How does the USMCA differ from NAFTA?

The United States-Mexico-Canada Agreement (USMCA) differs from the North American Free Trade Agreement (NAFTA) in several key ways.

1. Rules of Origin: One major difference is the updated rules of origin for automobiles. Under NAFTA, vehicles needed to have 62.5% North American content to qualify for duty-free treatment. However, under the USMCA, this requirement has been increased to 75%. Additionally, the USMCA introduces a new requirement that 40-45% of the content of light vehicles must be produced by workers earning at least $16 per hour.

2. Labor and Environmental Standards: The USMCA includes stronger labor and environmental provisions compared to NAFTA. It requires Mexico to implement labor reforms, including the recognition of collective bargaining rights and the establishment of independent labor courts. The agreement also includes provisions to address environmental issues such as illegal wildlife trade and illegal logging.

3. Intellectual Property Protection: The USMCA strengthens intellectual property protection compared to NAFTA. It extends the copyright term from 50 to 70 years after the death of the author and introduces new provisions related to digital trade, including protections for e-commerce and data localization.

4. Sunset Clause: NAFTA had no expiration date and could be terminated with a six-month notice. In contrast, the USMCA includes a sunset clause that requires a review of the agreement every six years. If the three countries do not agree to extend the agreement, it will expire after 16 years.

5. Dairy and Agricultural Market Access: The USMCA provides increased market access for U.S. dairy farmers in Canada. It eliminates Canada's Class 6 and 7 milk pricing system, which had created barriers for U.S. dairy exports. The agreement also includes provisions to address issues related to agricultural biotechnology and sanitary and phytosanitary measures.

Overall, the USMCA represents a modernized and updated version of NAFTA, addressing various concerns and incorporating new provisions to reflect the changing economic landscape and priorities of the three countries involved.