So, Just What is the USMCA?
The U.S.-Mexico-Canada Agreement (USMCA) rewrites the North American Free Trade Agreement (NAFTA), which for 26 years defined how $1.2 trillion in trade was conducted among the three countries.
USMCA replaced NAFTA on July 1. While participating traders are expected to comply with its requirements as of that date, they have until the end of 2020 to certify their initial efforts and until July 1, 2023, to become 100% compliant.
For some industries, the changes from NAFTA to USMCA are relatively minor. Not so for the auto industry.
“This is a massive change to a trade agreement that defined how we built our operations in Canada, Mexico and the U.S.,” notes Ann Wilson, who heads government affairs for the Motor & Equipment Manufacturers Association (MEMA) and its Original Equipment Suppliers Association (OESA) affiliate.
The office of the U.S. Trade Representative calculates that USMCA will give the U.S. $34 billion in new investment, $23 billion in additional annual parts purchases and 76,000 new auto sector jobs by the end of 2025.