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U.S., Canada, Mexico Reach Agreement to Update NAFTA

The U.S., Canada, and Mexico announced September 28, 2018 an agreement to modernize the 25-year-old North American Free Trade Agreement. The USMCA (U.S.-Mexico-Canada Agreement) is expected to be signed by December 1, which could bring it up for congressional consideration in early 2019.

According to fact sheets from the Office of the U.S. Trade Representative, the USMCA includes the following provisions.

Agriculture

  • Canada will provide new-tariff rate quotas exclusively for U.S. fluid milk, cheese, cream, skim milk powder, butter and cream powder, concentrated and condensed milk, yogurt and buttermilk, powdered buttermilk, products of natural milk constituents, ice cream and ice cream mixes, whey, margarine, and other dairies.
  • The U.S. will provide reciprocal access on a ton-for-ton basis for imports of Canadian dairy products as well as new market access for Canadian peanuts, processed peanut products, and a limited amount of sugar and sugar-containing products.
  • Canada will eliminate milk price classes 6 and 7, which USTR states allow "low-priced dairy ingredients to undersell United States dairy sales in Canada and in third country markets."
  • Canada will apply export charges to its exports of skim milk powder, milk protein concentrates, and infant formula at volumes over an agreed threshold.
  • Canada will provide new TRQs for U.S. chicken, eggs, and egg products and increase its access for turkey.

Manufacturing

  • To qualify for preferential treatment 75 percent of auto content must be made in North America and 40-45 percent must be made by workers earning at least $16 per hour.

Source:
Sandler, Travis & Rosenberg Trade Report

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