USMCA CUSMA comes into effect

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New NAFTA comes into force Canada Day amid tariff threats, COVID-19 uncertainty

by Cormac Macsweeney

Posted Jun 30, 2020 9:17 am MDT

National flags representing Canada, Mexico, and the U.S. are lit by stage lights at the North American Free Trade Agreement, NAFTA, renegotiations, in Mexico City, Tuesday, Sept. 5, 2017. THE CANADIAN PRESS/HO, Marco Ugarte

The USMCA will come into effect on July 1

It comes amid economic turmoil caused by COVID-19

The USMCA is expected to bring modest gains to Canada’s economy, with close to a $7-billion boost in the next five years

OTTAWA – The new NAFTA will come into effect on Wednesday amid the economic uncertainty caused by the COVID-19 pandemic.

The negotiations caused months of fear in business and economic circles, with U.S. President Donald Trump threatening to pull out of the trade agreement both our economies and Mexico rely on.

But after ratification earlier this year, the new NAFTA — formally the U.S.-Mexico-Canada Agreement — comes into force appropriately on Canada Day, bringing with it protections for the auto parts sector, more American access to our dairy market, stricter labour rules for Mexico, and measures to reduce the prices of pharmaceutical drugs.

Colin Robertson with the Canadian Global Affairs Institute says this deal gives businesses confidence that Canada still has privileged access to our largest trading partner, but the COVID-19 pandemic has left a lot of questions about the future of our economies.

“What it will depend on will be the growth of both economies’ ends. The pandemic puts the big question mark on recovery and what that means for the future, so that one I can’t answer,” he says.

Meanwhile, Marc Agnew with the Canadian Chamber of Commerce says the COVID-19 pandemic may delay some of the benefits we get from this deal.

“I don’t think the new NAFTA is going to, necessarily, have a chance to really show its true value, probably until two or three, four years down the line,” he explains.

However, Agnew believes this is a vital deal, regardless, because it will give businesses in Canada the security and confidence to plan for the years ahead.

He adds the moment is soured by Trump once again threatening tariffs on Canadian aluminium.

“It runs exactly counter to both the kind of spirit and the intent of what we’re trying to do with this agreement,” Agnew says.

Canada and the U.S. do $2 billion in trade a day. The USMCA is expected to bring modest gains to Canada’s economy, with close to a $7-billion boost in the next five years,

“It’s still the biggest, single bilateral trading relationship in the world,” Robertson notes.


Although most observers agree that the renegotiation process of the North American Free Trade Agreement (NAFTA) was more complicated than it had to be and that the final text is less than perfect, at the end of the day NAFTA’s replacement, the United States-Mexico-Canada Agreement (USMCA), does represent an important modernization of the framework under which trade will take place in North America in the coming decades. The USMCA enters into force on July 1. Its implementation poses important challenges for corporations, investors and other key actors, who will have to interpret the agreement, wait for rules and regulations to be rolled out, retool their business models to conform to it and understand the new general incentives landscape for trade and investment. This webinar explored the prospects for success and the challenges of implementing the new USMCA through the analysis of experts on commerce and economic integration in North America.

This event was sponsored by the Center for the United States and Mexico. Additional support for this webinar was provided by Transnational Dispute Management. Follow @BakerCtrUSMEX on Twitter and join the conversation online with #BakerMexico.


11:00 a.m. — Presentation
11:30 a.m. — Q&A


C.J. Mahoney, J.D.
Deputy United States Trade Representative for Investment, Services, Labor, Environment, Africa, China, and the Western Hemisphere

Charles “Chip” Roh
Former Assistant U.S. Trade Representative for North America; former Deputy Chief Negotiator, North American Free Trade Agreement for the United States; former Associate General Counsel, Office of the United States Trade Representative

Kenneth Smith-Ramos
Partner and International Trade Consultant, Agon International Trade Consultants; former chief negotiator for the modernization of the North American Free Trade Agreement for Mexico

Colin Robertson
Vice President and Fellow, Canadian Global Affairs Institute; former member, Deputy Minister of International Trade’s NAFTA Advisory Council and the North American Forum; former member, negotiation team for the Canada-US FTA and NAFTA


Tony Payan, Ph.D.
Françoise and Edward Djerejian Fellow for Mexico Studies, Baker Institute; Director, Center for the United States and Mexico, Baker Institute


David Gantz, J.D.
Will Clayton Fellow in Trade and International Economics, Baker Institute