The USMCA Agreement Copy: What You Need to Know as a Business Owner
The United States-Mexico-Canada Agreement (USMCA) is a trade agreement that was signed in November of 2018. It serves as a replacement for the North American Free Trade Agreement (NAFTA) and is designed to modernize and enhance the economic relationship between the three countries.
As a business owner, it’s important to understand the impact of the USMCA on your business and what changes you may need to make to comply with the new agreement. Here are the key highlights of the USMCA agreement copy that you should be aware of:
1. Improved Labor Standards
The USMCA includes several labor provisions that aim to improve working conditions and wages for workers in all three countries. Among other things, the agreement requires Mexico to improve its labor laws and enforcement mechanisms, including freedom of association and collective bargaining rights. Additionally, the USMCA mandates that a significant portion of automobile production be made by workers earning at least $16 an hour.
2. Increased Access to Canadian Dairy Markets
One of the biggest changes in the USMCA involves increased access to Canadian dairy markets for American farmers. Under the terms of the agreement, Canada has agreed to eliminate its Class 7 pricing system, which had effectively shut out American dairy exports from the Canadian market. This change is expected to increase export opportunities for American dairy farmers.
3. Stricter Rules of Origin for Automobiles
The USMCA includes stricter rules of origin for automobiles, which require a higher percentage of parts to be made in North America in order for a vehicle to qualify for duty-free treatment. Specifically, the USMCA requires that 75% of a vehicle’s components be made in North America (up from 62.5% under NAFTA) in order to qualify for duty-free treatment. Additionally, the agreement requires that 40-45% of a vehicle’s content come from high-wage areas (i.e. the US and Canada), which is expected to boost automobile production in these countries.
4. Electronic Commerce
Another key feature of the USMCA is its provisions related to electronic commerce. The agreement prohibits customs duties on digital products and sets rules for data localization, helping to facilitate the flow of information across borders. Additionally, the USMCA includes provisions to protect intellectual property and prevent the theft of trade secrets.
Overall, the USMCA represents an important modernization of the economic relationship between the US, Mexico, and Canada. As a business owner, it’s important to understand how the agreement may impact your business and to take steps to ensure compliance with the new rules and regulations. By staying informed and proactive, you can position your business for success in the new era of North American trade.