USMCA

The United States–Mexico–Canada Agreement (USMCA) is a trilateral trade agreement among the United States, Mexico, and Canada that replaced the North American Free Trade Agreement (NAFTA). It entered into force on July 1, 2020, and aims to modernize trade rules by addressing digital trade, intellectual property, labor and environmental standards, and other contemporary trade issues while preserving mutual market access.

Key provisions include updated rules of origin for autos and auto parts, which require a large share of vehicle content to be produced in North America and place new wage-related requirements intended to raise manufacturing wages in the region. The agreement also expands protections for digital trade, ensures cross-border data flows, and strengthens intellectual property rights. It adds heightened labor and environmental standards with enforcement mechanisms, including a labor chapter that allows for specific enforcement actions and rapid remedies if denials of rights occur. The trade framework also covers state-owned enterprises and provides updated rules for e-commerce, small business participation, and services trade.

Agriculture and market access are addressed, with Canada offering greater access in some dairy sectors and the United States seeking improved access for agricultural and other products. The pact preserves dispute settlement mechanisms and introduces mechanisms to monitor and enforce compliance with labor and environmental commitments. It includes a sunset provision, creating a 16-year term with a mandatory six-year review to determine whether the agreement should be extended, revised, or terminated.

Overall, USMCA is designed to facilitate trilateral trade, support regional supply chains, and raise standards across member economies, while maintaining competitive access for all three parties.