The new NAFTA agreement, also known as the USMCA (United States-Mexico-Canada Agreement), has been a hot topic in recent months, especially in Canada, as the country`s economy heavily relies on trade with its neighbors to the south. The agreement was signed in 2018, but it took until 2020 for it to be ratified by all three countries.
The new NAFTA agreement includes several changes from the original agreement, including updates to intellectual property laws, auto industry regulations, and labor provisions. One of the most significant changes is the increase in the percentage of North American content required for a vehicle to be considered “made in North America.” Under the previous NAFTA agreement, 62.5% of a vehicle`s content had to be made in North America to qualify, but under the new agreement, that number has increased to 75%.
Another significant change is the “sunset clause,” which means that the agreement will expire after 16 years and will be subject to review every six years. This gives each country the opportunity to renegotiate or withdraw from the agreement after each review.
In terms of trade between Canada and the United States, the new agreement maintains most of the current trade arrangements, but with a few notable changes. For one, Canada has agreed to increase its tariff-free dairy quota for American farmers. Additionally, the United States has agreed to provide increased access to its market for Canadian wheat, poultry, and eggs.
Overall, the new NAFTA agreement is seen as a positive development for Canada, as it maintains the country`s strong trade relationship with the United States while also making necessary updates and improvements. The agreement is expected to have a positive impact on the Canadian economy, particularly in the auto industry and agricultural sector.
Despite the positive reception of the new NAFTA agreement, it is important to note that there are still some potential challenges and uncertainties, particularly with regard to the ongoing trade tensions between the United States and China. However, for now, Canada can rest assured that its important trading relationship with the United States remains strong and secure.