Passage of the United States-Mexico-Canada Agreement (USMCA) has recently been characterized by the media as a political issue, with President Trump pushing for a vote by year’s end and House Speaker Nancy Pelosi not committing to a timetable for calling the vote. The USMCA was originally signed by United States President Donald Trump, Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau on November 30, 2018. However, to become effective, the USMCA needs to be ratified, and the enabling legislation passed by the respective legislatures of each country. Mexico became the first country to ratify the agreement on June 19, 2019. The United States and Canada have not yet ratified the USMCA, with Canada indicating that it would only ratify the USMCA in tandem with the United States.
After the USMCA goes into effect, it will completely replace the North American Free Trade Agreement (NAFTA). Many of the USMCA’s provisions are carried over from NAFTA, however, there are several important differences, particularly with respect to digital trade and provisions affecting the dairy and automotive industries. The following highlights several important advantages of the USMCA, with many of these requirements being phased in over several years:
According to the United States International Trade Commission, the USMCA would increase employment by 176,000 jobs (a 0.12 percent increase) and increase U.S. real GDP by $68.2 billion (a 0.35 percent increase). Accordingly, the USMCA is generally receiving broad bipartisan support and the only question remains whether political considerations will further delay and perhaps jeopardize the ratification process.