U.S., Canada and Mexico just reached a sweeping new NAFTA deal. Hereās whatās in it.
On Sunday night, President Trump got his wish for a significantly revised North American trade deal. After more than a year of intense negotiations, the United States, Canada and Mexico reached an agreement to update the North American Free Trade Agreement, the 1994 pact that governs more than $1.2 trillion worth of trade among the three nations.
The new deal wonāt go into effect right away. Most of the key provisions donāt start until 2020 because leaders from the three countries have to sign it and then Congress and the legislatures in Canada and Mexico have to approve it, a process that is expected to take months.
Hereās a rundown of whatās in the ānew NAFTA.ā
New name: Goodbye NAFTA. The new deal will be known as the United States-Mexico-Canada Agreement or āUSMCA.ā Trump, who had long disdained NAFTA, had suggested he might call it the āUSMC,ā in honor of the U.S. Marine Corps, but in the end, USMCA won out.
Big changes for cars. The goal of the new deal is to have more cars and truck parts made in North America. Starting in 2020, to qualify for zero tariffs, a car or truck must have 75 percent of its components manufactured in Canada, Mexico or the United States, a substantial boost from the current 62.5 percent requirement.
Thereās also a new rule that a significant percentage of the work done on the car must be completed by workers earning at least $16 an hour, or about three times what the typical Mexican autoworker currently makes. Starting in 2020, cars and trucks should have at least 30 percent of the work on the vehicle done by worker earning $16 an hour. That gradually moves up to 40 percent for cars by 2023.
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Iām wondering how Canada is going to retain its supply management system (government run farming) if the market opens up to American dairy. This should be interesting.