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USMCA –the rebranded version of NAFTA encourages production and investment

"In a big victory for his agenda to abolish global free trade that many associate with the signing of NAFTA in 1994, President Donald Trump recently convinced Canada and Mexico to accept restricted trade with their main export partner. Keeping China in focus, the U.S. negotiators clinched a new trade deal with Mexico and Canada to replace the 1994 North American Free Trade Agreement that Trump labeled a disaster."

 

USMCA the rebranded version of NAFTA encourages production and investment 002In a big victory for his agenda to abolish global free trade that many associate with the signing of NAFTA in 1994, President Donald Trump recently convinced Canada and Mexico to accept restricted trade with their main export partner. Keeping China in focus, the U.S. negotiators clinched a new trade deal with Mexico and Canada to replace the 1994 North American Free Trade Agreement that Trump labeled a disaster.

Encouraging US investments and Production

The rules of origin of this agreement, which govern how much value of a car needs to be made in the region, willUSMCA the rebranded version of NAFTA encourages production and investment 001 help the Trump administration to restrict the advent of Chinese products besides encouraging production and investment in the U.S. and North America.

The agreement, known as USMCA, also prohibits its members from boosting their economic competitiveness by devaluing their currencies, something Trump has accused China of doing in the past.

The deal, however, failed to resolve U.S. tariffs on Canada’s steel and aluminum exports

More access to the Canadian diary market

Canadian President Trudeau made a concession on dairy by giving the U.S. farmers more access to the protected Canadian market than the 3.25 per cent granted to its partners in the earlier Trans-Pacific Partnership trade agreement. The U.S. would be granted 3.6 per cent access. Canada had also agreed to eliminate its “Class 7” pricing system for certain milk ingredients, an irritant to farmers in Wisconsin and New York.

The revised agreement also requires the three nations to give three-month’ notice if they start trade negotiations with a “non-market economy,” an indirect reference to China. The U.S. can terminate its pact with Mexico or Canada if either of them strikes a deal with a non-market economy.

A stronger framework for innovation, manufacturing and jobs

The new pact shows the ways the Trump team seeks to rebalance trade treaties with provisions that are aimed at increasing manufacturing in the U.S., including unusually proscriptive provisions setting a minimum fixed wage level for auto manufacturers. The political consequences of the trade deal for Trump and Republicans in Congress remains to be seen, but the deal has already been received as a down payment for future successes that Trump’s supporters hope his trade policy will yield. It would provide a much stronger framework for more innovation, more manufacturing and better jobs for U.S. workers.

But achieving the same success elsewhere will not be easy. The existence of NAFTA text that largely satisfied most parties gave negotiators solid ground to build on, but no such ground exists for the U.S. relationship with China.

 

 
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