I actually think I lost more Brain Cells than I gained reading this USMCA Pdf New Trade Agreement and well, it’s one that you will have to read for yourself. Yes, there are some things that are said well and may have very good intentions, but YOU CANNOT DICTATE POLICY upon another Country. Anyone can sign anything, but who’s to show or say that what is agreed upon will be done.
In certain cases like the Diary Industry, seeing is believing, but for the Cattle Industry, I’m still not sure and others as well on like pharmaceutical drugs. But you put on your big pants and send a few hours hovering over all of those pages and you too will come away dumber than smarter for sure. And the one I think most everybody wants to know is Wages Pay for similar work in these three Countries-
United Auto Workers currently ranges from $28 to $38 or so for those hired before September 2007, and between $16 and $20 for workers hired afterward.
By comparison, Mexican vehicle-assembly workers made less than $8 an hour on average in 2017, with those at parts plants making less than $4 an hour, according to the Center for Automotive Research, a nonprofit research group.May 7, 2018.
The average wage at Commscope is 115 pesos. New workers are hired at the minimum wage of 75 pesos per day, or $4.11 in U.S. dollars.
The Mexican government raised the country’s minimum daily wage by 20% to MXN 123.22 starting January 1st 2020. It is the biggest wage hike in the last four and half decades. In the northern border region, where wages are higher, the minimum salary increased by 5% to MXN 185.56. In 2019, wages increased by 16%. Mexico Minimum Daily Wage – data, historical chart, and calendar of releases – was last updated on February of 2020 from its official source.
The average Auto Mechanic salary in Canada is $58,500 per year or $30 per hour. Entry level positions start at $37,050 per year while most experienced workers make up to $74,100 per year.
Do you now see the disparity between the Three member Countries in USMCA?
So, now you know…
Well, here’s the 376-page Trade Deal that you can read and it’s Okay, it won’t bite you-
But there are some amazing hidden gems in it like this one-
Mr. Non-Global Warming Person-
Trump enacted an Environmental Protection Link to a Major Trade Agreement! (yes, read on down and you will find it highlighted for you)
USMCA provides a Provision for Immigrants at the BORDER WALL to come into America if you know where to look and understand how to do it? Yep, it’s there, Trump has given the GREEN LIGHT TO IMMIGRANT ENTRY, and it is highlighted, but again, if you know how to use it. Lol And a huge hit was this one-
“[T]his agreement has not earned the support of America’s working families. Without major improvements, this supposed overhaul will prove to be nothing more than a rebranded corporate handout.
Just scroll down and see who wrote that is there for you to see.
NAFTA TURNED UPSIDE DOWN or just a Show of Child’s Play? And just for grins, you might be needing to take a peep at this one as well-
But when NAFTA was turned UPSIDE DOWN, someone Farted in the RICH Man’s World, and it came out USMCA?
And does ya give a Hoot about any of it? Workers mostly no, but ones holding the Bearer Notes and Answering to Stock Holders, this one was a Capitalist Blessing of a Deal-it keeps more of the Monies right in the United States and Canada, but it still opens the Door for more Foreign Country Dependency upon Product Manufacturing.
Lovely it is if you are a Giant Squid and then if you aren’t, does it really make a HOOT? Well, I want to discuss Wages first off in Mexico at all of them Factories. And I know, Lord how some thinks that the Mexicans are Stealing their Jobs and making the Wages that they should have been making. But as I see it, the new USMCA is a Capitalist Move and a Capitalist Move ONLY to keep the Money flowing in to the right Coffers here in America.
And why might I be saying that young man? Well, here, let us take a peep at them Wages in say-Juarez, Mexico. Okay? You know the ones that you bees crying and saying you be wanting here in America-you know they stole your JOBS and now, you want them back and the Pay that goes with them-Okay, I have no problem with you going to Mexico and getting rightfully that which is yours. Afterall, you are going to be buying the Products, right? But before you jump into your car, take a peep at the following-OKAY? Now, be careful what you ask for cause you can surely get it-
MAQUILADORA WORKERS IN JUAREZ FORM A UNION
More than 150 members of the first independent union in Juarez in 30 years held a workers assembly on February 7 to develop their proposed demands to Commscope, formerly known as ADC, a manufacturer of fiberoptic equipment for major telecommunication companies.
