President Trump signed the reworked North American Free Trade Agreement into Law


President Trump has signed a new NAFTA agreement into law with Mexico and Canada that includes major changes.

President Trump signed the reworked North American Free Trade Agreement into law last Wednesday, fulfilling one of his campaign promises which was to revise “one of the worst trade deals” in history. “Today we are finally ending the NAFTA nightmare,” Mr. Trump said during a White House signing ceremony, calling the new trade deal a “colossal victory” for farmers, factory workers, and other countries.

The new United States-Mexico-Canada Agreement updates the 25-year-old North American Free Trade Agreement, with new laws on intellectual property protection, the internet, investment, state-owned enterprises, and currency.

The 2,000-page document does include some rather meaningful changes, including incentives to make cars in North America and open Canadian markets for American dairy farmers.

The new agreement raises the threshold of what percentage of non North American parts can be in vehicles, over a period of time, from 62.5 percent to 75 percent. That’s meant to pressure automakers to use fewer parts from countries like Germany, Japan, South Korea or China. The pact also requires 70 percent of a vehicle’s steel and aluminum to originate in North America, with steel being both melted and poured on the continent.

For the first time, the new agreement also mandates that 40 to 45 percent of the parts for any tariff-free vehicle must come from a so-called high-wage factory or one that must pay a minimum of $16 an hour in average salaries for production workers. That’s about triple the average wage in a Mexican factory right now. The provision should either force automakers to buy more supplies from Canada or the United States or cause wages in Mexico to rise.

The deal also expands those commitments, requiring more protections for workers, blocking imports of goods made with forced labor, and setting up mechanisms to ensure that those rules are enforced. It sets up an independent panel that can investigate factories accused of violating labor rights and stop shipments of that factory’s goods at the border. It establishes an inter-agency committee to monitor Mexico’s labor reforms, as well as American attachés who will report to Congress on the progress.

In an annex to the agreement, Mexico also committed to enacting comprehensive legal changes to oppose forced labor and violence against workers, and allow for independent unions and labor courts.

The final agreement removes a provision with protections for a class of drugs called biologics that had offered the drugs 10 years of protection from cheaper options in both Canada and Mexico.

The agreement expands other protections for intellectual property rights, extending the 50 years of protection for copyrights in NAFTA to 70 years.

The agreement gives internet companies like Facebook and YouTube certain protections from lawsuits related to the user content posted on their platforms. It also sets new standards by prohibiting governments from asking tech companies to disclose their source code or put duties on electronic transmissions.

Canada has agreed to eliminate a plan that helps sellers of certain milk products, at home and abroad, and open its market to American milk, cream, butter, cheese, and othe products. In return, the United States expanded access to its market for Canadian dairy and sugar.

In a major change, the U.S.M.C.A. rolls back a special system of arbitration that allowed companies to sue governments for unfair treatment. The provision was criticized both by the Trump administration, which said it encouraged outsourcing and by Democrats, who said it gave corporations too much power to challenge environmental and consumer regulations.

The system can no longer be used in disputes between the United States and Canada and is limited to disagreements between Mexico and the United States that involve a narrow range of industries, including petrochemicals, telecommunications, infrastructure and power generation.

But the U.S.M.C.A. has a sunset clause that requires the three countries to review, after six years, whether to remain in the agreement. If any country chooses not to proceed with the pact, the U.S.M.C.A. will expire 16 years later.

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Economics, Finance and Investing