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The Latest NAFTA Agreement: What You Need to Know

The North American Free Trade Agreement (NAFTA) has been a topic of heated discussion among policymakers, business leaders, and the public for several years. After much negotiation, a new agreement finally came into effect on July 1, 2020, known as the United States-Mexico-Canada Agreement (USMCA).

Key Provisions

One of the main objectives of the USMCA is to create fair competition and level the playing field for American workers and businesses. Here are some of the key provisions of the agreement:

1. Rules of Origin – The USMCA requires that a certain percentage of a product must be made in North America to qualify for tariff-free treatment. This is intended to encourage the use of North American materials and production processes, rather than outsourcing to other countries.

2. Labor Protections – The USMCA includes provisions that require all three countries to implement labor laws that protect workers` rights, such as the freedom of association and the right to collective bargaining.

3. Environmental Protections – The USMCA also calls for environmental protections, such as the prevention of marine litter and the conservation of wildlife. Additionally, companies must commit to reducing methane emissions and other greenhouse gases.

4. Digital Trade – The USMCA includes new provisions for digital trade, such as prohibiting data localization requirements that require companies to store their data in specific countries. This is expected to increase cross-border data flows and facilitate e-commerce.

5. Auto Industry – The USMCA also contains provisions that are specific to the auto industry. For example, a higher percentage of a car`s components must be made in North America to qualify for tariff-free treatment.

Impact on Trade

The USMCA is expected to have a significant impact on trade between the three countries. The International Trade Commission estimates that the USMCA will increase U.S. GDP by $68.2 billion and create 176,000 new jobs. Additionally, the USMCA is intended to provide more certainty and stability for businesses, which could encourage them to make new investments in North America.


The USMCA marks a new era in trade relations between the United States, Mexico, and Canada. Although it is not without its criticisms and challenges, it is expected to provide many benefits to all three countries. As the world continues to grapple with the economic effects of the COVID-19 pandemic, the USMCA could provide a much-needed boost to North American economies.