President Trump Signs USMCA

On Wednesday, January 29, 2020, President Trump signed into law the United States Mexico Canada Agreement (USMCA). The USMCA is an updated version of the of the nearly 25-year-old North American Free Trade Agreement (NAFTA). It includes major changes on automobiles and new policies on labor and environmental standards, intellectual property protections, and some digital trade provisions.

Here’s a brief overview of what’s in it:

• Country of origin rules: Automobiles must have 75 percent of their components manufactured in Mexico, the US, or Canada to qualify for zero tariffs (up from 62.5 percent under NAFTA).

• Labor provisions: 40 to 45 percent of automobile parts must be made by workers who earn at least $16 an hour by 2023. Mexico agreed to pass new labor laws to give greater protections to workers, including migrants and women.

• US farmers are allowed more access to the Canadian dairy market.

• Intellectual property and digital trade: The deal extends the terms of copyright to 70 years beyond the life of the author (up from 50). It also includes new provisions to address the digital economy, such as prohibiting duties on products such as music and e-books, and protections for internet companies so they’re not liable for content their users produce.

• Sunset clause: The agreement adds a 16-year sunset clause — meaning the terms of the agreement expire, or “sunset,” after 16 years. The deal is also subject to a review every six years, at which point the US, Mexico, and Canada can decide to extend the USMCA.

The USMCA won’t be finalized until Canada ratifies it. Canada’s parliament just started this process and is likely to pass the new trade legislation. The USMCA will go into effect 90 days after this occurs.

SGIA will continue to follow this developing issue. For more information or questions, please contact the SGIA’s Government Affairs department at
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