NAFTA: Part 3

By Reid Offers

 

A lot has happened between the last issue and now, and the trade negotiators from North America have come together and agreed on a new deal. While the new deal still needs approval from the legislatures to be finalized, a lot has both changed and stayed the same with regards to NAFTA.


The new trade agreement is being called “United States-Mexico-Canada Agreement,” or USMCA for short. As uncreative as the name may be for this new trade agreement, it was named on purpose as the three countries wanted to distinguish USMCA from NAFTA.  


Most modern economists would contend that free trade is a win-win for all parties involved. Steering clear of protectionist tariffs and opening up new protections for firms and employees, the new trade agreement seeks to change some things from NAFTA. Some of the most major changes brought about from it are listed below:

 

  • Country of origin rules
  • Labor provisions
  • Intellectual property and digital trade
  • Environmental protections

 


Country of Origin Rules

 

When I was younger, my baby-boomer father would always complain about the current state of automobiles and how “they don’t make ‘em like they used to.” This is usually said with reference to the fact that a lot of parts are being manufactured in Asia. Under the USMCA, however, this will no longer be an issue, because the majority of cars and trucks being sold in North America will have to abide by new regulations. This means that by 2030, 75% of automobile components and alike will have to be made from parts manufactured right here in North America. What does this mean in regards to pricing? It is hard to say at this point; however, it most likely will not have a huge effect on MSRP’s (manufacturer’s suggested retail price) of vehicles, since some major Japanese and German carmakers already have factories in the United States. In the long run, Korean carmakers are more likely to move some of their manufacturing over as well. Twenty years from now when we are all graduated, we can have the peace of mind of driving cars around (or the cars driving us around) knowing that its parts and components were made by North American workers.

 

Labor Provisions

Unlike some international conglomerates that resort to child labor and poor working conditions, the US, Mexico, and Canada have agreed to more strict labor provisions in USMCA. In order to safeguard against unfair employment practices, all three nations have decided that any imported goods follow strict protocol for labor. Any goods that are made by forced labor will not be allowed. The labor chapter also ensures that national laws allow unions and prevent discriminatory hiring policies from taking place. Although it may seem like such practices are already protected, many US firms do business in Canada, and if Concordia students take jobs with such businesses, they can be protected against fallacious practices both at home and abroad. Many women’s rights are included as well; they deal with discrimination based based on pregnancy, sexual harassment, and gender identity. Having these new rules in place can give those who might be subject to discriminations peace of mind when entering the workforce. Even though it maybe possible for such practices to happen, the deal includes a “non-derogation” clause to make sure legislation is not passed to infringe on the mentioned labor conditions. If anything rises to concern, the three countries can open up a forum for discussion to navigate, if needed. This will hold all governments accountable. With these new protections and policies in place, both current and future graduates can be assured knowing that they, as well as their products, will be protected.

 

Intellectual Property and Digital Trade

A big section of the new trade deal was designed with regards to intellectual property and patents. Intellectual property, or IP for short, refers to to creations of the mind, such as literary and artistic works, designs, symbols, names, and images used in commerce. All three countries now have the obligation to protect and respect IP across their borders. For any students that are creators of any kind, USMCA seeks to enforce stronger civil and criminal matters, especially for things like music and film production. Another benefit will be to make sure trademarks are better protected; this means that brand-name labels will keep their integrity. Nobody likes knock-off items that weed their way into retail spaces, and now imported goods will be screened a lot better for such items. Included with trademarks is protection for pharmaceutical patents. US pharma-companies will now have better security for their drugs here in Canada (and visa versa). This does not mean, however, that we should fear an increase in pricing; rather, if there is anything to fear, it would be that the profits of drug companies will continue to grow as protections for them, which means fewer players in the marketplace.  

 

Climate Protections

With the scientific claim that climate change is the biggest threat to humans, the USMCA has a section dedicated to stronger climate protection and adherence to climate regulations. Although it does not come anywhere close to goal outlines in the Paris Climate Accords, all three countries have committed to better protection with respect to wildlife and biodiversity. The environmental protections also include a provision to ensure that each country doesn’t pass laws that might go against the outlined goals. The North American Agreement on Environmental Cooperation (NAAEC) is set up to ensure that resolutions with the new climate policies are followed properly. While protecting the climate further will require massive socioeconomic changes, this part of the new trade deal is a step in the right direction for us.

 

Sunset Clause

The last addition to the new deal is something called a “sunset clause.” This means that the terms of the agreement expire after a period of time. With that said, it is important to note that, going forward into the future, the provisions of USMCA are bound to change with new governments being elected and different economic issues that might arise in the future.

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