USMCA vs NAFTA | the differences

November 30, 2018

The University of Illinois farmdocDaily team detailed what's different in the USMCA as compared to the NAFTA agreement it could replace if approved by the United States Congress. That won't happen until sometime, probably, late next year. 

USMCA doesn’t change the old tariff structure or the zero tariffs policy on most manufacturing and agricultural goods. There are large sections of the old NAFTA which were not touched. The most significant changes, including digital trade, were previously negotiated as part of the Trans-Pacific Partnership or TPP. The Trump Administration withdrew from it, but USDA officials have been signaling this trilateral trade agreement could pave the way to rejoining that effort to restrain China's influence. 

USMCA requires 75 percent of cars parts be manufactured in one of the three signatory countries to be exempt from tariffs. That's up from 62.5 percent. 45% of the car parts must be made by employees making at least $16 an hour and Mexican laborer will now have the right to unionize. It also extends labor protections to migrant workers and protects women from discrimination. The minimum wage is not binding in Canada or the United States and doesn't take effect in Mexico until 2023.

Canada has agreed to open 4% of its dairy market to farmers in the United States.