Canada endorses USMCA and moves toward implementation
3 abril 2020

BUSINESS

Trade agreements. On March 13, The Canadian Parliament approved the United States-Mexico-Canada Treaty (USMCA), including the amended protocol signed on December 10, 2019. This completed the treaty’s approval process by the three countries’ legislatures, after the United States ratified it on January 16 and Mexico on December 12, 2019. The agreement incorporates chapters on agriculture, labor, environment, electronic commerce and trade facilities between the parties. Now, governments will start working on the implementation process, spending the next three months amending the necessary internal regulations.

The treaty, which will replace the North American Free Trade Agreement (NAFTA), was originally signed in November 2018 by Presidents Donald Trump (United States), Enrique Peña Nieto (Mexico) and Prime Minister Justin Trudeau (Canada). However, in order to move forward with legislative ratification, the U.S. Democratic Party demanded amendments to the agreement, especially in relation to compliance with new labor regulations in Mexico. These additional changes were agreed to in late 2019, and now ratified.

USMCA lays down new standards on the labour front. It establishes stricter criteria for workers’ rights in order to “balance” labor costs between the three countries. The United States in particular criticized Mexico’s advantage in this regard because of the low wages paid and the lack of mechanisms to modify this disadvantage under the old North American Free Trade Agreement (NAFTA). The new article will “balance” this out and create a mechanism to control effective compliance with the labor provisions. It also includes a dispute settlement mechanism that will facilitate sanctions for non-compliance with the agreement’s provisions.

Next steps

The Canadian Parliament ratified USMCA, thus completing the legislative ratification process in all three signatory countries. Now the Mexican President, Andrés Manuel López Obrador (AMLO), has asked his Secretary of Foreign Affairs, Marcelo Ebrard, and the Secretary of Economy, Graciela Márquez, to reach an agreement to move toward implementing the treaty. The negotiating teams will have time until June 1 to define the uniform regulations and establish the panelists for the treaty’s dispute resolution system.

 

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