Canada, Mexico and the U.S. reach agreement on new trilateral deal

Canada and the United States announced last weekend that they reached an agreement, alongside Mexico, on a new, modernized trade agreement, the United States-Mexico-Canada Agreement (USMCA).

The new agreement is basically a rewrite of the North American Free Trade Agreement (NAFTA) with notable changes in the rules of origin for the automotive sector, a new access to the Canadian market for some U.S. dairy products, and other changes that benefit the U.S.

Canada’s de minimis threshold for duty/tax exemption on low value shipments will be raised to C$150 for duties and C$40 for sales tax.

The steel and aluminum American tariffs (based on “national security” concerns) imposed by the U.S. on Canada and Mexico earlier this year were not addressed in the USMCA.

The full text of the agreement is available on the website of the United States Trade Representative: United States-Mexico-Canada Agreement Text

Leaders from the three countries are now aiming to sign the deal by the end of November, before the end of Mexican President Enrique Peña Nieto’s term in office.

The agreement will also have to undergo a legal verification and authentication in the three agreed languages, specifically English, Spanish, and French.

Ratification and entry into force is not expected before 2019 at the earliest, due to domestic legislative requirements in the three countries.