Late Sunday night, a trade agreement was reached between Canada, the U.S., and Mexico. The new agreement will replace the North American Free Trade Agreement (NAFTA) with the United States-Mexico-Canada Agreement or USMCA.
NAFTA will remain in place with all its current rules until the legislative branches of government from Canada, Mexico, and the U.S. enact the USMCA. As it is NAFTA certificate renewal season, we strongly suggest that you continue with your plans to renew your certificates at this time.
In the meantime, here are some highlights from the new Trade Agreement.
The de minims threshold in Canada will increase from $20 to $150 dollars.
Canada agreed to provide U.S. dairy farmers access to about 3.5 % of its approximately $16 billion annual domestic dairy market.
An auto parts quota of $108 billion and $32.4 billion will be in place for Mexico and Canada respectively.
The Rules of Origin on foreign autos into the U.S. will require a regional value content of 75%, up from 62.5% under NAFTA. This will be transitioned into the new deal over 5 years.
70% of autos must be made up of steel and aluminum manufactured in the three countries.
Our Trade Advisors in both our Canadian and U.S. offices are reviewing the full text that has been published to determine how the new USMCA will affect your trade practices. Stay tuned for coming announcements.