Us Mexico Trade Agreement Details
The US-Mexico Trade Agreement Details Unveiled: What You Need to Know
In August 2018, President Donald Trump announced that the US had reached an agreement with Mexico to revamp the North American Free Trade Agreement (NAFTA), which had been in place since 1994. The new agreement, dubbed the United States-Mexico Trade Agreement (USMTA), aimed to modernize the terms of trade between the two countries. Here are some key details you need to know about the USMTA.
1. Sunset Clause: The USMTA includes a “sunset clause” that automatically terminates the agreement after 16 years unless both parties agree to renew it. This was a contentious issue for Mexico, which preferred a longer-term agreement.
2. Auto Industry: The USMTA includes new rules for the auto industry that require a higher percentage of a vehicle`s content to be made in North America to qualify for duty-free treatment. A minimum of 75% of the vehicle`s content must be made in North America, up from 62.5% under NAFTA. Additionally, 40-45% of the content must be made by workers earning at least $16 per hour.
3. Labor Provisions: The USMTA includes new labor provisions that require Mexico to enact new laws to protect workers` rights to unionize and raise the minimum wage. Mexico also agreed to allow independent labor inspections, which will be funded by the US.
4. Intellectual Property: The USMTA includes new provisions on intellectual property rights, including expanding patent protections for biologic drugs and increasing copyright protections for digital music and movies.
5. Agriculture: The USMTA includes new rules for agriculture, including eliminating tariffs on a number of agricultural products and increasing market access for U.S. dairy products in the Mexican market.
6. Energy: The USMTA includes provisions on energy, including ensuring fair treatment for U.S. companies operating in Mexico`s energy sector.
7. Dispute Resolution: The USMTA replaces NAFTA`s dispute resolution mechanism with a new system that provides more options for resolving disputes.
Overall, the USMTA represents a significant shift in trade policy for the U.S. and reflects President Trump`s desire to renegotiate longstanding trade agreements. While some have criticized the agreement for not going far enough, others have praised it for addressing issues that were not covered under NAFTA. As the details of the USMTA continue to be implemented, it will be interesting to see how it impacts trade between the U.S. and Mexico.