The Agreement between the United States of America, the United Mexican States, and Canada (USMCA), was proposed by US president Donald Trump and signed on November 2018 to replace the old North American Free Trade Agreement (NAFTA). Additionally, a revision of the USMCA was recently signed on December 2019.
Under the new agreement, the US has tariff-free access to 3.6% of the $15.2 billion Canadian dairy market, 75% of an automobile’s value must come from within the governed regions to qualify for zero tariffs (up from 62.5% under NAFTA), 40-45% of auto content must be made by workers earning at least $16 per hour by the first five years after ratification, and Mexico must pass legislation that improves the collective bargaining capabilities of labor unions. As well as provisions for intellectual property and digital trade.
Meanwhile, the recent revision added commitment that all parties will adopt, implement, and maintain seven multilateral environment agreements (MEAs), demanded new mechanisms and resources to ensure that the US government effectively monitors compliance with the agreement’s labor obligations specific to Mexico, and removed provisions that contribute to high prescription drug prices.
The US and China Phase I Trade Deal
The US and China Phase I trade deal signed by US President Donald Trump and Chinese Vice Premier Liu He will cut tariffs on $120 billion in Chinese products in half from 15% to 7.5%. In exchange, China pledges to purchase $200 billion more American energy, farm, and manufactured goods over the next two years and address US complaints about intellectual property practices. The purchases will increase total exports to China to over $260 billion in 2020, and about $310 billion in 2021.
China agreed to purchase an additional $32.9 billion of manufacturing goods in 2020 and $44.8 billion worth of goods in 2021. China also agreed to purchase $18.5 billion of additional energy products in 2020 and $33.9 billion in 2021. Regarding services, China agreed to $12.8 billion and $25.1 billion of purchases above the 2017 total, in 2020 and 2021, respectively. Additionally, China agreed to purchase additional agriculture products of $12.5 billion and $19.5 billion in 2020 and 2021, respectively.
In turn, the US agreed to reduce the tariff rate on $120 billion worth of Chinese goods from 15% to 7.5%. The US tariffs of 25% on $250 billion worth of Chinese products will remain unchanged. The tariffs that were set for December 15, 2019 on $160 billion worth of Chinese products have been suspended. China's planned 25% tariff on US automobiles were also suspended.
The deal will also strengthen Chinese legal protections for patents, copyrights, trademarks, and procedures to combat online counterfeit and pirated goods and infringement. In the currency agreement, China pledged to refrain from competitive currency devaluations and from using the exchange rate as a trade advantage.
By: Alejandra Lopez and Rodolfo Rodriguez