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New NAFTA Announced

U.S., Canada and Mexico Reach Trilateral Trade Agreement

On Sunday, Sept. 30, the United States, Canada and Mexico reached a new trade agreement to replace the North American Free Trade Agreement (NAFTA) right before the U.S.-imposed deadline. NAFTA is still in effect while the new agreement, called the United States-Mexico-Canada Agreement (USMCA), goes through Congressional review. The timing allows outgoing Mexican President Enrique Peña Nieto to sign the USMCA prior to him leaving office.

 

“We are encouraged to see the United States reach a trilateral trade agreement with Mexico and Canada, allowing duty-free movement of auto parts to continue between the three countries. As we continue to review the text, we hope the modernized agreement strengthens trade in the region and promotes consistency and predictability for U.S. auto manufacturers, distributors, retailers and service providers,” said Bill Hanvey, president and CEO, Auto Care Association.

 

In terms of autos and auto parts, the updated auto rules of origin (Chapter 4) requires that 75 percent of a vehicle’s content must come from North America, up from the current 62.5 percent, in order to receive duty-free treatment. The agreement also includes a labor wage provision requiring a percentage of a vehicle to originate from workers earning at least $16/hour to be eligible for duty-free treatment.

 

Please review the full text of the trade agreement for more details. USTR has released a couple factsheets as well:

 

USMCA Factsheet 1

USMCA Factsheet 2


View Auto Care's NAFTA Resource Page