Meeting in a hall that usually rented for children’s parties in the Plaza Nogales shopping center, Jorge Raul Garcia, the newly elected general secretary, facilitated the discussion of their first proposed collective bargaining agreement.
Their contract proposal is for 285 pesos per day, $15.62 in U.S. dollars, which is based on a study by the National Autonomous University of Mexico on what Mexican workers need to make ends meet on basic necessities.
Jorge worked at Commscope for 16 and-a-half years cutting fiberoptic cable. He made 150 pesos per day. The average wage at Commscope is 115 pesos. New workers are hired at the minimum wage of 75 pesos per day, or $4.11 in U.S. dollars.
They formed the Union of Workers at the ADC Factory. Commscope, or ADC, is producing fiber optics for Verizon, AT&T, Nortel, Telmex, Televisa and a telecommunications company in Scotland.
The union had requested strike authorization from the state Ministry of Labor.
Jorge was skeptical that they would get it. He foresaw an extended struggle that would go beyond state authorities to the federal government.
He said that the company is illegally exerting pressure on the chair of the labor board to declare the union illegal.
There are around 255,000 workers in Juarez’ 330 maquiladoras, about 13 percent of the national total, making Juarez one of the largest concentrations of manufacturing along the U.S./Mexico border.
According to a survey by the Hunt Institute for Global Competiveness, the average pay of Juarez maquiladora workers was 18 percent less than the average for manufacturing workers in Mexico’s border cities.
In 1993, a partnership between the Mexican labor federation, the Authentic Labor Front (FAT) and the U.S. union, the United Electrical Workers, mounted a union organizing campaign at the General Electric factory, Compania Armadora, but lost the election.
In the mid 1990s, Mexican and U.S. unions cooperated in opening a Center for Labor Studies (CETLAC) to help educate workers about their rights.
However, CETLAC closed its doors last year. Its former director, Daniel Rocha, is focusing on organizing workers in the informal sector, people who shine shoes in the central plaza and people who guide motorists to parking spots on public streets.
Gathering after the worker assembly to give their personal stories, workers passed around a box of tissues, as one after another broke into tears describing their struggle to survive on the low wages.
Ema is a single mother with two sons who makes 900 pesos per week, $49.38 in U.S. dollars. She gets no child support from her sons’ father. After she pays Fonavit, a government housing agency, she has 600 pesos left.
Breaking into tears, Ema said that she had to choose between buying shoes for her sons to go to school or buying food.
She developed a cyst in her wrist from the repetitive motion of turning screws at work. Ema said that her supervisor would count the time she took to go to the bathroom and then ask why she stayed so long.
Veronica Rodriguez, elected Recording Secretary, has worked 11 years at the plant. She said that when it was ADC, the treatment was good but when it changed owners and the name, it became different.
“The situation is intolerable. The Supervisors talk to us with ugly words saying we are idiots, and bad workers. ‘You work slow and don’t meet production,’ they would say,” Veronica said.
She said that she had to work nine hours and then the supervisors wanted the 10 people on her line to work 20 more hours. They had problems with pain in their arms and wrists after that 29 hour shift. Veronica said that there is a nurse at the plant but she does not care about their pain.
Luis Manriquez carries heavy cables and equipment at the plant. He has boots with steel toes that are supposed to be changed every six months but he has had the same boots for three years. The steel toe plate is cutting into his toes.
Luis has worked at the plant for 10 years. He makes 920 pesos per week and after paying Fonavit, he has 720 pesos left. He depends on getting extra overtime but on one occasion, after working extra hours, he was tired and made mistakes. The supervisor ordered him to go home without pay.
