After successful, last-minute negotiations, Canada and the United States agreed on September 30, 2018 to revise and modernize the North American Free Trade Agreement (NAFTA). The United States and Mexico previously announced their intent to proceed with a revised trade agreement (see Trump and Trade Update dated September 4). In remarks to the press, President Trump said, “Throughout the campaign, I promised to renegotiate NAFTA, and today we have kept that promise,” adding, “Once approved by Congress, this new deal will be the most modern, up-to-date, and balanced trade agreement in the history of our country, with the most advanced protections for workers ever developed.”
To augment the president’s announcement, the Office of the U.S. Trade Representative (USTR) released a series of fact sheets concerning the renegotiated trade agreement with Mexico and Canada:
- Rebalancing Trade to Support Manufacturing
- Strengthening North American Trade in Agriculture
- Market Access and Dairy Outcomes of the USMC Agreement
- Modernizing NAFTA into a 21st Century Trade Agreement
According to the USTR, these features are among the highlights of the new agreement:
- U.S. auto manufacturers and workers will benefit from new rules of origin requiring 75 percent of auto content to be produced in North America, and the new agreement will incentivize billions of dollars in additional U.S. vehicle and auto parts production.
- New trade rules will increase wages by requiring that 40-45 percent of auto content be performed by workers earning at least $16 per hour.
- For textiles, the agreement will promote greater use of Made-in-the-USA fibers, yarns and fabrics. It also establishes provisions for textile-specific verification and customs cooperation that provide new tools for strengthening customs enforcement and preventing fraud and circumvention.
- The new labor chapter is a core part of the agreement and will make the labor provisions fully enforceable.
- Canada will eliminate its “Class 7” program that allows low-priced dairy ingredients to undersell U.S. dairy products, and will provide new access for U.S. products, including fluid milk, cream, butter, skim milk powder, cheese and other dairy products. Canada will also eliminate its tariffs on whey and margarine.
- For poultry, Canada will provide new access for U.S. chicken and eggs and increase its access for turkey. Under this agreement, all other tariffs on agricultural products traded between the United States and Mexico will remain at zero.
- The new agreement includes a modernized, high-standard chapter that provides strong protection and enforcement of intellectual property rights, including 10 years of data protection for biologic drugs and a large scope of products eligible for protection.
- Strong measures on digital trade have been established, including rules to ensure data can be transferred cross-border and to minimize limits on where data can be stored.
- An updated financial services chapter includes commitments to liberalize financial services markets and facilitate a level playing field for U.S. financial institutions, investors and investments in financial institutions, and cross-border trade in financial services.
- The environment chapter includes enforceable environmental obligations, including obligations to combat trafficking in wildlife, timber and fish; strengthen law enforcement networks to stem such trafficking; and address pressing environmental issues such as air quality and marine litter.