Canada-United States-Mexico Agreement (Cusma)

Canada-United States-Mexico Agreement (Cusma)

The Canada-United States-Mexico Agreement (CUSMA) is a trade agreement that replaces the North American Free Trade Agreement (NAFTA) between the three countries. The agreement was signed on November 30, 2018, and came into effect on July 1, 2020. CUSMA is seen as an update to NAFTA, with changes aimed at strengthening the agreement for all three nations.

The CUSMA agreement covers a wide range of industries, including agriculture, automotive, and digital trade. One of the significant changes in the agreement is the updated rules of origin for the automotive industry. Under CUSMA, vehicles must have 75% of their components made in the three countries, compared to 62.5% under NAFTA. In addition, a new labor provision requires a significant portion of the vehicle to be made by workers who earn at least $16 per hour.

Another significant change is the new digital trade chapter, which includes provisions on data localization, data protection, and cross-border data flows. This chapter is designed to encourage innovation and growth in the tech sector and provide greater legal certainty for digital trade.

CUSMA also includes changes to the agricultural sector. The agreement removes Canada`s Class 6 and Class 7 milk pricing systems, which the United States claimed were unfairly subsidizing Canadian dairy products. This change allows for greater access to the Canadian dairy market for American farmers.

The agreement also includes an intellectual property chapter, which strengthens protections for trademarks, copyrights, and patents. This chapter aims to provide greater certainty and protection for businesses operating in all three nations.

Overall, CUSMA is seen as an improvement over NAFTA, with provisions that aim to benefit all three countries. The agreement modernizes the trade relationship between the United States, Canada, and Mexico and provides greater certainty for businesses operating in North America.

In conclusion, CUSMA is a significant agreement that updates and strengthens the North American trade relationship. With changes aimed at encouraging innovation, growth, and greater legal certainty, the agreement is set to benefit the economies of all three countries. As the trade landscape continues to evolve, CUSMA provides a solid foundation for continued cooperation and growth.