Luis said that if workers miss a day they lose half of their attendance bonus. He said bonuses are a mechanism to pressure workers.
Aurelia Mendrano has worked at the plant for 11 years. “The treatment is inhuman,” she said.
Aurelia said that if workers ask for permission to leave work to pick up a sick child from school, the supervisors tell them that it is their problem because they had babies or have “that kind” of husband.
“There is a lot of favoritism. People close to the supervisors get better treatment. The supervisors are like Egyptian pharaohs,” Aurelia said.
Aurelia said that someone sent her chocolate one day. She did not know it was her supervisor until he asked her friend what time she goes to the restroom.
She told her supervisor that she respects him as a supervisor but did not want a relationship. He told her that they could be lovers and he could help her get a better position.
After she rebuffed him, he kept pressuring her. She became sick from the stress and had to spend time in the hospital.
Dulce Maria Roque has worked at the plant for eight years. When her daughter is sick, she must negotiate with the supervisor to take the child to the doctor. The supervisor will say that she can leave half-an-hour early but will have her salary cut in half for the day.
“We are treated with no compassion or understanding of our necessities. The supervisors are without ethics and don’t care about the human person,” she said.
Luz Maria Nava had worked at the plant for 11 years. She had a heart attack on the assembly line. She was in recovery for two months and afterwards could not work extra hours.
When she got a call from the school that her daughter was sick, the human resources office would not let her call anyone to pick up her daughter. They told her that they would cut her salary if she left work.
Luz Maria said that management took the doors off of four of the 10 toilet stalls to discourage women from spending time in the restroom. She said that when they complained, human resources said “what is the problem? You are women with the same things on your body.”
Favoritism is rampant. Luz Maria said that a woman in human resources passed over a more qualified worker to give a position to her husband.
Saul Ruiz has worked at the plant for 15 years. He saw that a friend on his line, Lupita, was sick. She went to human resources to ask if she could go to a doctor. Human Resources said that she could not go. The plant nurse did not check on her. Saul said that she went home and died that night.
“One of the reasons that we requested a union was that no one in the company cared about us. If we have a union, we can take care of each other,” Saul said.
Another worker who was gay also became sick and died. When workers asked management why he died, they were told that “he died because he chose to be gay,” according to Saul.
After these two incidents, three workers went to meet with an attorney to find out how to start a union. The attorney, Cauhetomoc Estrada Sotelo, said to bring together a group of workers for a meeting. More than 200 came to the meeting.
On September 16, Mexican Independence Day, they delivered a petition for a union to the labor tribunal.
When workers who signed the petition showed up at work that day, management told 172 of them that they no longer worked there and the company would tell other maquiladoras not to hire them because they are rebels.
Raul said that they had a planton, an encampment outside the factory gates, for 43 days.
They took down the planton as part of an agreement with the president of the labor commission to be registered as a union. It took a further sit-in of the commission offices but on December 21, they were certified as a legal union.
As a union, they are demanding a collective bargaining agreement from the company and filing a strike petition with the labor tribunal. They are expecting the labor tribunal to deny them permission and then they will appeal to the federal labor board.
Their demands to the company are to reinstate the 172 fired workers and back pay since November 19, and to sign a collective bargaining agreement with a minimum wage of 285 pesos per day, increased from the current average of 115 pesos per day.
They are demanding that mothers who have children in child care or school be allowed to leave to get their children with no decrease in their salary or bonus. Also, if they have to go to a medical appointment, they would not lose wages if they show a prescription as proof.
Of the 172 fired workers, 106 are women and 49 are heads of household.
At the furthest point in south Juarez, past a roundabout Glorieta a Benito Juarez, highway signs carry the names of maquiladoras such as Planta Electrolux. The highway has four lanes and tall metal poles hold four street lights each. Huge steel poles more than 100 feet high carry large power lines.
