Question

On the background of USMCA Agreement explore world’s biggest trading partners – Canada and USA relations to the following specific industries:

Steel Aluminum Automobile Dairy Products Beef

Evaluation Criteria’s:

 Importance and overall global trade value

 MFN status

Overall national economic contribution - direct and indirect

Employment- skilled/unskilled and overall national share

Laws governing the Agreement

Trade Dispute Resolution

ADR – Alternative Dispute Resolution

Past and Current Scenarios

Respective Government’s current stance

Personal Trade Perspective – what each government need to do to draw win-win strategic

relationship

Answer 1

The New United States-Mexico-Canada Agreement (USMCA) is a mutually beneficial win for North American workers, farmers, ranchers, and businesses. When finalized and implemented, the agreement will create more balanced, reciprocal trade that supports high-paying jobs for Americans and grows the North American economy.

STEEL. The US steel industry is hopeful the entry of the US-Mexico-Canada Agreement will help bolster demand for steel throughout North America, steel industry. The most substantial change in the USMCA is new rules of origin requirements, which stipulate that 75% of an automobile to be manufactured in North America to qualify for duty-free treatment, up from 62.5% in the original NAFTA which in turn would provide employment to skilled as well unskilled workers up from 26% to 43% and more The USMCA also includes a new labor value content rule, which requires companies to pay a percentage of their workforce $16 per hour to qualify for a reduced tariff rate. Maintains duty-free treatment for originating goods.Maintains the prohibition on export duties, taxes, and other charges and the waiver of specific customs processing fees. Adds new provisions for transparency in import licensing and export licensing procedures.

ALUMINIUM. This trade agreement guarantees robust, fair and rules-based trade of aluminum and aluminum products between the three countries. Furthermore, the new Rules of Origin that incentivize regional sourcing of aluminum for auto parts and vehicles will drive demand for U.S. aluminum manufacturers in the years to come. aluminum industry and the 690,000 American jobs it supports. The domestic aluminum industry will continue to thrive within a tariff- and quota-free North American region. Imports of aluminum sheet and plate from China into Mexico have increased by nearly 150 percent in the past year and more than 1,700 percent since 2014. And now it’s time for all three USMCA countries to develop and coordinate on systems that can identify and proactively address concerns about aluminum.

AUTOMOBILE.   75% of passenger vehicle and light truck components to be manufactured in a USMCA country without being subjected to tariffs. ... This is an increase from the current NAFTA provision of 62.5% that will remain in effect until USMCA is ratified. USMCA also mandates that automakers manufacture 40% of their motor vehicles in facilities where assembly workers are earning at least US$16 an hour. While average wages are even higher than that for auto assembly workers in Canada and the U.S., they are not in Mexico, where a number of U.S. automakers have shifted production in recent years to take advantage of the lower costs.

DAIRY PRODUCTS. USMCA fundamentally changes Canada's trade-distorting policies, reforms Canada's controversial dairy pricing system and provides exclusive Canadian market access for U.S. farmers and manufacturers. ... Full compliance is essential to achieving more fair trade with Canada and protecting American-made cheeses in Mexico. USMCA will advance U.S. agricultural interests in two of the most important markets for American farmers, ranchers, and agribusinesses. This high-standard agreement builds upon our existing markets to expand United States food and agricultural exports and support food processing and rural jobs. U.S. dairy product exports. In 2018, U.S. dairy
exports to Mexico were valued at $1.4 billion and to Canada at $731 million out of total dairy exports of $5.9 billion. Mexico is the leading market for U.S. cheese and nonfat dry milk exports. Canada is the leading export market for butter and processed dairy products (e.g., infant formula, milk drinks, and ice cream).

BEEF. In addition, the imports of beef and beef products from Canada and Mexico total $4 billion, which is $2 billion more than the amount of U.S. beef exports. trade relations with Mexico and Canada, which are critical destinations for U.S. pork, beef and lamb. This agreement will bolster the United States' position as a reliable supplier to two leading markets that currently account for about one-third of all U.S. red meat exports. We look forward to the Senate taking up this legislation as soon as possible and completing the ratification process