USMCA: A Closer Look

Many individuals may not realize the impact that the United States, Mexico, and Canada Agreement will have on business and especially farming in the area. Senator Charles Grassley’s office provided the following information that outlines the impact of this agreement.

USMCA brings North American trade into the 21st century by creating the highest standard trade agreement across disciplines for all three parties

  • USMCA would raise U.S. real GDP by over $68 billion and create nearly 176,000 jobs. (USITC report)
  • USMCA would increase total annual U.S. agricultural and food exports by $2.2 billion. (USITC Report)
  • USMCA would increase U.S. dairy exports to Canada by $227 million and Mexico by $50.6 million. (USITC Report)
  • USMCA would be the first U.S. free trade agreement with a digital trade chapter, fostering U.S. growth in the digital economy for firms of all sectors and sizes. (USMCA Coalition)

 Market Access:

  • Preserves and enhances U.S. duty-free access to Mexican and Canadian markets.
  • Requires greater transparency in licensing for imports and exports.
  • Improves regulatory compatibility and practices for trade in information and communication technology, pharmaceuticals, medical devices, cosmetic products, and chemical substances.
  • Minimizes redundant and unnecessary testing of exported products.
  • Establishes information-sharing tools and mechanisms aimed at enabling small and medium enterprises to take advantage of USMCA.
  • Eliminates local presence requirements for cross-border service providers

Agriculture:

  • Increases market access for U.S. farmers with new export opportunities for U.S. dairy, poultry and egg producers.
  • Eliminates Canada’s Class 6 and 7 dairy programs that hindered U.S. exports to third-country markets.
  • Provides for cooperation and information exchange on agricultural biotechnology trade matters, including gene editing.
  • Prevents trade barriers disguised as food safety and animal or plant health measures by requiring such measures to be based on sound science.
  • Addresses longstanding non-tariff barriers to the ability of U.S. producers to export wheat and wine to Canada.
  • Creates safeguards to protect against issuance of geographic indications that would prevent United States producers from using common names to describe food products.
  • Ensures that the fees for any import checks of agricultural goods are no higher than the actual cost of service and that the import check is conducted efficiently.
  • Improves the transparency and functioning of approval processes for agricultural biotechnology.

 Intellectual Property:

  • Secures strong protections and enforcement of intellectual property rights to help drive innovation and create economic growth.
  • Requires ex officio authority for customs officials to stop suspected counterfeit goods.
  • Requires a minimum copyright term of the life of the author plus 70 years, or publication plus 75 years.
  • Provides 10 years of data protection for agricultural chemicals.
  • Continues to provide strong patent protection for innovators by enshrining patentability standards and patent office best practices.
  • Requires strong standards against circumvention of technological protection measures for digital content.
  • Provides for copyright safe harbors that are consistent with current U.S. law.
  • Provides for criminal procedures against the unauthorized copying or transmitting of movies playing in theaters.
  • Improved protections for trade secrets, including civil and criminal protections, guarantees on the ability to license trade secrets, and protection from unauthorized disclosure by courts and government officials.

 Digital Trade:

  • USMCA will be the first U.S. free trade agreement with a digital trade chapter, creating a strong foundation for the expansion of trade and investment in innovative digital products and services.
  • Prohibits the imposition of tariffs on digital products transmitted electronically.
  • Minimizes restrictions on where businesses may store and process data and on their ability to transfer data across borders.
  • Limits the circumstances when governments may compel disclosure of source code and proprietary algorithms.
  • Ensures that businesses may use electronic authentication and signatures to conduct digital trade.
  • Ensures that consumer protections apply to digital trade.
  • Promotes open access to government-generated public data.
  • Limits the civil liability of internet service providers for third-party content that they host or process.

 Customs & Trade Facilitation:

  • Raises the “de minimis” customs thresholds under which U.S. businesses may export to Canada and Mexico with reduced paperwork and without paying taxes or duties.
  • Requires making customs regulations available online.
  • Eliminates the standard Certificate of Origin form, allowing parties to make a preference claim with the minimum data elements.
  • Allows importers to complete a certificate of origin, instead of relying on the exporter.
  • Strengthens verification authority for enforcement purposes.

 Auto Rules of Origin:

  • New rules will increase U.S. jobs in the automotive sector by incentivizing production in the United States and North America.
  • By encouraging companies to use more U.S. content and high wage labor, USMCA will help ensure that U.S producers and workers are able to compete on a level playing field.

 Financial Services:

  • Expands market access for U.S. business to export electronic payments services, investment advice, and portfolio management.
  • Limits the circumstances when a financial regulator may require local storage of data.
  • Requires transparency in government licensing and market access authorizations.

 State-Owned Enterprises:

  • Imposes market disciplines and prohibits discriminatory privileges and certain subsidies.

 Textiles:

  • Strengthens incentives to use North American fibers, yarns, and fabrics in textile products.

 Labor & Environment:

  • Provides the strongest labor and environment obligations in any U.S. trade agreement and makes them fully subject to the enforcement and dispute settlement under Chapter 31.

 Currency:

  • Requires transparency on currency policies and addresses unfair currency practices.

 Good Governance:

  • Encourages regulations to be written in plain language so that the public can better understand their meaning.
  • Requires most regulations to go through a notice and comment procedure so the public can see and provide input on proposed regulations.
  • Requires criminal penalties for bribery and corruption, including with respect to interactions with foreign government officials.

 Dispute Settlement:

  • Improves enforcement of our trading rights by preventing the defending party from blocking the formation of a dispute settlement panel to decide a case.

 Trade with Canada and Mexico

  • North American trade supports 12 million American jobs. (U.S. Chamber of Commerce)
  • Trade with Canada and Mexico has more than quadrupled in the last 25 years, reaching nearly $1.4 trillion in 2018, or $3.8 billion per day. (U.S. Chamber of Commerce)
  • Canada and Mexico buy more American goods than our next 11 trading partners combined ($500 billion versus $460 billion). Combined, the Canadian and Mexican economies represent a half-trillion dollar market for U.S. exports (the $500 billion figure = half trillion). (NAM)
  • 49 U.S. states list Canada or Mexico as one of their top three export markets. (U.S. Chamber of Commerce)
  • Canada and Mexico buy one-third of U.S. merchandise exports. (USMCA Coalition)
  • Of 42 manufacturing sectors, 38 have Canada or Mexico as their first or second top export market. (USMCA Coalition)
  • From 1993 to 2017, U.S. agricultural exports to Canada and Mexico more than quadrupled, from $8.9 billion to $39 billion. (USMCA Coalition, citing American Farm Bureau)
  • More than 120,000 American small- and medium-sized businesses export goods and services to Canada and Mexico. (USMCA Coalition)
  • From 1993 to 2017, U.S. services exports to Canada and Mexico tripled from $27 billion to $91 billion. (USMCA Coalition)