An Analysis of the United States - Mexico - Canada Agreement
In May 2017, the Trump Administration began the process of renegotiating the North American Free Trade Agreement (NAFTA). NAFTA, which came into force in 1994, created one of the largest and most successful trade zones in the world by expanding freer trade among the United States, Mexico, and Canada. After more than a year of renegotiations, the leaders of the three countries signed the new United States？Mexico？Canada Agreement (USMCA) on November 30, 2018. Much of the USMCA remains consistent with NAFTA, but substantive improvements were made regarding 21st-century trade issues, such as digital trade, intellectual property rights, and cross-border data flows. The USMCA also includes an agriculture chapter that helps to increase some dairy market access, as well as a side letter on energy that maintains tariff-free treatment for raw and refined oil and gas products. Unfortunately, the USMCA has several critical weaknesses that should be addressed. The forthcoming implementing legislation and additional side letters between the three countries may be possible tools. This Backgrounder provides several suggestions for improving policies associated with the USMCA chapters on labor, the environment, government procurement, rules of origin, as well as the provision of a review and term-extension process.