On a dirt patch next to the driveway to the Lexmark plant, workers pitched tents and continued a planton for more than 6 weeks. Miriam Delgado Hernandez, coordinator, expressed their fear of being disappeared like the 43 students from the Ayotzinapa rural teachers’ college in the state of Guerrero in 2014.
This year Juarez is celebrating 50 years of the Border Industrial Program, which opened the door to the maquiladora boom.
While production is booming, wages and working conditions are deteriorating.
The minimum wage is hovering just above $4 per day as the peso is rapidly devalued.
According to Cecilia Espinosa, a former maquiladora worker who is currently on staff at the Mesa de Mujeres, a women’s human rights group, since 1982 the minimum wage has been losing purchasing power. Last year, the minimum wage of 70.10 pesos per day lost 68 percent of its value.
Previously, young people usually paid 50 percent of their income to their parents, according to Cecilia. Now, all family members of working age need to work full time to support the household.
The Mexican president and governor of Chihuahua have traveled overseas to lure more production to Mexico. As wages are rising in China because of labor unrest, they are trying to capture market share in advance of the implementation of the Trans Pacific Partnership. The TPP will open access to Vietnam and Malaysia as low-wage areas in competition with Mexico.
There has been a black-out of coverage of the protests in the Juarez media. The February 7 edition of the local paper had a full page spread denying that there are problems in the maquiladoras.
A former maquila worker from Eaton Busman, one of the plants with a labor dispute, Antonia “Toñita” Hinojosa Hernández, ran for mayor in the June 5 election to call attention to the grievances of workers.
While actually winning was a moon-shot, organizing the campaign to reach the 250,000 maquiladora workers in the city was a vehicle to organize workers in the maquiladoras. They launched a civic association called Maquiladora Workers of Juarez.
On the U.S. side, labor and community activists have been organizing in support of the Juarez maquila workers.
A group of students met at the Center for Inter-American and Border Studies at the University of Texas, El Paso (UTEP) to plan a student group to support Juarez maquiladora workers.
A labor support group, the Kentucky Workers League, picketed the Lexmark headquarters in Lexington, Kentucky, last January.
The San Francisco Labor Council passed a resolution in support of the maquiladora workers at its meeting on February 8. It sent letters to Mexican President Enrique Peña Nieto, Chihuahua Governor Cesar Duarte, Juarez Municipal President Javier González, the Chihuahua Secretary of Labor Fidel Perez and Lexmark corporate headquarters calling on them to protect workers rights to organize and demonstrate, to reinstate fired workers and to recognize their union.
A similar resolution was passed by the El Paso Central Labor Union on January 13 and the Texas AFL-CIO state labor federation on January 20.
The AFL-CIO issued a message of solidarity on January 11 and called on the U.S. government to review any purchases from these suppliers that may be receiving U.S. taxpayer dollars while they violate labor rights.
Even U.S. Congressman Beto O’Rourke of El Paso visited the planton outside the Lexmark plant and had his picture taken with workers. His parents own maquiladoras. His father-in-law is Bill Foster who built the power-house business alliance, the Verde Group.
The Border Institute, a faith-based group from both sides of the border, held a meeting on February 6 in Juarez with a workshop, “Discussion on Globalization and the Border Economy.” They discussed “Laudato, Si” or “Praise be to you” an encyclical letter by Pope Francis on the environment, production and work.
Father Benjamin Cadena described Border Theology. People idolize the market like the biblical golden calf. The fetish is now the economic system called Neoliberalism. Money is the new god that replaces the god of life. The desert is a place for communion and solidarity and the preferential treatment of the poor, moving through darkness by loving the light.
Father Cadena said that Pope Francis has spoken about structural or social sin that creates inequality.
Sin is within society as lack of justice and those who pay the highest price for the impunity of the rich are the poor, according to Father Cadena.
While the Border Institute did not take a formal action, activists at the meeting began organizing to publish a letter in a local paper to coincide with Pope Francis’ visit to Juarez on February 17.
