Steptoe’s International Trade group has put together a helpful guide to the new NAFTA (the US-Mexico-Canada Agreement (USMCA)).
The Agreement must still go through ratification and implementation processes in all three countries before it can enter into force. In the coming weeks, the Trump Administration will submit legislation to Congress to implement the USMCA. Before a vote can be taken in the United States, however, the Administration will first need to resolve concerns and objections raised by members of Congress from both parties, making any vote on the USMCA challenging before the congressional summer recess.
Although the USMCA carries over a number of NAFTA’s important market-opening elements, it also introduces a number of changes that carry potentially significant implications for business planning across many sectors.
How Will the USMCA Affect Your Business and Why You Should Care:
The USMCA includes new rules to promote and protect trade in cutting-edge commercial areas such as digital trade and advanced pharmaceuticals. It also generally incorporates the latest approaches from recent US trade agreements on regulatory policies, labor standards, and environmental protection and conservation to promote competitive markets and avoid a “race to the bottom.”
However, the USMCA departs from past trade agreements in that it limits the potential for binding and enforceable dispute settlement decisions, and instead moves toward the use of US trade laws and economic leverage to promote compliance.
Business practices across a range of industries and sectors will be shaped by the USMCA.
Particular sectoral developments in the USMCA that may affect your business include the following:
- Digital Trade: Prohibits a USMCA country, with respect to any sector including financial services, from requiring data to be stored or processed in-country.
- Pharmaceuticals: Requires a USMCA country to provide a minimum 10-year period of data protection for biological drugs in particular.
- Retail (including E-Commerce): Requires a USMCA country to increase the value below which imports can enter its market duty-free, from US$50 to US$117 for Mexico and from C$20 to C$150 for Canada.
- Government Contracts: Provides that US-Canada government procurement market access and processes will be governed solely by the more limited terms of the WTO Agreement on Government Procurement.
- Chemicals: Requires a USMCA country to disclose all data, including scientific and technical assessments, relied upon by an agency developing a chemical regulation.