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5 Ways the New U.S., Mexico, Canada Trade Agreement Impacts the Detroit Region

This week, the governments of Canada, Mexico and the United States announced an agreement on a revised deal to replace the North American Free Trade Agreement (NAFTA). The new trade agreement, known as the United States-Mexico-Canada Agreement (USMCA) is expected to be signed by the end of November.

The Detroit Regional Chamber supported updates to the 24-year old trade agreement with the understanding that any new agreement must first “do no harm” to the countries’ existing trade relationship.

Here is a look at the top five ways USMCA could impact the region’s economy according to a fact sheet released by the White House.

1. Automotive Manufacturing

The new deal will require more of a vehicle’s parts to be made in North America in order for automakers to avoid tariffs. It requires that 75 percent of the parts must be made in Canada, Mexico or the United States, roughly 12 percentage points higher than under the original NAFTA.

2. Leveling the Playing Field for U.S. Workers

USMCA requires 40 percent of car and truck parts be made by workers earning at least $16 an hour. This requirement would level the playing field between American and Mexican automotive workers and to incentivize manufacturers to build more in the United States.

3. Expanding Market Access for Food and Agricultural Products

Canada will provide new access for the full range of U.S. dairy products, eggs and poultry. In exchange, the United States will allow more Canadian dairy, peanuts and peanut products to cross the border.

4. Digital Trade

USMCA provides a firm foundation for the expansion of trade and investment in innovative products and services, including rules to ensure that data can be transferred cross-border and to minimize limits on where data can be stored and processed.

5. Environmental Protection

New provisions will combat trafficking in wildlife, timber and fish; enhance the effectiveness of customs inspections; strengthen law enforcement networks to stem trafficking; and protect fish and marine species by prohibiting harmful fisheries subsidies and combatting illegal, unreported, and unregulated fishing.