Detail - 2019

December 19, 2019 - USMCA (United States, Mexico, Canada Agreement) trade deal passed by the House of Representatives, replacing NAFTA with agreement with fairer provisions for the United States between the North American nations of Canada, Mexico, and the United States. By the end of the year, Mexico has also passed the treaty with pending status still in Canada.



It had been the darling of both political parties when negotiated and passed from 1992-1994, but the opponents of NAFTA, the North American Free Trade Agreement, between the United States, Mexico, and Canada, had been proven predominantly correct. Oh, there are some who parse the numbers associated with North American trade between 1994 and 2019 and state that it was a positive for all three sides, even though perhaps tilted in directions away from the United States. However, there were many who thought the giant sucking sound of jobs south, and factories south, that had been predicted by Third Party Texan Ross Perot in the 1992 Presidential election, was not worth the benefits, and that the trade agreement needed to be adjusted.

One of those who thought that adjustments were needed was President Trump, who had campaigned on a promise to renegotiate previous trade agreements around the world since the announcement of his candidacy for the White House in June 2015. His belief was that a more fair agreement that would bring manufacturing jobs back to the United States could be achieved. Upon his election, a renegotation of the terms of NAFTA became a prime objective.

Negotiation and Passage

Negotations were announced on May 18, 2017 with a formal effort begun on August 16, 2017. They continued until the fall of 2018 with a draft of the final bill constructed on September 30, 2018. There was a focus on dairy production, aluminum, a push for domestic USA production of cars, intellectual property, and environmental rights. Negotiations had not always gone smoothly, with threats of tariffs and bilateral deals in the offing.

"The new North American Free Trade Agreement maintains stability for Canada's entire economy -- stability that's essential for the millions of jobs and middle-class families across the country that rely on strong, reliable trading relationships with our closest neighbors. That's why I'm here today. The new agreement lifts the risk of serious economic uncertainty that lingers throughout a trade renegotiation process," Canadian Prime Minister Justin Trudeau, November 30, 2018. (Factbase.se)

"During the last day of my administration as President, I am honored to be here standing in this signing ceremony of the new trade agreement between Mexico, the U.S., and Canada. The agreement that we will sign today expresses the shared will by our three nations to work together toward the wellbeing and prosperity of each one of our societies," Mexican President Enrique Pena Nieto, November 30, 2018. (Factbase.se)

"USMCA is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our farmers and manufacturers, reduces trade barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world," President Donald J. Trump, date unkonwn (ustr.gov).

When the agreement was signed on November 30, 2018 between President Trump, Canadian Prime Minister Justin Trudeau, and Mexican President Enrique Pena Nieto in the G2 Summit in Buenos Aires, there was still a good way to go until all three nations could ratify the treaty within their legislative branches. A revised version was updated on December 10, 2018. The United States House of Representatives agreed to the measure on December 19, 2019. The vote was bipartisan, with 193 Democrats and 192 Republicans voting for, and only 38 Democrats, 2 Republicans, and 1 independent voting against. It passed the U.S. Senate on January 16, 2020, 38 Democrats and 51 Republicans voting for, 8 Democrats, 1 Republican, and 1 Independent Voting against. President Trump signed the U.S. side of the enabling legislation and ratification on January 29, 2020.

Ratification in Mexico and Canada was completed by March 13, 2020. Mexico had ratified the revised treaty on December 12, 2019. Canada was the final nation to officially ratify the document, on March 13, 2020, and announced to the USA and Mexico on April 3, 2020 that the final ratification was completed. The USMCA will take effect on July 1, 2020. It is scheduled to expire after sixteen years and can be renewed.

Text, USMCA Preamble

AGREEMENT BETWEEN THE UNITED STATES OF AMERICA, THE UNITED MEXICAN STATES, AND CANADA

PREAMBLE

The Government of the United States of America, the Government of the United Mexican States, and the Government of Canada (collectively "the Parties"), resolving to:

STRENGTHEN ANEW the longstanding friendship between them and their peoples, and the strong economic cooperation that has developed through trade and investment;

FURTHER strengthen their close economic relationship;

REPLACE the 1994 North American Free Trade Agreement with a 21st Century, high standard new agreement to support mutually beneficial trade leading to freer, fairer markets, and to robust economic growth in the region;

PRESERVE AND EXPAND regional trade and production by further incentivizing the production and sourcing of goods and materials in the region;

ENHANCE AND PROMOTE the competitiveness of regional exports and firms in global markets, and conditions of fair competition in the region;

RECOGNIZE that small and medium-sized enterprises (SMEs), including micro-sized enterprises, contribute significantly to economic growth, employment, community development, youth engagement and innovation, and seek to support their growth and development by enhancing their ability to participate in and benefit from the opportunities created by this Agreement;

ESTABLISH a clear, transparent, and predictable legal and commercial framework for business planning, that supports further expansion of trade and investment;

FACILITATE trade between the Parties by promoting efficient and transparent customs procedures that reduce costs and ensure predictability for importers and exporters, and encourage expanding cooperation in the area of trade facilitation and enforcement;

RECOGNIZE their inherent right to regulate and resolve to preserve the flexibility of the Parties to set legislative and regulatory priorities, and protect legitimate public welfare objectives, such as health, safety, environmental protection, conservation of living or non-living exhaustible natural resources, integrity and stability of the financial system, and public morals, in accordance with the rights and obligations provided in this Agreement;

FACILITATE trade in goods and services between the Parties by preventing, identifying, and eliminating unnecessary technical barriers to trade, enhancing transparency, and promoting good regulatory practices;

