USMCA vs NAFTA Assignment The North American Free Trade Agreement (NAFTA), the 1994 pact that governs more than $1.2 trillion worth of trade among the Unit

USMCA vs NAFTA Assignment The North American Free Trade Agreement (NAFTA), the 1994 pact that governs more than $1.2 trillion worth of trade among the United States, Canada and Mexico, has been updated on September 30, 2018. The three countries have agreed to replace it with a new plan, the United States – Mexico – Canada Agreement (USMCA) that changes multiple industries. USMCA will take effect on January 1, 2020, provided that it is ratified by the legislatures of the three countries.Please read the uploaded articles about USMCA on Blackboard. In your view, who would be the winners and who would be the losers from the new agreement? Please focus on specific U.S. businesses of your choice that, in your view, would be disadvantaged by the new USMCA regulations. What changes in their strategies can you propose?Length: Up to a page, single space. Office of the U.S. Trade Representative
Information about USMCA, the United States – Mexico – Canada Agreement
https://ustr.gov/
The Office of the United States Trade Representative (USTR) is an agency of more than 200
committed professionals with decades of specialized experience in trade issues and regions of the
world. The Office negotiates directly with foreign governments to create trade agreements, to
resolve disputes, and to participate in global trade policy organizations. Its representatives also
meet with governments, with business groups, with legislators and with public interest groups to
gather input on trade issues and to discuss the President’s trade policy positions. USTR was
created in 1962 and has offices in Washington, Geneva, and Brussels.
(1) USMCA Trade Factsheet on Modernizing NAFTA into a 21st
Century Trade Agreement
UNITED STATES–MEXICO–CANADA TRADE FACT SHEET
Modernizing NAFTA into a 21st Century Trade Agreement
https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/october/unitedstates%E2%80%93mexico%E2%80%93canada-trade-fa-1
The United States, Mexico, and Canada have reached an agreement to modernize the 24year-old NAFTA into a 21st century, high-standard agreement. The new United States-MexicoCanada Agreement (USMCA) will support mutually beneficial trade leading to freer markets,
fairer trade, and robust economic growth in North America.
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INTELLECTUAL PROPERTY
The United States, Mexico, and Canada have reached an agreement on a modernized, highstandard Intellectual Property (IP) chapter that provides strong and effective protection and
enforcement of IP rights critical to driving innovation, creating economic growth, and
supporting American jobs.
Key Highlights: Protections for United States Innovators and Creators
The new IP Chapter will:
Include 10 years of data protection for biologic drugs and a robust scope of products eligible
for protection.
Require full national treatment for copyright and related rights so United States creators are
not deprived of the same protections that domestic creators receive in a foreign market.
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Continue to provide strong patent protection for innovators by enshrining patentability
standards and patent office best practices to ensure that United States innovators, including
small- and medium-sized businesses, are able to protect their inventions with patents.
Include strong protection for pharmaceutical and agricultural innovators.
Require a minimum copyright term of life of the author plus 70 years, and for those works
with a copyright term that is not based on the life of a person, a minimum of 75 years after
first authorized publication.
Require strong standards against the circumvention of technological protection measures
that often protect works such as digital music, movies, and books.
Establish appropriate copyright safe harbors to provide protection for IP and predictability
for legitimate enterprises that do not directly benefit from the infringement, consistent with
United States law.
Provide important procedural safeguards for recognition of new geographical indications
(GIs), including strong standards for protection against issuances of GIs that would prevent
United States producers from using common names, as well as establish a mechanism for
consultation between the Parties on future GIs pursuant to international agreements.
Enhance provisions for protecting trademarks, including well-known marks, to help
companies that have invested effort and resources into establishing goodwill for their brands.
Key Achievement: Most Comprehensive Enforcement Provisions of Any Trade Agreement
For the first time, a trade agreement will require all of the following:
Ex officio authority for law enforcement officials to stop suspected counterfeit or pirated
goods at every phase of entering, exiting, and transiting through the territory of any Party.
Express recognition that IP enforcement procedures must be available for the digital
environment for trademark and copyright or related rights infringement.
Meaningful criminal procedures and penalties for unauthorized camcording of movies, which
is a significant source of pirated movies online.
