in freer markets, fairer trade and robust economic growth in the region.