They published a full-page ad that described an oppressive and exploitative social reality for workers in Juarez.
While the Pope met with some selected maquiladora workers, his visit was tightly choreographed to present Juarez as a safe place for investment.
- Country of origin rules: Automobiles must have 75 percent of their components manufactured in Mexico, the US, or Canada to qualify for zero tariffs (up from 62.5 percent under NAFTA).
Labor provisions: 40 to 45 percent of automobile parts must be made by workers who earn at least $16 an hour by 2023. Mexico agreed to pass new labor laws to give greater protections to workers, including migrants and women. Most notably, these laws are supposed to make it easier for Mexican workers to unionize.
- US farmers get more access to the Canadian dairy market: The US got Canada to open up its dairy market to US farmers, a big issue for Trump.
- Intellectual property and digital trade: The deal extends the terms of copyright to 70 years beyond the life of the author (up from 50). It also includes new provisions to deal with the digital economy, such as prohibiting duties on things like music and ebooks, and protections for internet companies so they’re not liable for content their users produce.
Sunset clause: The agreement adds a 16-year sunset clause — meaning the terms of the agreement expire, or “sunset,” after 16 years. The deal is also subject to a review every six years, at which point the US, Mexico, and Canada can decide to extend the USMCA.
But, now, I am dissecting the actual USMCA Pdf and its a long booger of a thing and it is no Secret sorts of stuff, you can read it as well-
WOW! The greatly Heralded, muchly anticipated changes that dropped NAFTA like a rock into the deepest wastepaper basket of B.S. that ever existed finally came out and it’s now called-USMCA
U no what? It’s been said that there is an eleven mile deep hole for all the B.S. sitting atop a wastepaper basket next to the Desk in the Oval Office. Is it true? And today, I’ve been dissecting the new USMCA Trade Pact.
And the 1st place I want to point out is this-
LABOR-practices in a Foreign Country like we can do anything about that? Look closely at this on page 24 of the USMCA Trade Agreement-
Now, I have put certain words in in parentheses for you to see better.
The USMCA labor provisions “are expected” (which means no guarantee) to promote higher wages and improved labor conditions in
member markets “if”(like who is going to Enforce them) these provisions are enforced. The Commission’s quantitative analysis of the
collective bargaining commitments in Mexico estimates that these provisions would increase Mexican
“union wages by 17.2 percent”(WOW! From 6-7 dollars a DAY to a whole’nother 17.2 % increase), “assuming”(ASSUME is where u make an ASS out of U and Me) that these provisions are enforced. This estimated wage
increase is then applied in the economy-wide model, together with the effects of other provisions, to
estimate the effects on the U.S. economy. The Commission estimates that the impact of the collective
bargaining provisions related to Mexico would have a “moderate effect” on the U.S. economy.
The USMCA labor chapter represents a significant departure from NAFTA, which does not include a
labor chapter but instead addresses labor rights in a side agreement. USMCA labor provisions are
subject to the same dispute settlement mechanism as other provisions in the agreement. The USMCA
labor chapter requires the parties to adopt and enforce the labor rights defined by the International
Labour Organization. USMCA “seeks”(seeks is not a binding word at all) to protect migrant workers and addresses issues of violence against
workers and of imports produced by forced labor. USMCA also includes a nonderogation provision that
prohibits the elimination or weakening of existing labor regulations in a way that impacts intra-party
trade or investment. (In other words, the RICH 3rd Party has put in a Backdoor)
Another key provision of the labor chapter specifically applies obligations to Mexico. An annex to the
labor chapter, addressing worker representation in collective bargaining, commits “Mexico to recognize”(like this will ever happen)
the right for workers to use collective bargaining. There are also notable labor provisions in other
USMCA chapters, including in the chapter on automotive rules of origin. These automotive-related labor
provisions are included in the modeling of the automotive sector.