Civil and criminal penalties for satellite and cable signal theft.
Broad protection against trade secret theft, including against state-owned enterprises.
Key Achievement: Strongest Standards of Protection for Trade Secrets of Any Prior FTA
In particular, the Chapter has the most robust protection for trade secrets of any prior United
States trade agreement. It includes all of the following protections against misappropriation
of trade secrets, including by state-owned enterprises: civil procedures and remedies,
criminal procedures and penalties, prohibitions against impeding licensing of trade secrets,
judicial procedures to prevent disclosure of trade secrets during the litigation process, and
penalties for government officials for the unauthorized disclosure of trade secrets.
DIGITAL TRADE
The new Digital Trade chapter contains the strongest disciplines on digital trade of any
international agreement, providing a firm foundation for the expansion of trade and
investment in the innovative products and services where the United States has a
competitive advantage.
Key Highlights of the Digital Trade Chapter
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The new Digital Trade chapter will:
Prohibit customs duties and other discriminatory measures from being applied to digital
products distributed electronically (e-books, videos, music, software, games, etc.).
Ensure that data can be transferred cross-border, and that limits on where data can be stored
and processed are minimized, thereby enhancing and protecting the global digital
ecosystem.
Ensure that suppliers are not restricted in their use of electronic authentication or electronic
signatures, thereby facilitating digital transactions.
Guarantee that enforceable consumer protections, including for privacy and unsolicited
communications, apply to the digital marketplace.
Limit governments’ ability to require disclosure of proprietary computer source code and
algorithms, to better protect the competitiveness of digital suppliers.
Promote collaboration in tackling cybersecurity challenges while seeking to promote industry
best practices to keep networks and services secure.
Promote open access to government-generated public data, to enhance innovative use in
commercial applications and services.
Limit the civil liability of Internet platforms for third-party content that such platforms host or
process, outside of the realm of intellectual property enforcement, thereby enhancing the
economic viability of these engines of growth that depend on user interaction and user
content.
DE MINIMIS
Key Achievement: Increased De Minimis Shipment Value Level
To facilitate greater cross-border trade, the United States has reached an agreement with
Mexico and Canada to raise their de minimis shipment value levels. Canada will raise its de
minimis level for the first time in decades, from C$20 to C$40 for taxes. Canada will also
provide for duty free shipments up to C$150. Mexico will continue to provide USD $50 tax free
de minimis and also provide duty free shipments up to the equivalent level of USD
$117. Shipment values up to these levels would enter with minimal formal entry procedures,
making it easier for more businesses, especially small- and medium-sized ones, to be a part of
cross-border trade. Canada will also allow a period of 90 days after entry for the importer to
make payment of taxes.
Increasing the de minimis level with key trading partners like Mexico and Canada is a
significant outcome for United States small- and medium-sized enterprises (SMEs). These
SMEs often lack resources to pay customs duties and taxes, and bear the increased
compliance costs that low, trade-restrictive de minimis levels place on lower-value
shipments, which SMEs often have due to their smaller trade volumes.
New traders, just entering Mexico’s and Canada’s markets, will also benefit from lower costs
to reach consumers. United States express delivery carriers, who carry many low-value
shipments for these traders, also stand to benefit through lower costs and improved
efficiency.
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FINANCIAL SERVICES
U.S. financial services firms provide services critical to every sector of the economy, including
small- and medium-sized businesses. The United States exported about $115 billion in
financial services in 2016, generating around a $41 billion surplus in trade in financial
services.
The updated Financial Services chapter includes commitments to liberalize financial services
markets and facilitate a level playing field for U.S. financial institutions, investors and
investments in financial institutions, and cross-border trade in financial services. The chapter
also preserves the discretion of financial regulators to ensure financial stability.
Key Achievement: Core Obligations to Prevent Discrimination Against U.S. Financial
Services Suppliers
The chapter includes core obligations, such as:
National treatment, to ensure that U.S. financial service suppliers receive the same treatment
as local suppliers.
Most-favored-nation treatment, to ensure that U.S. financial service suppliers receive the
same treatment as those from other countries.
Market access, which prohibits imposition of certain quantitative and numerical restrictions
that would limit the business of U.S. financial services suppliers.
