June 24, 2019

The New NAFTA: Where Are We?

U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau met last week to discuss several issues, including progress of the United States Mexico Canada Agreement, or USMCA, the trade pact that is supposed to replace NAFTA. In a statement after the meeting, Prime Minister Trudeau said, “We can’t overstate how important free trade is to the Canada-U.S. relationship … Millions of people and businesses depend on a strong economic partnership between our two countries to make ends meet. That’s why we worked incredibly hard with our North American partners to secure a new NAFTA.”

True to the prime minister’s words, the Canadian Parliament already has begun consideration of the agreement, and both major parties, the governing Liberals and the official opposition party, the Conservatives, have expressed support for quick approval of the deal.

South of the U.S. border, meanwhile, on June 18 Mexico’s Senate approved the USMCA on a 114-4 vote, completing that country’s legislative approval process.

Trump administration officials still are hoping the U.S. Congress will approve the pact before the August recess and have been on Capitol Hill trying to convince lawmakers to move quickly. U.S. Trade Representative Robert Lighthizer testified last week in both the House and Senate regarding the Trump administration’s trade policy in general. During the hearings, Ambassador Lighthizer spoke positively about his efforts to address House Democrats’ concerns about the USMCA. During testimony before the Senate Finance Committee he said, “I think we’re on track. I think we’re making progress, and I’m hopeful … over the course of the next couple of weeks, we can make substantial progress.”

Regarding enforcement, Ambassador Lighthizer indicated a willingness to work with lawmakers “to the extent they want to plus it up … There’s room to do that. I’m certainly happy to do that.” Ambassador Lighthizer also argued the current agreement has “a viable dispute-settlement process, one that I’m willing to work with members on.”

Also on the USMCA: MSCI’s partners at the Aluminum Association have published a background primer on the USMCA rules of origin requirements for automotive products produced in North America.