What is the USMCA?

The U.S.-Mexico Canada Agreement (USMCA) is a trade agreement signed by the United States, Mexico and Canada on November 30, 2018. The agreement successfully renegotiates the North American Free Trade Agreement, bringing North American trade into the 21st century with groundbreaking provisions on digital trade, agriculture, state-owned enterprises, labor and the environment, among many others.

The USMCA maintains tariff-free access to Mexico for American exporters. For Canada, it maintains the current tariff-free access for 99% of U.S. products and eliminates some remaining barriers facing U.S. dairy and poultry exports. The agreement preserves and strengthens America’s strong trade ties to Canada and Mexico. Importantly, it includes groundbreaking provisions on digital trade, intellectual property, and other issues that will bring North American trade into the 21st century.

Fast Facts: U.S. Trade with Canada and Mexico

  • Supports Millions of Jobs: Trade with Canada and Mexico supports 12 million American jobs in every state in the Union, according to reports by the Business Roundtable. In fact, 49 U.S. states count Canada or Mexico as one of their top three merchandise export markets.
  • Drives U.S. Export Growth: U.S. goods exports to Canada and Mexico have expanded far more since the 2007-2009 recession than U.S. exports to any other country in the world, accounting for about 40% of the growth in overall U.S. goods exports in dollar terms, according to Commerce Department data.
  • Quadrupled in the Past 25 Years: Trade with Canada and Mexico reached nearly $1.3 trillion in 2017, and the two countries buy more than one-third of U.S. merchandise exports, according to Commerce Department data.
  • Remains Vital for U.S. Manufacturers: U.S.-manufactured goods exports to Canada and Mexico support the jobs of more than 2 million men and women at more than 43,000 manufacturing firms across the United States, according to the National Association of Manufacturers. Most U.S. manufacturing sectors (38 out of 42) and most states (46 out of 50) count Canada or Mexico as their first- or second-largest foreign purchasers.
  • Essential for Farmers and Ranchers: U.S. agricultural exports to Canada and Mexico quadrupled from $8.9 billion in 1993 to $39 billion in 2017, according to the American Farm Bureau Federation, and the two countries are top markets for U.S. grains, dairy products, meats, fresh fruits, and vegetables. Nearly one-third of U.S. agricultural exports went to our North American neighbors in 2017, the AFBF adds.
  • Powers the Service Economy: U.S. services exports to Canada and Mexico tripled from $27 billion in 1993 to $91 billion in 2017, but America’s highly competitive business services sector—including firms in such fields as audiovisual, software, architecture, accounting, engineering and project management, banking, insurance, and many more—continues to enjoy exceptional export growth.
  • Boosts American Small Businesses: Canada and Mexico are the top two export destinations for U.S. small and medium-sized enterprises, more than 120,000 of which sell their goods and services in our two North American neighbors. When an American small business starts exporting, it’s almost always to Canada or Mexico.
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USMCA modernizes the rules for trade in North America with state-of-the-art provisions in the following areas:

Market Access

Maintains tariff-free access to the Mexican market for all U.S. goods exports. For Canada, maintains the current tariff-free access for 99% of U.S. products and eliminates some remaining barriers facing U.S. dairy and poultry exports.

Digital Trade

Creates best-in-class rules to foster U.S. growth in the digital economy for firms of all sectors and sizes, for example, guaranteeing the freedom to move data across borders and prohibiting the forced localization of data, thereby ensuring continued growth for a dynamic area of international commerce.

Intellectual Property

Secures stronger protections for patents, copyrights and related rights, trademarks, designs, and trade secrets as well as strong enforcement tools to guard against counterfeiting and piracy.

Agriculture

In addition to outstanding market access, establishes modern, science-based sanitary and phytosanitary standards that are arguably the strongest achieved in any trade agreement.

Regulatory and Technical Barriers to Trade

Promotes regulatory compatibility and best regulatory practices for ICT products, pharmaceuticals, medical devices, cosmetics, chemicals, and other products. Also bars import restrictions on remanufactured goods.

Financial Services

Ensures a level playing field for U.S. financial institutions, investors and investments in financial institutions as well as cross-border trade in financial services on a nondiscriminatory basis.

Customs

Establishes high-standard rules for customs procedures with regard to advanced rulings, simplified entry, risk management, single window, e-signatures, and self-certification of origin.

State-Owned Enterprises

Establishes rules to ensure governments and their state-owned enterprises do not distort competition in the marketplace by guaranteeing regulatory impartiality and requiring that SOE decisions be commercially motivated.

Competition Policy

Ensures that antitrust investigations are fair, transparent, and based on sound economic analysis.

Enforcement

Raises the bar with the strongest enforcement provisions of any U.S. trade agreement with applicability for all chapters, including labor and the environment.