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North American Trade Agreement Takes Effect

Posted on July 1, 2020

The United States Mexico Canada (USMCA) Trade Agreement—the “new NAFTA”—goes into effect today.

The USMCA modernizes the North American Free Trade Agreement (NAFTA), which originated in January 1994.

Canada and Mexico are among the top three trading partners for Massachusetts, representing billions of dollars in cross-border business.  This trilateral trade relationship is one of the most valuable in the world.  Bay State companies are relieved that the USMCA leaves much of NAFTA intact, yet also includes new provisions on labor, environment and digital trade.

Imports and exports among the U.S., Canada and Mexico have grown significantly since 1994 and despite slowdowns due to the COVID-19 crisis, trade ties among our North American partners are expected to strengthen in the years ahead.

The auto industry – interdependent across the northern and southern U.S. borders—will face new “rules of origin,” meaning that a higher percent of content of new vehicles needs to be manufactured in the U.S.  The dairy sector in the U.S. will have better access to Canadian markets.

Canada’s Consul General in Boston, David Alward, states “The modernization of the original NAFTA marks an important milestone in the evolution of the commercial relationship between Canada and the U.S., providing us with the foundation to further increase North American competitiveness and strengthen our ability to compete globally.  Now, North America has a 21st century trade agreement that will ensure the prosperity of our entire continent.  Our countries have publicly recognized the importance of preserving our vital binational supply chains.”

Mexico’s Consul General in Boston, Alberto Fierro Garza, said “The USMCA represents a remarkable opportunity for North America to reaffirm the depth of the commercial relationship we have been building for over 26 years.  USMCA provides certainty for the continuation of investment and trade and provides regulations that allow for more prosperity for all of our workers, for better environmental provisions, and for an enhanced business environment.  Mexico is certain that our societies will continue to benefit from our shared strengths and that our partnership will allow for North America to remain one of the most competitive regions in the world.”

Massachusetts Congressional Representative Richard Neal led USMCA negotiations on behalf of the U.S. House of Representatives.  Voting Yes on USMCA in December 2019 were Massachusetts Representatives Clark, Keating, Lynch, Neal, Moulton and Trahan.  Voting No were Representatives Kennedy, McGovern and Pressley.  Senator Elizabeth Warren voted yes on USMCA in January, while Senator Ed Markey voted no.