USMCA

Table of Contents

WHAT WE WILL LEARN IN THIS VIDEO

What is USMCA?What are the special provisions it has?
Will USMCA stop Chinese influence in North America?
How will USMCA impact the on-going trade war between U.S and China?
A possible India – U.S trade agreement in the future?

The United States–Mexico–Canada Agreement The USMCA is the result of the 2017–2018 renegotiation of NAFTA by its member states. The countries informally agreed to the terms on September 30, 2018 and formally agreed to the terms on October 1, 2018.

BACKGROUND

During the 2016 US presidential election, Donald Trump’s campaign included the promise to re-negotiate, or cancel if renegotiations fail, the North American Free Trade Agreement.
Upon election, President Trump proceeded to make a number of changes affecting trade relations with other countries. Withdrawing from the Paris Agreement, ceasing to be part of negotiations for the Trans-Pacific Partnership, and significantly increasing tariffs with China were some of the steps he implemented, reinforcing that he was serious about seeking changes to NAFTA.

ANALYSIS OF THE TRADE DEAL – AUTOS

Cars sold under North America’s free trade system must be more North American: the regional content minimum rises to 75 per cent from the current 62.5 per cent.
There will be a new requirement that at least 40 per cent of content be made by workers earning US$16 per hour or more. And should Washington ever slap Trump’s oft-threatened tariffs on cars, Canada will still be able to export 2.6 million passenger vehicles south every year, tariff-free.
That leaves much room for expansion, as Canada’s plants currently have recently shipped fewer than two million annually.

ANALYSIS OF THE TRADE DEAL – DAIRY

The United States has long sent more milk, cheese and dairy products north than Canada shipped south, but Canada’s supply management system has tightly limited access.
Most of that system remains in place, but the new deal gives American farmers’ tariff-free access to 3.6 per cent of Canada’s dairy market, which will send hundreds of millions of dollars more of more product into this country.

ANALYSIS OF THE TRADE DEAL – STEEL

Canada and Mexico went into the trade deal with a frustrating 25 per cent tariff on steel shipments to the United States, and 10 per cent on aluminum. In this trade deal, those tariffs … stay exactly as they are.

SUNSET CLAUSE

NAFTA had no expiry date. The new USMCA, on the other hand, runs out after 16 years—a mechanism called the “sunset clause.”
The U.S. had been agitating strongly for a five-year expiry date, after which all three countries would have to review and re-negotiate, but Canada and Mexico held out for a bit more stability.
Instead, the USMCA will last 16 years if nothing else is done, and six years from now, the three countries will review the deal and have an option to extend it beyond that term.

THE CHINESE SUNSET CLAUSE

If a USMCA signatory enters free trade negotiations with a “non-market country,” it must notify other USMCA partners in advance, must let those partners review the new deal’s text in advance, and it allows at which point those other countries to may serve six months’ notice that they plan to exit the USMCA.

INDIA U.S TRADE AGREEMENT?

In the year 2017 bilateral trade (in both goods & services) grew by 9.8% to reach US$126.1 billion. India’s exports to the US stood at US$77.3 billion while USA’s exports to India stood at US$48.8 billion

THE TARIFF KING JIBE

Trump described India as a “tariff king” as he reiterated his allegations that New Delhi has a high tariff rate on various American products.
The US trade deficit with India has doubled over the last 10 years but only to $27 billion, while there was a surplus with Brazil of $28 billion in 2017.