USMCA hits one-year mark

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Global Trade

Back on July 1, 2020, the United States-Mexico-Canada Agreement (USMCA) went into effect.

The deal, reached during the Trump administration, began with negotiations aimed at the modernization of the 1994 North American Free Trade Agreement (NAFTA). Those negotiations kicked off in August 2017.

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A year on: USTR remarks on USMCA

USMCA

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Fast forward a year after the USMCA went into effect July 1, 2020, and United States Trade Representative Katherine Tai offered remarks on the trade deal.

“For years, there was broad consensus that the NAFTA needed to be updated and remedied to meet the needs of the 21st century and correct for flaws and breakdowns in the agreement that developed over time,” Tai said. “That view was shared by the business community, labor unions, and Members of Congress from both parties.

“The USMCA as originally negotiated made some important strides towards achieving the goals of updating and remedying the NAFTA, but still fell short of the standards required to win Congressional support. Only with close partnership with businesses and labor organizations, and after a most unlikely ‘collaboration’ between congressional Democrats and the Trump Administration, did the re-negotiated USMCA emerge as a better deal for workers and a new model for trade agreements able to secure a broad base of support.”

Bipartisan praise

Meanwhile, with the concept of bipartisan agreement in the headlines regarding the Biden administration’s infrastructure plan, both sides of the aisle have touted the bipartisan support underpinning the USMCA (which passed with a Republican in the White House, a Republican-majority Senate and a Democrat-majority House).

“Throughout the negotiations of the United States-Mexico-Canada Agreement (USMCA), Republicans and Democrats worked together in good faith to help working families, blue-collar workers, and job creators by advancing trade policies in a bipartisan way,” the House Ways and Means Republicans said in a release today.

“Both parties agreed to key provisions that modernized the outdated rules governing North American trade in an innovative way that puts American farmers, ranchers, manufacturers, and workers on a more level playing field.”

Furthermore, they called USMCA an “agreement for the 21st century.” In addition, the Ways and Means Republicans noted the deal included a “first-of-its-kind digital chapter” (Chapter 19 in the agreement).

“No Party shall impose customs duties, fees, or other charges on or in connection with the importation or exportation of digital products transmitted electronically, between a person of one Party and a person of another Party,” Article 19.3 of the chapter says.

In addition, the chapter calls for each party to endeavor to “avoid unnecessary regulatory burden on electronic transactions.”

Tai touts USMCA standards, need for increased cooperation on forced labor

Among its provisions, Tai touted what she called the USMCA’s “strongest labor and environmental standards in any agreement ever,” its labor enforcement mechanism. In addition, she noted its “critical changes to intellectual property provisions designed to increase access to affordable medicine for regular people.”

The parties convened the first meeting of the USMCA Labor Council earlier this week. The USMCA’s Environment Committee met for the first time June 17 to discuss the environment chapter of the agreement (Chapter 24).

However, in touting the countries’ cooperation on the deal and enforcement of its provisions, Tai said the countries will need to continue to tackle forced labor.

“A good next step in this increased cooperation can be on the issue of forced labor,” she said. “The USMCA includes a strong obligation to prohibit the importation of goods produced with forced labor. Working together to address this critical economic and moral issue would send a powerful message to the world.”

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