Intellectual Property Rights
The Commission assesses that full implementation and enforcement of the IPR chapter’s provisions
would benefit U.S. industries that rely on IPR protections. The agreement would strengthen protections. (Yes protections to keep the Capitalist Machine moving along just nicely while putting more American Workers out of a JOB).
And one part that still haunts me is this-40-45% of the Automotive Parts has to be made by someone making $16 an hour by 2023. Well, hell to the no on that one with it being in Mexico. No, this is where American and Canadian Workers making these parts come into play. This is a piece of the Pie to keep certain Labor Unions Happy right here in America. Do u now get it? But gosh darn it, did you see how low the Mexican Worker is paid and not by the HOUR, but by the DAY! $4 to $7 a Day. A DAY!
Trade in Goods
In 2017, the USMCA parties accounted for 14 percent of global exports of goods and 19 percent of
global imports of goods. Canada and Mexico were the two largest export markets for the United States
that year, receiving 34 percent of total U.S. exports; they were also two of the top three import sources,
supplying 26 percent of total U.S. imports (figure 1.4). The United States exported $282 billion in goods
to Canada and $243 billion to Mexico in 2017. By comparison, the United States exported $130 billion in
goods to China, its third-largest export market. The United States received $314 billion worth of
imported goods from Canada in 2017 and $299 billion worth from Mexico. These amounts rank second
19 UN, DESA, Statistics Division, 2017 International Trade Statistics 2017 Yearbook, vol. I, 92, 226, 358.
0% 50% 100%
←Deficit Surplus →
Services Exports Goods Exports Goods Imports Services Imports
United States International Trade Commission | 33
and third, respectively, after imports of Chinese goods, which totaled $505 billion in the same period.20
The automotive sector was the largest source of U.S. exports to Canada, whereas the machinery sector
was the largest source of U.S. exports to Mexico.
In terms of U.S. imports, the largest source of goods from Canada was the natural resources sector, and
the largest source of goods from Mexico was the automotive sector.21 Most U.S. imports from Canada
and Mexico were duty free in 2017. The percentage of U.S. imports from Canada subject to duties was
16 percent; from Mexico, only 5 percent. By comparison, the percentage of U.S. imports from the world
subject to duties was 30 percent.22
Figure 1.4 Trade shares of the selected countries in U.S. trade in goods, 2017
Source: USITC DataWeb/USDOC (U.S. total exports and general imports; accessed February 12, 2019).
Trade in Services
In 2017, the USMCA parties accounted for 17 percent of global exports of services and 13 percent of
global imports of services, with the United States being responsible for a majority of trade.23 Canada was
the second-largest importer ($58 billion) of U.S. service exports, and Mexico was the seventh-largest
($33 billion); the two countries accounted for a combined 11 percent of total U.S. services exports. By
comparison, the United States exported $58 billion in services to China, its third-largest export market.
In terms of total U.S. imports of services, in 2017 Canada ranked 4th at $33 billion, and Mexico ranked
7th at $25 billion. China ranked 12th that year, highlighting the fact that China supplies far less in
20 USITC DataWeb/USDOC (U.S. total exports and general imports; accessed February 12, 2019). 21 USITC DataWeb/USDOC (U.S. total exports and general imports, aggregated at the HTS-2 level; accessed
February 12, 2019).
22 Dutiable imports from Canada and Mexico are likely goods for which, under NAFTA, the origin requirement could
not be satisfied or for which importers did not complete appropriate customs paperwork. USITC DataWeb/USDOC
(U.S. imports for consumption and dutiable values; accessed February 28, 2019).
23 World Bank, WDI, Service Exports, https://data.worldbank.org/indicator/BX.GSR.NFSV.CD (accessed February 25,
2019); World Bank, WDI, Service Imports, https://data.worldbank.org/indicator/BM.GSR.NFSV.CD (accessed
February 25, 2019).
