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

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 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.