Question

Explain the trilateral trade agreement between Canada-The United States-Mexico (CUSMA) in one/two paragraphs. (Don’t forget to list proper citation for your answer)

Answer 1

At the G20 Summit in Buenos Aires, the US, Canada, and Mexico formally signed a new trilateral trade agreement. It is recognized as the USMCA, or the Agreement between the United States and Mexico and Canada. Under the new deal, to qualify for zero tariffs, cars and trucks must have 75% of their parts assembled in Mexico, the U.S., or Canada. This is a significant increase in the initial NAFTA from 62.5 percent.

The goal is to improve the production of automotive parts in North America by pushing car companies to use parts made here over cheaper parts from Asia. This is likely to increase the cost of cars and trucks, and it may make it more difficult for Mexico to make or sell some smaller cars here in the United States.

In all three nations, the most striking difference about this new deal includes protecting jobs. The agreement calls for workers who earn at least $16 an hour by 2023 to make 40 to 45 percent of automotive components. The law is specifically aimed at Mexico and is intended to bring salaries up to the standards of the US and Canada. That's good for Mexican workers, but behind that's not the only motivation. The Trump administration hopes that if Mexico no longer pays its employees much less than the U.S. and Canada do, companies will no longer have a reason to move their factories (and out of the U.S.) there, thus holding production jobs in the U.S. and Canada.

And unlike NAFTA, the new deal allows each country to sanction each other for trade-impact labor violations. It is a complex, multi-step process based on similar protections in the Trans-Pacific Partnership (TPP), a multinational trade deal that Trump pulled the U.S. out of office after taking office. These are much-needed reforms that resolve some questions about NAFTA that U.S. labor unions have had for a long time. Canada uses what is called a dairy supply management program (and eggs and poultry) which closely controls how much of each commodity can be imported and imposes strict tariffs and quotas on those products when transported to the state. The US has offered Canada the opportunity to open up its dairy market, beginning with a six-month access phase-in that goes up to almost 4 percent — just marginally above what was agreed in the TPP.

There's also the fact that more than two decades ago NAFTA was signed, so it really didn't deal with the web. In adding new rules for the digital economy, the USMCA aims to fix this. These provisions include items such as no duties on electronically purchased products, such as music or e-books, and protections for internet companies so that they are not liable for content produced by their users. Both Canada and Mexico wanted protection from these tariffs— and Canada finds these tariffs insulting, in particular, as it is a close US defense partner. But they are not excluded from these duties by the USMCA. Canada and Mexico have had the US make a side deal that essentially protects them from future tariffs for cars below 232, but the tariffs for steel and aluminum remain in place.

Reference- USTR website