Rest of the
Rest of the world 52%
As noted in chapter 1, the Bipartisan Congressional Trade Priorities and Accountability Act of 2015
requires the Commission to assess USMCA’s impact on the U.S. economy and on specific industry
sectors. The Commission’s assessment was required to encompass the agreement’s impact on U.S. real
gross domestic product (GDP), exports and imports, employment and employment opportunities, and
the production and employment of broad industry sectors. In response, the Commission applied a multielement framework to estimate the impact of the many diverse provisions of USMCA.
USMCA is unlike many previous trade agreements for which the primary impacts were assessed by
analyzing the reduction or removal of tariffs and easily quantified nontariff measures like quotas.
Because these changes were by and large already accomplished under NAFTA, the analysis of USMCA’s
effects had to focus more intensively on provisions applicable to nontariff issues, such as those related
to international data transfers, rules of origin, labor regulations, tariff-rate quota (TRQ) allocations,
investment regulations, and intellectual property rights. The Commission’s approach used a combination
of industry- and provision-specific modeling techniques, together with an economy-wide computable
general equilibrium model, to estimate the impact of USMCA. Provisions were selected for modeling
based on the expected magnitude of their economy-wide impact, data availability, and analytical
The results of the industry- and provision-specific analyses were then jointly integrated into an
economy-wide model that provided estimates on the combined impact of the agreement on the U.S.
economy, including key economic indicators such as GDP, trade, and employment. The economy-wide
model estimates that USMCA would likely increase GDP by about 0.35 percent ($68.2 billion),
employment by about 0.12 percent (176,000 full-time equivalent jobs), and exports to Canada and
Mexico by about 5.9 and 6.7 percent ($19.1 billion and $14.2 billion), respectively.26
The next section of this chapter describes the coverage of the quantitative analysis of this report. It lists
the provisions included in the modeling, and also explains the limitations of the coverage. The third
section of this chapter summarizes the extensions to the Commission’s modeling developed for this
report. The fourth section describes the estimated effects of USMCA on the U.S. economy overall, broad
economic sectors, and workers with different levels of education. The fifth section presents the
analytical framework for the economy-wide analysis. It also analyzes the impact of the provisions that
reduce certain policy uncertainty in international data transfers, cross-border services, and investment,
26 Employment estimates throughout this chapter reflect full-time equivalent (FTE) jobs. In the model, workers may
enter or exit the labor force but are never considered unemployed, they are outside of the labor force.
U.S.-Mexico-Canada Trade Agreement
38 | http://www.usitc.gov
and considers the impact of alternative assumptions about labor mobility. The last section of this
chapter reviews the related literature.
The remaining chapters in the report provide further analysis of both the provisions that were modeled
as a part of the economy-wide model and those that were not, with the aim of providing a
comprehensive analysis of the impact of USMCA on the U.S. economy and industry sectors. Some
provisions were not modeled because they were expected to have a small economy-wide impact or
because of data or analytical limitations.
In this report, the Commission has included analyses specific to eight groups of USMCA provisions:
agriculture, automobiles, intellectual property rights (IPRs), e-commerce, labor, international data
transfer, cross-border services, and investment. As depicted in figure 2.1, each of these analyses
provides estimates of provision-specific economic impacts and modeling inputs for the economy-wide
model. This methodology resulted in impact estimations specific to each individual provision and at a
more aggregate, economy-wide level that reflected all the modeled USMCA provisions. The economywide impact of all of these provisions is presented in this chapter.
The economy-wide model estimates that many aspects of the U.S. economy would likely grow under
USMCA. Estimates indicate that U.S. real GDP would grow by 0.35 percent ($68.2 billion) and
employment would grow by 0.12 percent (about 176,000 jobs). Exports to Canada and Mexico would
increase by about 5.9 and 6.7 percent ($19.1 billion and $14.2 billion), respectively.
