US, Canada and Mexico sign USMCA: What changes have been made to the over 25-year-old NAFTA

US president Donald Trump on Monday announced a new trade agreement with neighbouring Mexico and Canada and declared the agreement to be "a great deal" for all three countries and said the pact brings an end to the previous North American Free Trade Agreement (NAFTA). All counterparts of the three countries are expected to sign the deal by November-end. The deal is likely to come into force by 2020, as it will have to be approved by Congress which will vote while it is in session next year. The USMCA deal was signed only hours before the Trump administration-imposed deadline of 30 September. The ‘US, Mexico, and Canada Agreement’ or USMCA, Trump said, would revive the manufacturing sector in the US and create hundreds and thousands of jobs in America. This will create high-quality jobs and strictly enforce the rule of origin requirement, he added. [caption id=“attachment_5301721” align=“alignleft” width=“380”] File photo of US president Donald Trump. AP[/caption] The new trade agreement, Trump asserted, would usher in a new dawn for the country’s auto industry and transform North America into a manufacturing powerhouse and allow the US to reclaim the supply chain that went out off-shores. He said this will help manufacturing of the pharmaceutical sectors. However, the new agreement mandates that the deal be reviewed in six years. If the three countries concur on whether the deal is still effective, it will be finalised on for the full 16 year-period. The NAFTA deal was signed in 1994, and governed more than $1.2 trillion dollars worth of trade between the three countries. The new USMCA has come into existence after a year of negotiations. According to The Washington Post, the provisions are expected to apply from 2020, after leaders from the countries sign it and respective legislatures give their approval. Key differences between USMCA and NAFTA Automobile manufacturing: Under USMCA, to be free from tariffs, a larger part of a vehicle’s parts will be made in North America. The new agreement requires that 75 percent of the parts for automobiles be made in either of the three countries. This is about 12 percent higher than what was mandated under the original NAFTA. This was with the purpose of keeping the production of car parts in the US and help bring back some that had moved abroad. In addition, automobile machines should have at least 30 percent of the manufacturing done by workers earning around $16 an hour. USMCA also said that Mexico needed to make it easier for workers to form unions. Canada’s dairy market: The USMCA gives the US more access to Canada’s dairy market than what was allowed under NAFTA. Under NAFTA, Canada was able to limit how much milk and dairy products could be brought in from the United States. However, under USMCA, new quotas will be set which are expected to increase market access for US farmers. On the other hand, the US will give more scope to Canadian dairy, peanuts and similar products in its market. Canada also agreed to change low prices of some milk products, including milk protein. A CNN report said that, “The Dairy Farmers of Canada quickly came out to criticise the new trade agreement, claiming it puts the livelihood of Canadian dairy producers at risk. Canada recently made concessions in the Trans-Pacific Partnership and a trade deal with the European Union that also opened up its dairy market.” However, a few issues like US tariffs on steel amd aluminum imports, along with retaliatory tariffs were left out of the USMCA deal. That is expected to be negotiated separately. Intellectual Property (IP): The modified chapter on IP contains stricter protections for patents and trademarks across categories, including domain names. The Washington Post said that, “Many business leaders and legal experts believed these updates were necessary given that the original agreement was negotiated 25 years ago.” Chapter 11 removed: Chapter 11 gave companies and investors a separate provision to resolve disputes with one of the governments under NAFTA. However, Chapter 11 has been removed for the most part, due to critics arguing that it was being used by big companies to take advantage of tax payers’ money. Under USMCA, this provision only applies to a few major industries like oil. With inputs from agencies