ALI Welcomes the Newly Revised and Concluded USMCA

The American Leadership Initiative welcomes the newly revised and concluded US-Mexico-Canada Agreement (USMCA) as an accomplishment that modernizes the original North American Free Trade Agreement (NAFTA) in important ways. The agreement has new language that protects the U.S. economy, workers and the environment, and sets new rules governing such matters as digital trade and labor law.

The reforms in USMCA provide for stronger enforcement and create rules of evidence that will help the United States successfully litigate labor, environmental, and other fact-intensive disputes, a provision recommended by ALI. The agreement also has the strongest labor provisions of any existing trade agreement and provides for effective monitoring of these obligations, a much more realistic standard of proof, as well as rapid response for labor enforcement provisions. USMCA also sets a new bar for strong enforceable environmental provisions.

The agreement covers important new issues that were not covered in the original NAFTA. A new digital chapter, is the first such comprehensive chapter in a trade agreement, going further than the language that would have been provided in the Trans-Pacific Partnership agreement. It includes language prohibiting duties and discriminatory measures on digital products, ensures that data can be transferred cross-border, and minimizes restrictions on where data can be stored and processed.

In addition to rule of law obligations governing labor and the environment, USMCA also includes language that obligates the parties to adopt or maintain anti-corruption measures, encouraging the promotion of anti-corruption organizations and training, and cross-border cooperation. The agreement expands the definition of state-owned enterprises and prohibits any government subsidies to those entities, and USMCA is the first trade agreement to include commitments to refrain from competitive devaluations and targeting of exchange rates, setting important precedents for future agreements.

As with all international agreements, USMCA isn’t perfect, but the agreement, with its new provisions, will advance American interests and values. While USMCA is necessary for economic progress and stability, achieving inclusive and sustainable economic growth requires additional policies, including, smart new investments in American workers and competitiveness, as well as capacity building support to advance the rule of law in Mexico.