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US-MEXICO-CANADA-TRADE-RULES-NAFTA
The ‘New NAFTA’ US-Mexico-Canada trade deal
BUENOS AIRES, Dec 1, 2018 (BSS/AFP) – The US, Mexico and Canada signed a
successor deal to the North American Free Trade Agreement (NAFTA) on the
sidelines of the G20 summit on Friday.
President Donald Trump had long denounced NAFTA, which he claimed was
killing US jobs, and demanded a renegotiation.
Controversy has continued even with what to call the new deal. Washington
calls it the United States-Mexico-Canada Agreement, although the other two
parties have their own names putting their countries first.
The revised accord now goes for ratification by the legislatures of the
three countries. Here’s what it contains:
– Autos: higher pay, local content –
Ending NAFTA would have meant tearing up the continent’s closely-
integrated auto supply chain. But Ottawa, Mexico City and Washington have now
agreed to sweeping changes to manufacturing and labor requirements that US
officials say should boost wages and discourage moving production offshore.
The deal will require that 75 percent of auto content be made in the
region, increased from 62.5 percent, and that 40-45 percent be made by
workers earning at least $16 an hour.
Mexico also agreed to continue to recognize US auto safety standards,
unless Mexican regulators conclude they are inferior to their own standards.
– Auto tariff relief –
Trump has threatened to use a national security justification to impose
steep tariffs on the hundreds of billions of dollars in autos the US imports
annually. But the USMCA includes side letters that agree to exempt Mexico and
Canada up to a threshold of 2.6 million vehicles a year, as well as an
unspecified amount of light trucks, and tens of billions of dollars in auto
parts.
However, the new deal does not resolve the punishing steel and aluminum
tariffs imposed worldwide earlier this year, and on Mexico and Canada since
May.
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US-MEXICO-CANADA-TRADE-RULES-NAFTA 2 BUENOS AIRES
– Dairy: Canada makes concessions –
Canada, which guarantees prices for its dairy producers through its
managed supply system, agreed to open its borders a little wider to American
milk, cheese, cream, butter and other goods.
The concession from Ottawa removed a major sticking point that Trump said
was a deal breaker.
Canada will also eliminate categories of low-cost dairy goods, and will
allow greater imports of US chicken, eggs and turkey.
– Settling disputes –
The US agreed to Canada’s insistence that the dispute settlement system —
formerly known as Chapter 19 — remain in the deal. Canadian officials
resolutely rejected Trump’s demand to scrap provisions to resolve
disagreements through international arbitration, something Ottawa has
successfully used to challenge US tariffs.
However, the agreement does make some changes to the more controversial
“Investor-State Dispute Settlement” powers, which critics said had allowed
powerful companies and wealthy investors to invalidate local laws and court
decisions through unaccountable arbitration.
– Intellectual property –
The new agreement requires that signatories allow equal copyright
treatment for writers, composers and others from member countries, requiring
a minimum term of the author’s life plus 70 years for copyrighted works.
– Digital trade –
When NAFTA took effect in 1994, e-commerce hardly existed in its current
form and modernizing its provisions was a key premise of the talks. The new
agreement prohibits customs duties for digitally distributed goods like
software and games, e-books, music and movies.
It would also limit local governments’ powers to force companies to
disclose propriety source code or place restrictions on where data may be
stored.
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US-MEXICO-CANADA-TRADE-RULES-NAFTA 3 LAST BUENOS AIRES
– The no-China-deals clause –
Tucked in the agreement is a provision that appears designed to stop
either Canada or Mexico from seeking a better deal with Beijing. If any
signatory seeks to enter into a free-trade agreement with a “non-market-
economy” — read China — the other parties will then be allowed to cancel
the three-country deal and replace it with a bilateral agreement.
US ties with China have grown increasingly contentious, and Washington has
slapped tariffs on more than $250 billion in imports from that country.
– An alternative ‘sunset clause’ –
The new trade pact will remain in force for 16 years, but will be reviewed
every six years. If the parties decide to renew the agreement, it will be in
effect for another 16 years. But if there is a problem, officials would have
10 years to negotiate to resolve their differences before the treaty would
expire. Canadian and Mexican negotiators, as well as US industry, had
outright rejected US demands that any new NAFTA contain a “sunset clause”
requiring the parties to re-authorize the agreement every five years.
– Labor rights –
US Trade Representative Robert Lighthizer says the labor protections in
the deal — which had been part of a side agreement to NAFTA — are the
strongest ever negotiated, and are enforceable. Under the agreement, “Mexico
commits to specific legislative actions to provide for the effective
recognition of the right to collective bargaining,” according to the USTR
office.
The agreement also contains requirements on internationally recognized
labor rights: prohibiting the imports of goods made through forced labor,
deterring violence against workers and ensuring protections for migrant
workers.
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