USMCA trade deal enters into force, replacing NAFTA

The U.S.-Mexico-Canada Agreement (USMCA) officially entered into force on Wednesday, replacing the 26-year-old North American Free Trade Agreement (NAFTA).

“Today marks the beginning of a new and better chapter for trade between the United States, Mexico, and Canada,” U.S. Trade Representative (USTR) Robert Lighthizer said in a statement, adding the USMCA contains “significant improvements and modernized approaches” that will deliver stronger worker protections, expanded market access, and greater opportunities to trade for companies.

“The recovery from the Covid-19 pandemic demonstrates that now, more than ever, the United States must stop the outsourcing of jobs and increase our manufacturing capacity and investment here at home,” Lighthizer noted.

“With the USMCA’s entry into force, we take another giant step forward in reaching this goal and advancing President Trump’s vision for pro-worker trade policies,” he said.

The renegotiation of NAFTA began in 2017 at the request of U.S. President Donald Trump, and leaders of the three countries initially signed the USMCA on the sidelines of the G20 summit in late 2018.

Following months of negotiations between U.S. congressional Democrats and the Trump administration over issues including labor and environmental enforcement, an amended accord was signed by the three countries late last year. Now all parties have completed their domestic procedures to implement the new trilateral agreement.

But many of the deal’s requirements, like expanding worker rights or opening up the flow of agriculture, have not been fully met, or still need to be phased in over the coming months and years, according to The New York Times.

“We have worked closely with the governments of Mexico and Canada to ensure that the obligations and responsibilities of all three nations under the agreement have been met, and we will continue to do so to ensure the USMCA is enforced,” Lighthizer said.

While the USMCA modernizes trading rules and strengthens the enforcement of labor and environmental rights, it is still “a net negative” for all three economies as its regulatory mandates, especially in autos, will restrict trade and hurt U.S. industry, according to an analysis published by the Peterson Institute for International Economics (PIIE).

“MEMA is grateful for the transparent process with which USTR has engaged stakeholders on the new automotive rules of origin issues,” the U.S. Motor & Equipment Manufacturers Association (MEMA), which represents auto parts suppliers, said Wednesday in a statement.

“However, these changes will not be without challenges for our members to implement. As implementation moves forward, MEMA intends to stay active and address these challenges,” said the association.