New Treaty between Mexico, the United States and Canada
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
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
15. Cross-Border Trade in Services
16. Temporary Entry
17. Financial Services
19. Digital Trade
20. Intellectual Property
21. Competition Policy
22. State-Owned Enterprises
25. Small and Medium-Sized Enterprises
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.