The North American Free Trade Agreement (NAFTA) has been a key trade agreement between Canada, Mexico and the United States for over two decades. However, in 2017, the three countries began negotiations to revise and update the agreement. After much discussion, a new agreement was reached, known as the United States-Mexico-Canada Agreement (USMCA) which went into effect on July 1st, 2020.

One of the key changes to the agreement is that it requires that more car parts be made in North America. Specifically, 75% of a car’s value must be produced in the three countries (up from 62.5% under NAFTA) to qualify for zero tariffs. Additionally, 40-45% of a car’s value must come from workers earning at least $16 per hour.

Another significant change is that the USMCA includes new protections for intellectual property and digital trade. The agreement ensures fair competition and includes stronger enforcement of intellectual property rights, such as patents, trademarks and copyrights.

The USMCA also includes new provisions related to labor rights and environmental protections. The agreement requires Mexico to improve labor conditions and strengthen workers` rights, including the right to collective bargaining. Mexico has also agreed to new environmental provisions that aim to reduce marine litter and protect marine wildlife, a major issue in the Gulf of Mexico.

Overall, the USMCA seeks to modernize and strengthen trade relations between the three countries. While the agreement has faced criticism, particularly from Canadian dairy farmers and U.S. labor unions, it represents a significant step forward in North American trade relations.

As the economy continues to recover from the COVID-19 pandemic, the USMCA will play an important role in supporting businesses and ensuring economic stability. With the agreement now in effect, businesses across all three countries can take advantage of new opportunities and continue to build strong partnerships in the global marketplace.