Published On: Tue, Oct 2nd, 2018

NAFTA out, USMCA in: What’s in the US – Mexico – Canada trade deal all about?

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Canada, Mexico, and the United States ushered in NAFTA 2.0 late on Sunday, just before an end-of-weekend deadline set by the US to salvage the 24-year-old trilateral deal.

Renamed the US-Mexico-Canada Agreement (USMCA), the deal updates the 1994 North American Free Trade Agreement, promising to lead “to freer, fairer markets, and to robust economic growth” in the three-country free trade area.

In a joint statement, US Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland hailed USMCA as a “modernized” agreement that “will strengthen the middle class, and create good, well-paying jobs”.

Mexican Economy Secretary Ildefonso Guajardo called it “a state-of-the-art instrument that will bring great economic benefits to Mexico, Canada and the US”.

Canadian Prime Minister Justin Trudeau tweeted after a conversation with his US counterpart that USMCA will “enhance competitiveness & prosperity, while creating new jobs”. Mexican President Enrique Pena Nieto dubbed the deal a “win-win-win” agreement. US President Donald Trump tweeted: “The USMCA is a historic transaction!”

Hadrian Mertins-Kirkwood, a researcher with the Canadian Center for Policy Alternatives described the agreement as “a mashup between the old NAFTA and the new TPP”, the Trans Pacific Partnership, the 12-country multilateral trade deal from which Trump withdrew the United States.

“While issues like dispute settlement, dairy access and auto rules are dominating news coverage, there may be far more consequential details that emerge as analysts pore over the text in the coming days and weeks,” Mertins-Kirkwood told Al Jazeera.

Here’s a look at one of the key points of USMCA:

Sunset clause

While NAFTA had an indefinite lifespan, USMCA will expire in 16 years.

Mexico City, Ottawa, and Washington will conduct a joint review six years after the deal enters into force, with an option to extend the deal beyond the 16-year term.

The so-called sunset clause setting a shelf life for the deal was a priority for Trump, who initially wanted the deal to be recertified every five years.

SMT Newsroom



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