Highlights of the United States-Mexico-Canada Agreement
Published Monday, October 1, 2018 11:14AM EDT
Last Updated Monday, October 1, 2018 3:08PM EDT
The new deal, called the United States-Mexico-Canada Agreement, came together in the final hours before the deadline for Canada to come on board a renegotiated trilateral deal.
The key points of the new USMCA:
- The Chapter 19 dispute resolution mechanism remains intact, though, it has been renumbered in the new 34-chapter agreement. This part of the deal allows for independent panels to resolve trade disputes that arise out of the deal. It was a red line for Canada, which feared not having an objective arbiter, despite the U.S.’s push for changes.
- American farmers will have increased access to the supply-managed Canadian dairy market. Specifically, Canada has increased the market access to 3.59 per cent, and the federal government agreed to get rid of what was known as Class 7 pricing on some dairy ingredients. The Americans are viewing this as “a big win” for them. It’s a bigger concession than what Canada made in the Trans Pacific Partnership.
- Canada maintained the original NAFTA text related to an exemption for cultural industries, which is aimed at protecting such things as Canadian media and bilingual content.
- Under the USMCA trade deal, online cross-border shipments to Canada worth less than $150 will no longer be subject to duties. The deal raises the raises the minimum purchase price that qualifies for duties and taxes, known as the de minimis threshold, up from $20 to $40.
- The deal includes 12 side letters on issues including wine, water, and cheese names. Eight were posted with the first full text of the deal Sunday night, and four others were published later, regarding the national security provision, aka Section 232.
- The new deal also has new measures the government says will help Canada’s natural resources sector; as well as a new environment chapter with measures related to air quality and marine pollution.
- The deal includes stronger rules of origin for autos, and an “ambitious” slate of other provisions related to the digital age.
- It includes a termination provision aimed at preventing the deal from becoming outdated. It states that the deal is good for 16 years after it comes into force, but within the first six years a mandatory “joint review” will be conducted to determine whether all three countries want to extend the agreement for another 16 years. It maintains the six month opt-out of the deal notice that existed in NAFTA.
- The investor-state dispute settlement process (ISDS) is also being phased out between Canada and the United States, which Freeland said has cost Canadians millions in legal fees.
- The U.S. has given Canada assurance that an exemption — should Trump follow through on a 25 per cent tariff on autos — would be granted for 2.6 million vehicles and US$32.4 billion worth of auto parts.
- The exchange of steel and aluminum tariffs between Canada and the U.S. remain in place for now, though the federal government is indicating that with the new deal momentum, they’re hopeful that the tariffs could be lifted before the deal is signed.