Developed economies - USMCA

what does USMCA stand for?

United States-Mexico-Canada Agreement

when was the USMCA introduced?

2018 new trade agreement to replace NAFTA

what is the USMCA?

One of the largest free trade zones

• 510 million population

• $31 trillion GDP

• 30% of the global economy

what was NAFTA blamed for?

• the exports of the US manufacturing to Mexico and the accompanying loss of jobs and suppression of wages amongst US workers

• US wanted to replace NAFTA

what does USMCA have that NAFTA did not?

• provisions on digital trade

• intellectual property rights

• labour and environmental standards

what does the USMCA include?

• New provisions on rules of origin for cars - higher % of car components to be made in North America to qualify for duty free tax - it has quotas for Canadian and Mexican car production

• New provisions on labour, the environment and IP rights

• The aim of it is to maintain the free flow of goods and services between the countries

• It is seen as a modern version of NAFTA

• Mexico exported $24 billion of cars to USA in 2015

what are the key differences between NAFTA and USMCA?

what are other details to consider for USMCA?

·      Think about the effects of a depreciation in the exchange rate of the Mexican peso against the US$ on Mexican – USA trade.

·      Tariffs on Mexican Imports: Trump said the U.S. would impose a 5% tariff on all Mexican imports in June 2020 unless the Mexican government took sterner measures to lower the number of Central American asylum seekers entering the U.S. from Mexico. A deal was reached to avoid the tariffs in June 2020.

·      Canadian Aluminium: In August 2020, Trump announced he would reinstate the 2018 tariffs on Canadian aluminum. Canada responded with a plan for equal tariffs on U.S. aluminium products. On Oct. 27, the same day the Canadian government was expected to unveil its retaliatory trade measures, Trump suspended the tariffs, retroactively through Sept. 1. U.S. trade officials said the tariffs would be reinstated if aluminium imports from Canada "exceed 105 percent of the expected volume in any month".