Key Achievement: First Provision Against Local Data Storage Requirements
For the first time in any U.S. trade agreement, this deal includes a prohibition on local data
storage requirements in circumstances where a financial regulator has the access to data that
it needs to fulfill its regulatory and supervisory mandate.
Key Highlights Supporting Financial Services
The new Financial Services chapter will include:
Updated provisions to allow for the cross-border transfer of data and an updated market
access obligation.
The most robust transparency obligations of any U.S. trade agreement, to ensure good
regulatory practices in government licensing and other market access authorizations.
A separate annex on commitments relating to cross-border trade, including application of the
national treatment and market access obligation to an expanded list of cross-border services,
such as portfolio management, investment advice, and electronic payment services.
Specific procedures related to investor-State dispute settlement claims with Mexico,
including provisions regarding expertise of arbitrators and a special procedural mechanism
to facilitate the application of the prudential exception and other exceptions.
CURRENCY
Key Achievements: High-Standard Policy and Transparency Commitments, with Robust
Accountability Mechanisms
The renegotiated agreement includes a chapter on Macroeconomic Policies and Exchange
Rate Matters, with new policy and transparency commitments on currency issues. The
chapter will address unfair currency practices by requiring high-standard commitments to
refrain from competitive devaluations and targeting exchange rates, while significantly
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increasing transparency and providing mechanisms for accountability. This approach is
unprecedented in the context of a trade agreement, and will help reinforce macroeconomic
and exchange rate stability.
LABOR
One of President Trump’s principal objectives in the renegotiation is to ensure the agreement
benefits American workers. The United States, Mexico, and Canada have agreed to a Labor
chapter that brings labor obligations into the core of the agreement, makes them fully
enforceable, and represents the strongest provisions of any trade agreement.
Key Achievement: Worker Representation in Collective Bargaining
The Labor chapter includes an Annex on Worker Representation in Collective Bargaining in
Mexico, under which Mexico commits to specific legislative actions to provide for the effective
recognition of the right to collective bargaining.
Key Achievement: Labor Rights Recognized by the International Labor Organization
The Labor chapter requires the Parties to adopt and maintain in law and practice labor rights
as recognized by the International Labor Organization, to effectively enforce their labor laws,
and not to waive or derogate from their labor laws.
Additionally, the chapter includes new provisions to take measures to prohibit the
importation of goods produced by forced labor, to address violence against workers
exercising their labor rights, and to ensure that migrant workers are protected under labor
laws.
Key Achievement: New Labor Value Content Rule
To support North American jobs, the deal contains new trade rules of origin to drive higher
wages by requiring that 40-45 percent of auto content be made by workers earning at least
USD $16 per hour.
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ENVIRONMENT
The United States, Mexico, and Canada have agreed to the most advanced, most
comprehensive, highest-standard chapter on the Environment of any trade agreement. Like
the Labor chapter, the Environment chapter brings all environmental provisions into the core
of the agreement and makes them enforceable.
Key Achievement: Most Comprehensive Set of Enforceable Environmental Obligations
The Environment chapter includes the most comprehensive set of enforceable environmental
obligations of any previous United States agreement, including obligations to combat
trafficking in wildlife, timber, and fish; to strengthen law enforcement networks to stem such
trafficking; and to address pressing environmental issues such as air quality and marine litter.
Environment obligations include:
Prohibitions on some of the most harmful fisheries subsidies, such as those that benefit
vessels or operators involved in illegal, unreported, and unregulated (IUU) fishing.
New protections for marine species like whales and sea turtles, including a prohibition on
shark-finning and commitment to work together to protect marine habitat.
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Obligations to enhance the effectiveness of customs inspections of shipments containing wild
fauna and flora at ports of entry, and ensure strong enforcement to combat IUU fishing.
First-ever articles to improve air quality, prevent and reduce marine litter, support
sustainable forest management, and ensure appropriate procedures for environmental
impact assessments.
Robust and modernized mechanisms for public participation and environmental
cooperation.