PROTECT human, animal, or plant life or health in the territories of the Parties and advance science-based decision making while facilitating trade between them;

ELIMINATE obstacles to international trade which are more trade-restrictive than necessary;

PROMOTE high levels of environmental protection, including through effective enforcement by each Party of its environmental laws, as well as through enhanced environmental cooperation, and further the aims of sustainable development, including through mutually supportive trade and environmental policies and practices;

PROMOTE the protection and enforcement of labor rights, the improvement of working conditions, the strengthening of cooperation and the Parties' capacity on labor issues;

RECOGNIZE that the implementation of government-wide practices to promote regulatory quality through greater transparency, objective analysis, accountability, and predictability can facilitate international trade, investment, and economic growth, while contributing to each Party's ability to achieve its public policy objectives;

PROMOTE transparency, good governance and the rule of law, and eliminate bribery and corruption in trade and investment;

RECOGNIZE the importance of increased engagement by indigenous peoples in trade and investment;

SEEK to facilitate women's and men's equal access to and ability to benefit from the opportunities created by this Agreement and to support the conditions for women's full participation in domestic, regional, and international trade and investment;

RECOGNIZE the important work that their relevant authorities are doing to strengthen macroeconomic cooperation; and

ESTABLISH an Agreement to address future trade and investment challenges and opportunities, and contribute to advancing their respective priorities over time, HAVE AGREED as follows:

The agreement goes forward with a mind-numbering array of details, most of which have consequences that the negotiators likely have no idea about, not unlike the previous NAFTA deal. Sorry opponents and proponents, but such is the way of treaties. How many details? Take a look at the Table of Contents ...

Table of Contents

A. United States-Mexico-Canada Agreement Text - Chapters

USMCA Protocol

0. Preamble
1. Initial Provisions and General Definitions
2. National Treatment and Market Access for Goods

US Tariff Schedule
US Tariff Schedule Appendix 1
MX Tariff Schedule
??MX Tariff Schedule Appendix 1
CA Tariff Schedule
CA Tariff Schedule Appendix 1

3. Agriculture
4. Rules of Origin
5. Origin Procedures
6. Textiles and Apparel
7. Customs Administration and Trade Facilitation
8. Recognition of Mexican Ownership of Hydrocarbons
9. Sanitary and Phytosanitary Measures
10. Trade Remedies
11. Technical Barriers to Trade
12. Sectoral Annexes
13. Government Procurement
14. Investment
15. Cross-Border Trade in Services
16. Temporary Entry
17. Financial Services
18. Telecommunications
19. Digital Trade
20. Intellectual Property
21. Competition Policy
22. State-Owned Enterprises
23. Labor
24. Environment
25. Small and Medium-Sized Enterprises
26. Competitiveness
27. Anticorruption
28. Good Regulatory Practices
29. Publication and Administration
30. Administrative and Institutional Provisions
31. Dispute Settlement
32. Exceptions and General Provisions
33. Macroeconomic Policies and Exchange Rate Matters
34. Final Provisions

B. Agreement Annexes

Annex I Investment and Services Non-Conforming Measures - Explanatory Note
Annex I Investment and Services Non-Conforming Measures - Mexico
Annex I Investment and Services Non-Conforming Measures - United States
Annex I Investment and Services Non-Conforming Measures - Canada
Annex II Investment and Services Non-Conforming Measures - Explanatory Note
Annex II Investment and Services Non-Conforming Measures - Mexico
Annex II Investment and Services Non-Conforming Measures - United States
Annex II Investment and Services Non-Conforming Measures - Canada
Annex III - Financial Services Non-Conforming Measures - Explanatory Note
Annex III - Financial Services Non-Confirming Measures - Mexico
Annex III - Financial Services Non-Conforming Measures - United States
Annex III - Financial Services Non-Conforming Measures - Canada
Annex IV - SOEs Non-Conforming Activities

C. Side Letters

1. MX-US Side Letter on 232 Dispute Settlement
2. MX-US Side Letter on 232 Process
3. MX-US Side Letter on 232
4. MX-US Side Letter on Auto Safety Standards
5. MX-US Side Letter on Cheeses
6. MX-US Side Letter on Distilled Spirits
7. MX-US Side Letter on Prior Users
8. CA-US Side Letter on 232 Process
9. CA-US Side Letter on Wine
10. CA-US Side Letter on Natural Water Resources
11. CA-US Side Letter on Energy
12. CA-US Side Letter on Research and Development Expenditures
13. Side Letter Text on 232 CA-US Response
14. Side Letter on the Ramsar Convention
15. Side Letter Regarding Article 23.6
16. Environment Cooperation and Customs Verification Agreement

For a full view of the entire United States-Mexico-Canada Trade Agreement, you can visit the website of the United States Trade Representative.

Photo above: President Donald J. Trump, Canadian Prime Minister Justin Trudeau, and Mexican President Enrique Pena Nieto signing the initial USMCA document on November 30, 2018 at the G2 Summit in Buenos Aires, 2018, Shealah Craighead, Executive Office of the President of the United States. Courtesy Wikipedia Commons. Below: Montage of the Third Presidential Debate (Bill Clinton, George Bush, Ross Perot), October 19, 1992, George Bush Presidential Library and Museum, and the NAFTA flag, 2009. Courtesy Wikipedia Commons. Info source: United States Trade Representative, ustr.gov; Factbase, factbase.se; Wikipedia Commons.

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President Barack Obama. Courtesy Wikipedia Commons.

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