‘New NAFTA’ Won’t Rattle Supply Chains 

Aside from auto and dairy industry provisions, not much has changed for global companies in USMCA deal 

Companies with global operations were relieved to hear last week that U.S. and Canadian trade reps struck a deal to keep the North American Free Trade Agreement largely intact.

Companies with global operations were relieved to hear last week that U.S. and Canadian trade reps struck a deal to keep the North American Free Trade Agreement largely intact.

When the new NAFTA deal — now renamed the United States-Mexico-Canada Trade Agreement — was announced, reports mostly centered on changes affecting the auto manufacturing and dairy industries. But details of the USMCA’s provisions have trickled out over the past week to give international trade and business attorneys a clearer idea of how, if at all, their clients in other industries might be affected. Those experts say that while there are tweaks to note, such as a new sunset clause and stronger intellectual property protections, the USMCA is mostly NAFTA with a new name and some Trans Pacific Partnership elements included.

With the 24-year-old NAFTA framework in flux over the past several months, global companies weren’t sure whether the new steel and aluminum tariffs would be eliminated or tariffs on other goods might get tacked on. Businesses also stood to lose some of NAFTA’s perks, including a convenient worker visa program, which still remain in the USMCA.

“I think what this outcome really does is eliminate some uncertainty,” said Tyler Rauert, an international business attorney and partner at Messner Reeves in Denver who represents both foreign and domestic clients. The NAFTA renegotiation, he added, “unsettled a lot of [clients’] supply chains and investment decisions because we just couldn’t depend on NAFTA remaining in place, at least not the way it had been.”

The USMCA will raise the percentage of a vehicle’s parts that must come from a NAFTA nation in order for that vehicle to avoid a tariff, and it will set certain wage requirements for the workers producing those parts. U.S. dairy farmers will have an easier time exporting to Canada.

But the U.S. pharmaceutical and entertainment industries might marginally benefit from stronger IP protections. Biologic drugs will get 10-year exclusivity in Canada and Mexico, up from eight and five, respectively. Copyright in Canada will be brought in line with the U.S. to last 70 years, not 50 years, after the author’s death.

But what notably hasn’t changed in the negotiations is that the steel and aluminum tariffs the Trump administration placed on Canada and Mexico in March remain in place for now. Also, NAFTA’s TN visa program that encouraged mobility of workers among its three nations appears to be untouched.

To read this story and other complete articles featured in the October 8, 2018 print edition of Law Week Colorado, copies are available for purchase online.