How Does the USMCA Compare to NAFTA

While the 1994 North American Free Trade Agreement (NAFTA) has provided many benefits to Canadians, Americans, and Mexicans, it still drew in a lot of criticism. As a result, the United States Mexico Canada Agreement (USMCA), a renegotiation of NAFTA, went into effect on July 1st to achieve a better deal for America. Being a far-reaching free trade agreement involving three large nations is, of course, complicated. But in truth, the USMCA is less of a complete overhaul of NAFTA as it is a minor alteration. Let’s see what the USMCA could mean for some industries:

Auto Manufacturing

• Criticisms of NAFTA escalated when automobile manufacturing plants shut down in Detroit, Toledo, and Oshawa. The harmful effect that NAFTA had on auto workers was undeniable, though there were also other multiple reasons for these plant closures. On the flip side, the agreement allowed North American consumers to have increased access to foreign vehicles along with generally lower prices. On top of that, NAFTA also helped Mexican auto workers . . . well, a little. Now, a key provision in the USMCA dictates that wages for making certain auto parts must be at least $16/hour, higher than what most Mexican factory workers currently receive. Could the new agreement lead to even higher wages for Mexican auto workers? More work for American and Canadian auto workers? Or just increased automation? Only time will tell.

Copyright Law

• The new copyright law was a key win for lobbyists in the U.S. America has always had more stringent copyright laws than its North American neighbors and has finally managed to extend some of its policies beyond borders. Standard copyrights will now expand to 70 years beyond the life of the creator, as opposed to the previous 50, which was the law in Canada.

Dairy Farming

• The new dairy farming clause was a win for American dairy farmers. They now have increased access to the Canadian market, which could help them but hurt Canadian dairy farmers instead. In a world where consumers are increasingly turning to dairy-free milk alternatives, this could have a significant effect.

Digital Media

• The new USMCA has set more severe penalties for online piracy. Is this a step in the right direction to protect content creators? Or another stab at net neutrality? Experts are still debating.

If you don’t operate in one of these fields, the effects of the USMCA may not impact you or your business as much. However, there are always unforeseen consequences in any trade deal, whether it be positive or negative. That is why Export Portal is here to help you stay informed and aware. Make sure to check out our site for more articles like this one and protect your business!