United States: The United States-Mexico-Canada Agreement (USMCA)

Last Updated: October 4 2018
Article by Daniel D. Ujczo

The United States, Canada, and Mexico reached a trilateral agreement as part of the renovation of the North American Free Trade Agreement (NAFTA) on September 30, 2018. Preliminarily styled the United States-Mexico-Canada Agreement (USMCA), the text is available at https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/united-states-mexico. The negotiators from all three countries deserve high praise for their efforts to conclude the deal at a rapid timing and tempo. The available text nevertheless has some deficiencies, including missing references to "Canada", in multiple areas. It is important for all companies to commence reviewing the text to determine the potential impacts on their operations. While many of the NAFTA's provision are left intact, there will be changes for ALL companies. The time is now to begin these preparations. Dickinson Wright is available to assist.

As a starting point, the published USMCA text largely is consistent with the presentations made during Dickinson Wright's recent webinar Know the New NAFTA. Interested parties should see the webinar and accompanying presentation for additional information regarding the USMCA. https://www.dickinson-wright.com/events/know-the-new-nafta-webinar-dan-ujczo

Additional Observations from the USMCA Text

  1. Structure - Contrary to the narrative that the US Trade Representative was "red in tooth and claw" and tearing up existing North American supply and value chains, the USMCA text preserves significant components of the existing NAFTA, and more than two-thirds of the chapters can be traced to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). In many chapters, the text eschews the original organization of the NAFTA and mirrors the CPTPP. All companies will need to review and edit documents/certificates to account for this reorganization.
  2. Rules of Origin - The USMCA text preserves most of the original NAFTA's rules of origin (ROO) methodologies but incorporates CPTPP principles. While these hybrid "in the weeds" changes will not grab headlines, all companies will need to review these changes to ensure existing and planned operations comply with the likely ROO. Autos, textiles, agriculture, polymers, and chemicals all have heavily revised ROO warranting close inspection.
  3. US Policy Objectives - From the Preamble forward, the US advances its policy objectives of moving production back to North America and allowing trade enforcement. There is an interesting definitional change to "customs duty" that is not found in the original NAFTA nor CPTPP that potentially will provide the US with greater flexibility to impose import restrictions (e.g., tariffs). It is not an overstatement to advise that the US has made progress on virtually all of its July 2017 NAFTA objectives. In the limited areas where the US has made concessions—such as, seasonality provisions with Mexico and government procurement—there are now US domestic actions (e.g., Buy American, Hire American) or legislation pending that will seek to achieve US goals. The dispute resolution system formerly known as Chapter 19 appears to be the only area where the US actually conceded without any fallback position.
  4. Canada's Objectives - Canada largely preserved the fka Chapter 19 dispute resolution system and cultural exemptions, as well as supported progress in the automotive ROO, labor, and environmental chapters.
  5. Supply Management / Dairy - Canada's supply management/dairy concessions go beyond CPTPP and equate to a 3.58% to 3.75% market access concession (CPTPP was 3.25%), as well as the elimination of Class 6 & 7 dairy pricing schemes that were an alleged source of injury to US dairy farmers in Wisconsin, New York State and Vermont. Additionally, there are restrictions on the amount of dairy powders that Canada can export into the global market and greater transparency/consultations required before Canada can make any further changes to supply management. Moreover, there appears to be greater access provided to the US on poultry (turkey) and eggs.
  6. Intellectual Property - Canada made concessions on data protection for biologics (10 years) and copyrights (75 years) that went beyond any CPTPP proposals. Additionally, Canada agreed to stop in-transit IPR violations, a key US request over the past several years. Further, Canada agreed to a notice-and-takedown provisions that it previously was unwilling to adopt as part of CPTPP.
  7. Express Shipments / De Minimis The US requested that Canada and Mexico raise its de minimis threshold for small package/express shipments to USD 800. Mexico agreed to USD 100, where no package would be assessed duties nor sales tax at or below that amount. The US-Mexico provision was global in scope (as opposed to applying to only North America). Canada agreed to a $150 with the following components: (a) Canadian dollars; (b) only $40 is sales tax free (meaning $110 is subject to sales tax); and (c) applies only to North American shipments. This concession is still higher than retailers deemed necessary to protect their domestic operations.
  8. Modernization - Companies operating in the three countries will benefit from innovative customs and trade facilitation (e.g., borders), digital, and a series of red-tape cutting measures throughout the agreement. The agreement also includes for the first time in a US trade deal currency manipulation and state-owned enterprises chapters.
  9. Immigration - The original NAFTA's temporary entry (immigration) system is largely preserved with a few minor enhancements. Dickinson Wright's immigration team will be providing ongoing guidance on this matter.
  10. Section 232s - The steel and aluminum tariffs imposed by the US on Canada and Mexico, and the resulting retaliation, will continue with an agreement between the parties to resolve the issues. We anticipate these tariffs and retaliation to be resolved no later than the late November signing of the Agreement.

    With regard to autos tariffs, the US-Canada side letter largely mirrors the US-Mexico letter, with caps at $2.6 million in vehicles and $180B in auto parts. It is important that this side letter only comes into play for non-conforming autos AND the imposition of tariffs. Vehicles and auto parts that conform with the USMCA auto ROO as previously described in Dickinson Wright's client alerts and webinar, will not be exposed to future auto tariffs. The parties also agree to consult for 60 days before imposing any new tariffs of this kind.

Next Steps

  •   Consultations will continue with the private sector in all three countries and the respective legislative bodies (e.g., US Congress) for 60 days. Again, now is the time to get engaged.
  • The parties will sign the agreement in late November (60 days from now).
  • The parties will begin preparations for ratification by their domestic processes. In the US, this will require a series of analyses—including a large scale review by the International Trade Commission—to examine economic impact, labor market impacts, etc. These will be completed, if on schedule, by late February/March.
  • The process will continue with the draft legislation presented to US Congress in Spring 2019 for an up and down vote.
  • Processes will advance in Mexico and Canada.

Dickinson Wright is available to assist all companies assess impact on their operations and develop strategies for engagement during the consultation and legislative processes. While there is time to prepare for the USMCA, there is little actual time to advance changes, if needed. As repeatedly advised, the time is now.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Dickinson Wright PLLC
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Dickinson Wright PLLC
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions