Members of the Montana and North Dakota Congressional delegation were among those present for a signing ceremony for USMCA, otherwise known as NAFTA 2.0. While many aspects of the new trade deal are the same, there are some key differences in the 2,082-page pact. Here are six.
1. Revving up auto manufacturing
USCMCA requires at least 75 percent of a vehicle’s parts to be made in one of the three member countries to remain tariff-free when moving across any of the Canada-Mexico-U.S. borders. That’s up from the previous rule, which required 62.5 percent. It also required wages of at least $16 per hour for more of these vehicle parts. That should help alleviate pressure on U.S. jobs, due to much lower wages in Mexico. That should add between 28,000 to 76,000 jobs in the auto industry over five to six years, according to various estimates. Meanwhile, GM has already, in anticipation of the changes, moved production of a Chevrolet electric vehicle back to the U.S.
2. More teeth in labor laws
The Democrats held up USMCA for almost a year to fight for enforceable labor laws that would create a more level playing field for American workers. An interagency committee will now be able to monitor Mexico’s labor reforms and compliance with labor obligations. A “rapid response” panel can also review individual facilities for violations, and levy duties or penalties on products from those facilities. The labor provisions won USMCA the backing of the AFL-CIO, one of the largest unions in the United States.
3. Milk matters
Milk and other milk products will be able to more freely cross the Canadian-U.S. border, with both countries agreeing to allow more of the other country’s dairy products in their countries. Canada will also accept more poultry and eggs, while the U.S. will accept more peanuts and peanut products, as well as a limited amount of sugar. Agricultural products were at zero tariffs in NAFTA, and will remain so in USMCA.
4. U.S. Wheat gets wings
Under Canada’s old system, all U.S. wheat was considered feed, even high-quality protein wheat. That’s gone away under USMCA.
5. Digital divides no more
Digital trade wasn’t part of NAFTA at all, so this part of USMCA charts brand new territory. Whether the provisions will result in new jobs is unclear, but there are several business-friendly aspects. For example, customs duties on digital products distributed electronically are prohibited, and limits on where data can be stored have been minimized. Governments also cannot require disclosure of proprietary computer source code and algorithms. Civil liabilities for third-party content is also limited.
6. Environmental provisions
While the agreement didn’t go far enough to suit environmental groups like the Sierra Club, USMCA does include $600 million to address environmental problems in the region that spill over the border, and it removes a requirement to prove that a violation affects trade. It also prohibits harmful fisheries subsidies that benefitted vessels or operators involved in illegal, unreported or unregulated fishing and includes new protections for marine species like whales and sea turtles.