Monday, October 8, 2018

NAFTA rewired - USMCA

A very enlightening talk on the new US-Mexico-Canada Trade Agreement in a series called Trade Talks by Soumaya Keynes and Chad Bown.

An interesting point was that the thing that has changed vis a vis NAFTA is a whole set of new rules in the new agreement. So market access was not the defining narrative of the new agreement since most of trade was already liberalised amongst the three partners under NAFTA. 

The new dimension was new rules of the game that covered inter alia the following:

1. Dispute settlement - Very interesting changes n the ISDS mechanism - limited scope vis a vis U-Mexico disputes and phase out for US-Canada disputes.
2. Labour standards - requires Members to maintain certain standards and some specific obligations on Mexico. Current NAFTA apparently has a side agreement on labour standards.
3. Rules of Origin for Motor vehicles - 62.5% car's value increased to 75% needs to be North American content and worker's wages condition.
4. Currency manipulation - not the gold standard, but some obligations that sets a precedent.

Well, this goes to show the legal complexity of obligations and the scope that trade agreements can cover.

@Hat tip - Peterson Institute Blog

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