USMCA Approved by U.S. Congress and Expected to Become Law Soon

January 2020

On January 16, 2020, the U.S. Senate passed the United States-Mexico-Canada Agreement (USMCA) by a vote of 89-10. The agreement was previously passed by the U.S. House of Representatives by a vote of 385-41 in December of 2019. President Trump is expected to sign the bill into law soon.
However, Canada must ratify the USMCA before it can take effect and is expected to hold a vote in the House of Commons once it reconvenes in late January. Mexico has already approved the recent modifications made by the U.S. 
The White House released a statement of administration policy, stating that the USMCA agreement will replace the 25-year-old North America Free Trade Agreement (NAFTA) aimed to rebalance trade in North America and modernize the trading relationships. The complete text of the White House statement can be read here.
The key changes of the USMCA include:
  • Automotive goods: USMCA rules of origin impose a labor value content rule requiring at least 40-45 percent of auto content to be produced at plants or facilities with an average wage of at least $16 per hour. In addition, the regional content value of vehicles will increase each of the next three years, to a final 75 percent.
  • Agricultural products: The USMCA increases market access into Canada for American dairy, poultry, and eggs; enhances information exchanges and cooperation regarding agricultural biotechnology trade-related matters; and improves transparency and cooperation to ensure non-discriminatory treatment for agricultural product standards.
  • Intellectual property: The USMCA provides enhanced protection and enforcement of intellectual property rights deemed critical to driving innovation, creating economic growth, and supporting American jobs.
  • Financial services: The USMCA includes commitments to liberalize financial services markets and increase cross-border trade in financial services.
  • Currency: The USMCA includes a chapter on currency that targets competitive devaluations and includes strong transparency provisions enforceable through dispute settlement.
For more information on the USMCA, please contact a BDO Customs and International Trade Services  professional.


Damon V. Pike
  James Pai
Senior Manager

Yun Gao
  Jay Cho