NAFTA Vs USMCA: Achieving Benefits in Development, Security, etc. for Workers and People in the Country
Abstract
This assignment is an evaluation of the two most important free trade agreements that occurred in the economic world scenario. Further in the report, it is analyzed, the way the external environment variables are impacted by the differences of the agreement from NAFTA to USMCA.
Introduction
The world’s largest free trade agreement, the North American Free Trade Agreement was signed between the countries of the United States, Canada, and Mexico on the 1st of January,1994. The prominent aim of the agreement was to reduce tariffs and increase the market accessibility between the countries. However, the three countries came to a discussion to negotiate the agreement under the direction of President Donald Trump. Later, the three countries came together and formed another agreement which is called as the United States Mexico Canada Agreement in Canada it is also termed as CUSMA shorted to the term Canada United States Mexico Agreement. In a comparison of both agreements, there are similarities as well as some major changes.
As in the external environment, there are six aspects that are being impacted by the projected differences between NAFTA to USMCA. According to some legal experts, the USMCA agreement is a blooming opportunity to Canada.
Political Forces
The United States is Canada's largest steel and aluminum exporter. Under section 232 President Trump had imposed tariffs for steel and aluminum from Canada, Mexico as well as from European Union. In the beginning of USMCA, US didn’t remove the two (steel and aluminum products) tariffs, even though Canada and Mexico wanted to remove the steel and aluminum tariffs it was not included under section 232.
However, later the US had lifted up the tariffs fully removing the amounts of 25% from steel and 10% from aluminum. According to the Canada Prime minister, these tariffs were hurting both Canadian producers and consumers as well US consumers. Since earlier as the steel prices dropped into a certain point and sold with 25-cent tariffs, it was unprofitable to the producer. As the tariffs were taken off, the jobs were saved from these risks and Canadians have the ability to make more profits out of steel and aluminum manufacturing.
Economic Forces
The good impact which USMCA has on economic forces is that compared to NAFTA this agreement has given protection to the workers in Canada and also to the workers of the other two countries. Under the agreement, it is enforced to pay high wages with economic conditions and to protect the labor rights of migrant workers and their working conditions. In comparison to the NAFTA agreement, USMCA has given a major focus on labor rights.
Sophie Jones from Chartered Professional Accountants Canada has reported that the agreement impacts vastly on industries such as automobiles and agriculture. In the automobile sector, as the agreement has held in order to proceed with zero tariffs 75% of the parts should be made within the three countries. Oral has stated that, this is a great opportunity for USA and Canada as eventually, the production of automobiles will move from Mexico to both countries. In consideration to the dairy market, Canada has given admittance to the US dairy farmers although Canada always protected their farmers from foreign competitors. As in this scenario, the USA will export to Canada, which will be a disadvantage for the dairy farmers in Canada.
Technological Forces
The USMCA has given a major focus on data sovereignty, where the public individual’s data are protected by the new rules of the agreement. This has provided the rules and regulations on using computerized personal data within a locality. Especially USMCA is consistent with a digital trade chapter which includes the relevant information and policies for threats of cyber security, data protection, and flow, and most importantly this was not a part of NAFTA before. The transfer of information including the personal details of individuals for any purposes is banned by any electronic manner. Furthermore, as a result of the USMCA impact the online shoppers' shipping costs from the US at reduced costs due to the increased “Dimi Minimus” threshold which is the amount that can be imported to Canada without taxes.
Societal Forces
Under the social other than the labor rights and conditions discussed, the other important aspect is the way consumers are impacted by the pharmaceutical drugs. Accordingly, in the agreement it is focused on the biological drugs manufactured by biotechnology will take a longer period to go to the consumers. In relation to the USMCA, as Canadian consumers will have to wait for a longer period for the pharmaceuticals since the less expensive generic medications will take some time to come into the market.
Global Forces
The global forces have co-related with the environmental issues as well. In order to provide a solution, and to protect the environment together they have pledged under the agreement. As for that, the three countries should initiate necessary steps in order to protect the ozone layer, conserve and protect the marine diversity and bio-diversity, and take responsibility of forests etc. In this respective way, the three countries together will be taking the responsibility of saving the environment.
Competitive Forces
Under the USMCA services, Canada has implemented restrictions for foreign investments in regard to the transportation section. These steps are taken in the aim of protecting the Canadian market and the transportation sectors, such as maritime, bus, and truck services. Moreover, Canada has the ability to restrict companies based on the nationality of them which are qualified to deliver services such as air transportation services.
Conclusion
As discussed above, the USMCA has much more to give to all three nations in respect to NAFTA. Although there are both positive and negative sides in each aspect, the Canadian government is trying their best to achieve the advantages in development, security, etc. for the workers and people in the country.
References
- [bookmark: _gjdgxs]Jackson, B. (2019). USMCA round-up: How it affects canada’s tech sector. Retrieved October 15, 2019 , from https://www.itworldcanada.com/article/usmca/round-up-how-it-effects-canadas-tech-sector/409510
- Oral, R. (2018). What does the USMCA mean for the Canadian Trade? Retrieved October 12, 2019, from https://www.cigionline.org/articles/what-does-usmca-mean-canadian-trade
- Trump promotes USMCA trade deal in Wisconsin. (2019). Retrieved October 12,2019, from https://www.cbsnews.com/news/trup-speaks-in-wisconsin-promote-rade-deal-live-today-2019-07-12/
- U.S.- Mexico- Canada Trade Agreement: Likely impact on the U.S economy and on specific industry sectors. 2019. United States international trade commission. 4889.