(2) USMCA Trade Factsheet on Agriculture
UNITED STATES–MEXICO–CANADA TRADE FACT SHEET
Strengthening North American Trade in Agriculture
https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/october/unitedstates%E2%80%93mexico%E2%80%93canada-trade-fa-2
The United States, Mexico and Canada have reached an agreement to benefit American
farmers, ranchers, and agribusinesses. While agriculture has generally performed well under
NAFTA, important improvements in the agreement will enable food and agriculture to trade
more fairly, and to expand exports of American agricultural products.
Key Achievement: Expanded Market Access for American Food and Agricultural
Products.
America’s dairy farmers will have new export opportunities to sell dairy products into
Canada. Canada will provide new access for United States products including fluid milk,
cream, butter, skim milk powder, cheese, and other dairy products. It will also eliminate its
tariffs on whey and margarine. For poultry, Canada will provide new access for United States
chicken and eggs and increase its access for turkey. Under a modernized agreement, all other
tariffs on agricultural products traded between the United States and Mexico will remain at
zero.
Key Achievement: Canada’s Milk Classes 6 and 7 to Be Eliminated
The top priority for America’s dairy industry in this negotiation has been for Canada to
eliminate its program that allows low priced dairy ingredients to undersell United States
dairy sales in Canada and in third country markets. As a result of the negotiation, Canada will
eliminate what is known as its milk classes 6 and 7. In addition, Canada will apply export
charges to its exports of skim milk powder, milk protein concentrates and infant formula at
volumes over agreed threshold, which will allow United States producers to expand sales
overseas.
Key Achievement: Setting Unprecedented Standards for Agricultural Biotechnology
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For the first time, the agreement specifically addresses agricultural biotechnology to support
21st century innovations in agriculture. The text covers all biotechnologies, including new
technologies such as gene editing, whereas the Trans-Pacific Partnership text covered only
traditional rDNA technology. Specifically, the United States, Mexico, and Canada have agreed
to provisions to enhance information exchange and cooperation on agricultural
biotechnology trade-related matters.
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Key Achievements: Significant Commitments to Reduce Trade Distorting Policies,
Improve Transparency, and Ensure Non-Discriminatory Treatment for Agricultural
Product Standards
Building on NAFTA, the United States, Mexico, and Canada agreed to work together in other
fora on agriculture matters, improve transparency and consultations on matters affecting
trade among the countries.
The United States, Mexico, and Canada agreed to several provisions to reduce the use of
trade distorting policies, including:
To not use export subsidies or World Trade Organization (WTO) special agricultural safeguards
for products exported to each other’s market.
Improved commitments to increase transparency and consultation regarding the use of export
restrictions for food security purposes.
If supporting producers, to consider using domestic support measures that have minimal or no
trade distorting or production effects and ensure transparency of domestic support programs.
Canada and the United States also agreed to strong rules to ensure tariff-rate quotas are
administered fairly and transparently to ensure the ability of traders to fully use them.
Key Achievement: Fair Treatment for Quality Requirements for Wheat and other
Agricultural Products
Canada has agreed to grade imports of United States wheat in a manner no less favorable
than it accords Canadian wheat, and to not require a country of origin statement on its
quality grade or inspection certificate. Canada and the United States also agreed to discuss
issues related to seed regulatory systems.
To facilitate the marketing of food and agricultural products, Mexico and the United States
agreed that grading standards and services will be non-discriminatory for all agricultural
goods and will establish a dialogue to discuss grading and quality trade related matters.
Key Achievement: Enhanced Rules for Science-Based Sanitary and Phytosanitary
Measures
In the Sanitary and Phytosanitary (SPS) Measures chapter, the United States, Mexico, and
Canada have agreed to strengthen disciplines for science-based SPS measures, while
ensuring Parties maintain their sovereign right to protect human, animal, and plant life or
health. Provisions include increasing transparency on the development and implementation
of SPS measures; advancing science-based decision making; improving processes for
certification, regionalization and equivalency determinations; conducting systems-based
audits; improving transparency for import checks; and working together to enhance
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compatibility of measures. The new agreement would establish a new mechanism for
technical consultations to resolve issues between the Parties.
Key Achievement: New Disciplines on Geographic Indications
The Parties agreed to provide important procedural safeguards for recognition of new
geographical indications (GIs), including strong standards for protection against issuances of
GIs that would prev…
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