USMCA is the acronym in English that corresponds to the agreement between the United States,Mexico and Canada. This agreement was proposed by Donald Trump, the then president of U.S, in order to replace the old commercial treaty between the North American countries known as Naphtha.
The decision in favor of naphtha replacement took place in November 2018 and was signed by the representatives of the three countries. Because it represents an update to the old agreement, the USMCA is also called the Naphtha 2.0. However, it is The approval of the legislation of each country is still required. for it to take effect.
Read too:Paris Agreement
USMCA x Naphtha
Naphtha is the acronym that corresponds to the North American Free Trade Agreement, which, in Portuguese, means North American Free Trade Treaty, established in the 1990s among the countries of North America: U.S, Mexico and Canada.
This agreement had as its main objective establish a free trade zone among its members, facilitating the entry and exit of goods
and looking for reduce taxes and fees for those products. NAFTA was ratified in 1993 and entered into force in 1994, then lasting for nearly 25 years.In addition to creating this zone that promoted trade between countries, the agreement also called for other points, such as copyright protection and intellectual property, the job generation and the development of all its members, without going against the legislation of each country.
This agreement was also intended to provide fair conditions for enable competition commercial among its members and also attract investment for countries.
Unlike other commercial economic blocs, NAFTA only promoted the free circulation of goods and services and not people. In other words, the population of each country could not move freely between territories.
The revision of NAFTA was due to the dissatisfactions pointed out by Trump, who saw a great trade deficit, especially in relation to Mexico.
For a moment, the president left open the possible withdrawal from the country of the agreement, which generated several demands from groups composed of congressmen and republicans, who claimed the importance of the country in remaining in it, considering that it was a source of employment for thousands of workers in the country, as well as a source of income for several businessmen, who saw in the treaty a way to expand their businesses.
Criticism by Mexicans they also existed. Many believed that NAFTA promoted a huge country dependency in relation to the United States, as well as favoring the latter in some aspects, pointing to commercial advantages in relation to several products made in Mexican territory.
O Canada, like the other two countries, also had dissatisfaction, claiming that the trade partnership with the United States sometimes limited to economy Canadian in relation to other countries around the world.
Read more:European Union
NAFTA is the former trilateral agreement between the United States, Mexico and Canada.
Goals
The main purpose of the USMCA is modernize the old agreement signed between the United States, Mexico and Canada. Despite several updates, many points of the agreement were maintained, with the objective of encouraging the free trade zone according to a new version. For this, several changes were made, especially from the point of view of the US economy., which, according to the current president, was being harmed by the old agreement.
Trump believes that the new agreement will favor the country's economy, lowering existing barriers and changing several issues, such as mobility of industries who headed abroad in search of advantages, such as low taxes and cheaper labor, generating a deficit for the United States, especially in terms of job creation.
There is, then, a tendency to american protectionism and the trade liberalization in other countries.
See too:Sectors of the economy
What changes?
The modernization of the trilateral agreement, despite maintaining several points of the old agreement, established several updates on business relationships among its members. Many of these updates were proposed by the President of the United States, being initially accepted by Mexico, that is, bilaterally, and later also by Canada.
At new rules of origin, as well as the issue of e-commerce or digital commerce, are addressed in the new agreement, although there are no specific rules for this. The issue of intellectual protection remains, but more consistently.
There was a copyright extension to 70 years after the author's death, this right lasted until the age of 50, thus favoring the United States, considering that most intellectual production is concentrated in the country in relation to the others.
There were also changes in the issue of pharmaceutical production, increasing the protection of drugs from eight to ten years, meaning that, during the validation of this period, the production of generics is not allowed.
The new agreement also protects companies that carry out electronic commerce, removing from them the responsibility for what users share, as well as deducts taxes from electronically marketed products.
The sector of car production also underwent updates. The new agreement provides that 75% of the car parts are manufactured in the United States or in the countries of the agreement, so that there is no possibility of product pricing, if these are manufactured in other countries. These parts must be manufactured by workers earning $16 an hour, a measure that prevents companies from migrating to places where labor is cheaper.
Another change is related to the validity period of the agreement. NAFTA does not have a fixed term to be in effect. already the new agreement will be in effect for six years, then it can be revised or extended.
Read too:international organizations
