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Economy & Business - July 2020

MEXICO: USMCA benefits are only likely to materialise in the medium term

The new North American regional trade agreement -which replaced the North American Free Trade Agreement (Nafta) that was operational since 1994- came into force on 1 July. Although the US-Mexico-Canada Agreement (USMCA) came about due to US President Donald Trump’s determination to address what he perceived to be a hugely disadvantageous agreement for his country, the final version of USMCA is much more balanced that feared and widely seen as beneficial to the whole region. A critical factor behind this is that the USMCA negotiations were carried out multilaterally, rather than bilaterally, as Trump had wanted. This made it possible for both Canada and Mexico to avoid having particularly unfavourable conditions imposed by the US. Areas where significant changes were introduced include labour relations and the environment, while the USMCA also introduced provisions regarding e-commerce matters, which was effectively non-existent when Nafta was drafted.

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