Over a year ago, Canada, Mexico, and the United States (U.S.) came together to sign a trade deal to replace the existing North America Free Trade Agreement (NAFTA). This new agreement, coined the United States-Mexico-Canada Agreement (USMCA), was meant to bring trading between the three countries into the 21st Century. At that time, the final step to implementing the new agreement was ratification by each but the quicksand of political posturing, elections, and impeachment trials hindered this progress.
On December 10th, 2019 a bridge was placed across the quicksand and the three countries met in Mexico City to sign a revised version of the agreement.
The newly revised USMCA (CUSMA or T-Mex depending on your resident country) has some major tweaks in the areas of: enforcement mechanisms, labour laws, pharmaceuticals and rules of origin. There are both winners and losers in each country as each conceded slightly from their own trade agendas in order to get the revised agreement signed.
The question on everyone's mind again is, “what is next and when will USMCA actually be in force?” It appears we are in the same spot as we were last year with one final step remaining - ratification of the agreement by the government of each country governments. Sources close to the U.S. Democratic Party have said that the U.S Senate will not vote on the bill to enact USMCA until after the impeachment trials, which means sometime in 2020. Some have suggested that it is possible that the vote will take place closer to or after the U.S. 2020 presidential election. Our Canadian government has said they will vote on ratification of the new agreement closely behind the U.S.
Today's already challenging customs and trade landscape is changing at a record pace. BDO Canada LLP is here to provide clear, concise answers to questions on the impact of these recent announcements by the U.S. and Canadian governments and assist in mitigating the impact to bottom lines. We will continue to update our clients as information becomes available regarding USMCA. Also, please watch for notification of our upcoming webinar on how to prepare your business for changes USMCA will bring about.
The information in this publication is current as of December 11, 2019.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.