The Canada-U.S.-Mexico Agreement (CUSMA), also known as the United States-Mexico-Canada Agreement (USMCA), is a free trade agreement between the three North American countries, set to replace the North American Free Trade Agreement (NAFTA). The agreement was signed by the leaders of the three countries on November 30, 2018, and came into force on July 1, 2020.
CUSMA is aimed to modernize and enhance trade relations between the three countries, promoting free and fair trade, and creating jobs and economic growth. It covers a wide range of areas, including intellectual property, digital trade, labor standards, environmental protection, and dispute settlement.
One of the key changes in CUSMA is the rules of origin for the automotive sector. Under NAFTA, 62.5% of a car’s content had to be made in North America to qualify for duty-free treatment. CUSMA increases that requirement to 75%, with a new requirement that 40-45% of the car must be made by workers earning at least $16 per hour. This is expected to promote higher wages and better working conditions for automotive workers in all three countries.
CUSMA also includes provisions to protect intellectual property, such as patents, trademarks, and copyrights. It extends the protection for biologic drugs to a period of 10 years, providing an incentive for pharmaceutical companies to invest in research and development. The agreement also includes provisions to protect digital trade, prohibiting customs duties on electronic transmissions and protecting cross-border data flows.
In terms of labor standards, CUSMA requires each country to adopt and maintain laws and regulations that provide for the right to collective bargaining, prohibit forced labor and the worst forms of child labor, and provide for acceptable working conditions. The agreement also includes a Rapid Response Mechanism that allows for the investigation of labor complaints in a timely and effective manner.
Environmental protection is another area addressed in CUSMA. The agreement recognizes the importance of addressing environmental issues such as air and water pollution, conservation of biological diversity, and the management of hazardous waste. It also includes provisions to promote conservation and sustainable use of fisheries resources.
Overall, the Canada-U.S.-Mexico Agreement represents a modernization and enhancement of the North American Free Trade Agreement. The agreement is expected to promote free and fair trade, and create jobs and economic growth in all three countries.