What are the differences between NAFTA and the USMCA?

Summary

The U.S.-Mexico-Canada Agreement (USMCA), which replaces NAFTA, includes provisions aimed at improving labor standards, environmental protections, and manufacturing policies. While it increases North American auto production and wages for workers, critics argue it falls short of addressing issues like climate change and job outsourcing. Though it has bipartisan support, some Democrats oppose it for not doing enough to combat global climate risks. Trade expert Lori Wallach highlights the deal's modest improvements but stresses that it remains a starting point for future, more comprehensive agreements addressing global inequality and climate change.

Takeaways

• 😀 The USMCA agreement was passed by the Senate and is set to replace NAFTA, aiming to improve trade between the U.S., Mexico, and Canada.
• 😀 The USMCA includes provisions to require 75% of automobile components to be manufactured in North America, up from 63% under NAFTA.
• 😀 The agreement mandates that 40-45% of automobile parts must be made by workers earning at least $16 an hour by 2023, focusing on labor standards.
• 😀 A key change in the USMCA is the increased ability for labor inspectors to enter facilities in Mexico to investigate worker rights violations.
• 😀 The deal includes provisions to give U.S. farmers more access to Canadian dairy markets, improving trade for agriculture.
• 😀 Some corporate provisions were rolled back in the final deal, including a proposal to extend patent exclusivity for biologic drugs, which was criticized for potentially raising medicine prices.
• 😀 Climate change was a significant point of criticism, with some senators arguing that the deal failed to adequately address environmental concerns.
• 😀 While the USMCA could reduce outsourcing, experts like Lori Wallach suggest it won’t bring back manufacturing jobs that were lost due to NAFTA.
• 😀 The USMCA eliminates a mechanism that allowed corporations to sue countries if they felt NAFTA rules were violated, a change praised by critics of corporate power.
• 😀 The final agreement is seen as a step forward but is not considered a complete overhaul. It focuses more on halting the negative impacts of NAFTA than creating a new, ideal trade framework.

Q & A

What is the USMCA, and what does it replace?

The USMCA, or U.S.-Mexico-Canada Agreement, replaces the North American Free Trade Agreement (NAFTA) that was signed into law by President Bill Clinton.

What are some key changes introduced by the USMCA compared to NAFTA?

Key changes include increasing the percentage of automobile components required to be manufactured in North America to 75%, enforcing labor law improvements in Mexico, and giving U.S. farmers more access to Canadian dairy markets.

Why was the USMCA considered a more progressive trade agreement by some Republicans?

Republican Senator Lindsey Graham argued that the USMCA would help make North America one of the most progressive free trade zones in the world, contributing to a stronger economy.

What provision was withdrawn from the USMCA after negotiations with Democrats?

A provision that would have granted biologic drugs 10 years of patent exclusivity was withdrawn after negotiations with Democrats.

What aspect of the agreement was criticized for not addressing climate change?

The USMCA was criticized for failing to include provisions that would address global climate change, leading some senators, including Bernie Sanders and Kirsten Gillibrand, to vote against it.

How did Lori Wallach describe the improvements in labor and environmental standards under the USMCA?

Lori Wallach acknowledged that the USMCA included improvements in labor and environmental standards, particularly in Mexico, but noted that the agreement still does not fully address the negative effects of NAFTA, such as job outsourcing.

What was the impact of the USMCA on corporate legal protections, particularly for pharmaceutical companies?

The USMCA removed provisions that would have granted extended monopolies to pharmaceutical companies, which would have locked in high medicine prices and exported U.S. policies to Mexico and Canada.

How does Lori Wallach view the USMCA in the context of the broader trade agreement landscape?

Wallach sees the USMCA as a starting point, describing it as a 'floor' rather than a 'template' for future trade agreements, stressing that it is not the ideal solution but a necessary improvement to stop the ongoing damage caused by NAFTA.

What was the effect of the USMCA on the ability of corporations to sue countries over trade violations?

The USMCA removed a mechanism under which corporations could sue countries if they felt trade violations occurred, which was seen as a positive change by critics like Lori Wallach.

Do critics believe the USMCA will bring back the manufacturing jobs lost due to NAFTA?

No, critics like Lori Wallach argue that while the USMCA may reduce outsourcing, it will not bring back large numbers of manufacturing jobs that were lost under NAFTA, as many companies continue to relocate production to Mexico.