News

New Treaty between Mexico, the United States and Canada

By Inés Arena Campero.

On October 1st of the current year, a new agreement a between Mexico, Canada and the United States was announced, to replace the North American Free Trade Agreement (“NAFTA”). The name of this new agreement will be “USMCA”, as per the initials of each country that is part of it.

The draft agreement that is now under discussion in the congresses of each of the countries contemplates 34 chapters, which are listed below:

1. Initial Provisions and General Definitions

2. National Treatment and Market Access for Goods

3. Agriculture

4. Rules of Origin, with Product Specific Rules

5. Origin Procedures

6. Textiles and Apparel

7. Customs and Trade Facilitation

8. Recognition of the Mexican State’s Direct, Inalienable, and Imprescriptible Ownership of Hydrocarbons

9. Sanitary and Phytosanitary Measures

10. Trade Remedies

11. Technical Barriers to Trade

12. Sectoral Annexes

13. Government Procurement

14. Investment

15. Cross-Border Trade in Services

16. Temporary Entry

17. Financial Services

18. Telecommunications

19. Digital Trade

20. Intellectual Property

21. Competition Policy

22. State-Owned Enterprises

23. Labor

24. Environment

25. Small and Medium-Sized Enterprises

26. Competitiveness

27. Anticorruption

28. Good Regulatory Practices

29. Publication and Administration

30. Administrative and Institutional Provisions

31. Dispute Settlement

32. Exceptions and General Provisions

33. Macroeconomic Policies and Exchange Rate Matters

34. Final Provisions

As next steps, each country must submit the draft agreement for review and approval by their respective congresses with the aim of signing the agreement by the last day of November 2018. In the case of Mexico, the agreement must be ratified by the Senate, which is why the Executive sent the bill to the corresponding Senate committees for its analysis.

This news is favorable for our country since it concludes a stage uncertainty for the markets, which generated a brake on foreign investment into our country.

Mexico is a country with the most free trade agreements in the world and this allows access to millions of customers, however, NAFTA has been the most important so far for its volume of business. NAFTA was originally signed in 1992 and entered into force in all three countries in 1994.

This treaty has allowed Mexico to complement its economy with the productive processes of Canada and the United States and has facilitated the Exchange of goods and services which has led to the attraction of productive investments.

According to data from American Chamber of Commerce, Mexico exchanges with the United States about $2,600,000.00 billion dollars in products per day. Therefore, it was very important for Mexico´s economy to continue being part of this treaty with the countries of the North.

The signing of this new agreement ensures the permanence and increase of reign investment in Mexico. However, it presents new challenges for the country, as the agreement imposes certain commitments of Mexico to continue legislating to promote certain sectors. We will be reporting on progress in revising this new agreement and the impact it will have on each sector.

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