Thursday’s Senate passage of the U.S.-Mexico-Canada Agreement (USMCA) means the 26-year-old NAFTA will soon be gone. President Donald Trump is expected to give final approval.
So now that it’s almost certain to guide trade between the three countries for years to come, businesses should know what it does. The Congressional Research Service published a brief on it earlier this week. Here are some of the highlights:
- USMCA raised the de minimis customs threshold for duty-free treatment to $117 for Canada and Mexico.
- USMCA added more enforceable labor provisions and an annex with Mexican commitments to reform its labor laws and practices.
- A new “rapid-response” mechanism would provide for an independent panel investigation at “covered facilities,” as opposed to a government inspection, for suspected denial of the right of free association and collective bargaining.
- USMCA-implemented legislation creates a new interagency committee and reporting requirements to Congress on Mexico’s implementation of labor reforms.
- A new Interagency Environment Committee for Monitoring and Enforcement will police enforcement of environmental provisions similarly to the monitoring unit for labor issues.
- USMCA revised the environment chapter to expand the coverage, enforcement, and monitoring functions of the agreement.
- 70% of a motor vehicle’s steel and aluminum must originate in North America to receive duty-free benefits. The revisions state that steel must be melted and poured within North America to be considered as originating, beginning at year 7 of the agreement.