The United States of America, Canada and Mexico on September 30th announced an agreement for an updated NAFTA, under the name of the United States, Mexico and Canada Agreement, or USMCA.

The full text of the agreement was made public, triggering a 60-day U.S. requirement for the agreement to be signed on November 30 — the last day Mexican President Enrique Peña Nieto will be in office.

After more than a year of negotiations, the new agreement is being reviewed carefully for its potential economic impact in each North American market, and its ability to advance economic integration, trade, cross-border investment and competitiveness across the region.

Here is a summary of how the agreement looks for each of the members according to our experts in each market.

Topic View from Washington View from Ottawa View from Mexico City
Reaction from leading business groups Business and farm groups are pleased that the final agreement includes Canada and leaves much of NAFTA intact, with moderate updates and additions. Business and labor are relieved that Canada was able to preserve the most critical elements of NAFTA. Business says Mexican exports will grow 50 percent to the North American region and there is strong potential for growth in Mexico’s agriculture, automotive, energy, technology, aerospace and manufacturing sectors.
Impact on automobiles/ parts U.S. automakers say they can still integrate their operations with higher rules of origin and stronger labor provisions. The new threshold on Canadian manufactured autos is well above current production, effectively exempting Canada from duties. New labor provisions marginally improve Canada’s competitiveness. For Mexicans, the automotive industry is one of the most important issues modified from the previous agreement. Some economists suggest the new rules could boost production of small vehicles outside the region, as their cost would be very high.
Impact on agriculture U.S. farmers are relieved with continued market access; dairy farmers get some additional access to Canada. Canada conceded some market access to U.S. dairy, in line with other trade deals such as CETA and CPTPP. Dairy farmers, while promised compensation, complain that supply management is not adequately supported. Specialists say the changes in the agriculture chapter are minimal. A commercial agreement for tomatoes, which is being negotiated separately, is pending.
Impact on manufacturing No changes in U.S. steel and aluminum tariffs. USMCA did not resolve the issue of US tariffs on Canadian steel and aluminum. It is anticipated that with USMCA these tariffs will eventually be rescinded. The Mexican steel and aluminum industries are exposed to U.S. trade tariffs. Like Canada, it is still pending for Mexico to define the application or elimination of the tariff on steel and aluminum.
Labor provisions U.S. labor unions are withholding support, saying the labor provisions may not be enforceable. Canada was unable to revise list of professionals covered under trade national visas. Mexico is committed to adopt legislative measures on freedom of association, collective agreements and eliminating the concept of protection contracts.
Addressing disputes U.S. yielded to Canada on a strong dispute settlement process. Preservation of the Chapter 19 dispute resolution process is considered a major victory for Canadian negotiators. With inclusion of Chapter 19 and 31, the agreement is perceived as positive and will offer greater legal certainty to investments in the country.
Intellectual property protections U.S. companies welcome stronger IPR provisions; drug companies welcome the 10-year patent protection period in Canada. Canada’s copyright terms will increase from 50 years to 70 years, in line with US and Europe. Extension of patents on biologics by two years has been characterized by some critics as increasing the cost of drugs. The production of generic medicines will be more difficult, while biologicals will have a 10-year patent period, higher than that established in TPP-11, which is five years, with the possibility of extending it three more.
Digital trade U.S. tech industry welcomes the new chapter on digital trade, data transfers and e-commerce. Canada’s cultural exemption was preserved, effectively protecting Canada’s bilingualism. But exemptions do not appear in digital trade chapter raising concerns about Ottawa’s ability to set content standards in digital media. Various NGOs in Mexico say the chapters on digital commerce and intellectual property are a risk for internet rights. These measures will not apply to Canada, only to Mexico.
Sunset clause The U.S. yielded on a 6-year sunset clause; the agreement will be in place for 16 years, with a review every six years. Canada would not agree to a 6-year sunset clause. Like Canada, Mexico did not agree with the sunset clause, supporting the 16-year option.
Ratification process Congress will consider ratification in 2019, but will need Democratic support for final passage. The outcome of the midterm elections could impact ratification. The agreement will be tabled in the House of Commons for discussion, following which Cabinet will ratify. The government will bring forth any required implementing legislation thereafter. Leading business groups foresee the agreement will be approved without changes.

Edited by Delaney McMullen