What Is The Status Of The NAFTA Agreement And USMCA
Updated: The long awaited NAFTA 2.0 agreement between Canada - US - Mexico is due to be implemented on July 1, 2020. Please visit our new NAFTA series for more information.
Mexico Ratifies USMCA Early
The USMCA was signed by all three leaders of the US, Canada and Mexico on November 30th, 2018. The next step is for the respective legislatures of each country to ratify the agreement. Mexico was the first out of the gate and ratified the agreement on June 19th, 2019, with a clear majority vote in their senate.
Path To Ratification
The path to ratification in Canada and the US has been difficult. The US President and Vice President have pushed for ratification from the Democrat controlled US House of Representatives. The Democrats have outstanding concerns with the text of the agreement, which remain unresolved. The House Speaker Nancy Pelosi has the final decision on when the agreement can be brought to a vote. The longer the delay, the more likely the agreement will fall prey to the 2020 US election politics.
USMCA Status In Canada
In Canada, a bill was introduced in May 2019 in the Canadian parliament but Canada has maintained it will not ratify the agreement unless and until the US does. The Canadian window for ratification closed on September 15th, 2019. Canada is in a Federal election and since the agreement was not ratified on September 15th, 2019, it will be left for the next parliament which may be led by a new prime minister. If the Conservative party of Canada wins the election ratification is unclear as the leader of the Conservative Party has been very critical of the current Prime Minister’s renegotiation of NAFTA. In addition, the Conservative Party has not indicated if they will ratify the USMCA but all reports suggest they likely will if elected to power.
USMCA Status In The US
The concerns the US Democrats have with the new agreement is; it lacks strong labor protections, it lacks strong environmental protections, it advances the interests of brand-name pharmaceutical companies at the expense of patients and its enforcement mechanism is too weak.
The US House Speaker has organized working groups for each area of concern and has encouraged the Democrats in each group to negotiate with the Administration (Office of the US Trade Representative) over how to address the concerns. These groups have continued to meet over the summer months and some progress was made with labor concerns. The United States Trade Representative (USTR) has really not made any viable counter proposals to the three other Democrat concerns.
Overall, the Democrats claim many of their concerns would require changes to the USMCA text, which would require re-opening the entire agreement, which has been approved by one country and signed by the other two. Canada and Mexico are not interested in re-opening the agreement.
NAFTA Remains In Effect
The USMCA is in limbo with no clear direct path for ratification in the US or Canada before their respective elections. As of September 23rd, 2019, NAFTA 1.0 remains in effect.
If you have questions about NAFTA, USMCA or International Trade, do not hesitate to contact the experienced experts at Pacific Customs Brokers.