How Does the New Nafta Agreement Affect Canada

The North American Free Trade Agreement (NAFTA) has been in place for more than 25 years, but in July 2020, a new agreement called the United States-Mexico-Canada Agreement (USMCA) came into effect. This new agreement has significant implications for Canada, and this article will explore how Canada is affected by the USMCA.

Firstly, it’s important to note that the USMCA maintains many of the provisions of NAFTA, such as allowing for tariff-free trade between the three countries. However, there are a few key changes that will impact Canada. One of the most significant changes is the new rules around automobile manufacturing. Under the USMCA, a higher percentage of a vehicle’s components (75%) must be made in North America to qualify for tariff-free trade between the countries. This means that Canadian automakers will have to source more parts from North America to remain competitive, which could lead to increased costs for manufacturers and, potentially, for consumers.

Another change that will impact Canada is the new dairy provisions in the USMCA. The agreement gives American dairy farmers greater access to the Canadian market, which has caused some concern among Canada’s dairy industry. The Canadian government has promised to compensate dairy farmers who are impacted by the new rules, but the long-term effects on the industry remain to be seen.

The USMCA also includes provisions related to intellectual property, digital trade, and labor rights. These provisions are similar to those in other recent trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). Overall, these provisions are expected to benefit Canada’s economy and help modernize the country’s trade relationships.

In conclusion, the USMCA has both positives and negatives for Canada. While it maintains much of the status quo established by NAFTA, there are changes that will impact Canadian businesses and industries. It’s still too early to say exactly how these changes will play out, but it’s clear that Canada will need to adapt to the new trade landscape created by the USMCA.