On June 1, 2020, the USTR Office issued the uniform rules which are the last hurdle before the implementation of the agreement on July 1, 2020. The Trump administration`s office proposed the USMCA citing new measures for digital commerce, strengthening the protection of trade secrets and adapting the rules of origin of automobiles among the benefits of the trade agreement.  To see the full text of the agreement between the United States, Mexico and Canada, click here. In a major concession to Democrats, the Trump administration has agreed to support some protective measures for a class of drugs called advanced and very expensive drug biologists. The final agreement nullifies a provision that, for ten years, provided protection for drugs from cheaper alternatives in both Canada and Mexico. The agreed text of the agreement was signed by the heads of state and government of the three countries on November 30, 2018, as an incidental event at the 2018 G20 summit in Buenos Aires, Argentina.  The English, Spanish and French versions will also be binding and the agreement will take effect after ratification by the three states through the adoption of enabling laws.  The North American Free Trade Agreement (NAFTA), signed by Prime Minister Brian Mulroney, Mexican President Carlos Salinas and U.S. President George H.W. Bush, came into force on January 1, 1994. NAFTA has created economic growth and a rising standard of living for the people of the three member countries. By strengthening trade and investment rules and procedures across the continent, Nafta has proven to be a solid foundation for building Canada`s prosperity.
NAFTA replaced Canada-U.S. Free Trade Agreement (CUFTA). Negotiations on CUFTA began in 1986 and the agreement entered into force on 1 January 1989. The two nations agreed on a landmark agreement that put Canada and the United States at the forefront of trade liberalization. For more information, visit the Canada-U.S. Free Trade Agreement information page. In addition, there is a provision that the agreement itself must be reviewed every six years by the three nations, with a 16-year forfeiture clause. The contract may be renewed for a period of 16 years during the six-year review period.  The introduction of the Sunset clause gives more control in the organization of the future of the USMCA in the hands of national governments.
However, there is concern that this could lead to greater uncertainty. Sectors such as automotive require significant investment in cross-border supply chains.  Given the dominant position of the U.S. consumer market, it is likely that this will put pressure on companies to establish more production in the United States, with a higher probability of higher production costs for these vehicles.  NAFTA required automakers to produce 62.5 per cent of the vehicle`s content in North America in order to qualify for a zero tariff. With the new agreement, this threshold will be increased to 75 per cent over time. This should force automakers to buy fewer parts for a “Assembled in Mexico” car in Germany, Japan, South Korea or China. The pact also requires that 70 per cent of a vehicle`s steel and aluminum come from North America, with steel both melted and poured onto the continent.