Effects of USMCA on Different Types of U.S. Workers
The estimated impacts of USMCA on workers are generally positive, but vary in magnitude depending on
their level of education. Differences across labor types are based on several factors. The first factor is
that the labor composition of each industry is different, meaning that each industry tends to employ a
different share of each type of worker. As a result, when demand for a certain industry’s output
increases, the labor demand for some types of workers grows more than others. The second factor is
that each worker type responds differently in terms of a worker’s decision to enter or exit the labor
market in response to wage changes. In general, more highly educated workers are less responsive to
35 Note that these estimates reflect the total impact on broad sectors. It is not necessarily the case that every
individual industry within these broad sectors would experience similar gains. For example, the automotive model
presented in chapter 3 estimated a positive impact on employment in parts manufacturing but a negative impact
on employment in vehicle production manufacturing.
U.S.-Mexico-Canada Trade Agreement
46 | http://www.usitc.gov
changes in wages because their jobs are more specialized and they are less likely to enter or exit the job
market. By comparison, less educated workers respond to wage changes more readily, reflecting the less
stable labor market these workers face compared to more-educated workers.
As shown in table 2.2, the average U.S. wage across workers of all types is estimated to increase 0.27
percent, reflecting about $150 per worker and year.37 As shown in figure 2.2, workers of all education
levels would experience increases in wages. However, wages would increase by a higher percentage for
workers with a graduate degree (0.30 percent) than for workers with 0–9 years of education (0.23
percent) or 13–15 years of education (0.25 percent). This is primarily because highly educated workers
are less responsive to wage changes and, therefore, require a higher increase in wages to induce them
to enter the labor market and satisfy new labor demand.
Across sectors, the largest wage increases are estimated to be in the manufacturing and mining sector,
due primarily to the automotive rules of origin changes. The other sectors would see smaller wage
changes, with services showing a smaller increase than agriculture.
Modeling of Labor
Some modifications were made to improve the treatment of labor in the United States within the
economy-wide model. U.S. workers were split into five types based on their educational attainment.73
The choice to focus on the education of workers rather than their Occupation was based on the often
large differences in educational attainment and earnings within an occupation in an industry.74 Further,
industries themselves also differ in terms of the educational composition of their workforce.75 Splitting
workers by educational attainment made it possible to estimate the impact of USMCA on workers of
similar education levels employed in different industries and on industries requiring workers with
diverse levels of education to produce output. Drawing on the 2017 Current Population Survey (CPS)
dataset collected by the U.S. Census Bureau, the labor portion of production in the economy-wide
model was split into five groupings in each industry. The groupings were workers with 0–9 years of
education, 10–12 years of education, 13–15 years of education, a bachelor’s or equivalent degree, and a
graduate or professional degree.76
The economy-wide model allows for changes in the number of workers in the United States. Workers
can drop out of the labor force if wages decrease, and nonworking adults can join the labor force if
wages increase. Further, each worker type responds differently to wage changes. Workers with lower
levels of education are modeled as being relatively responsive to wage changes when deciding whether
to switch their labor force participation status. Workers with higher levels of education switch between
nonparticipation and participation in the labor force only if wages change by a relatively large
percentage.77 This change in participation rate is not a change in unemployment; the market is assumed
to be at full employment.
Within the model, workers are permitted to move between industries, but face some frictions in doing
so. Since the assumption of restricted labor mobility across industries is new to the Commission’s
modeling, the impact of this assumption on the results was investigated.
Automotive, Steel, and Aluminum Products
Compared with NAFTA, USMCA significantly increases the regional content required in automotive
products and inputs, adds new requirements intended to support well-paying jobs for workers in the
industry, and introduces a more complicated process for qualifying automotive, steel, and aluminum
products for duty-free treatment. According to Commission estimates, these changes would lead to an
increase in U.S. automotive parts production, partly offset by a small decline in U.S. vehicle production
due to consumer price increases that would reduce demand. The result would be a net employment
increase of more than 28,000 full-time equivalent employees (FTEs) in the automotive sector.
The following discussion focuses on automotive rules of origin (ROOs) in the agreement text and related
side letters, and additional ROOs related to aluminum and steel.81 It begins with a description of
automotive trade; summarizes the automotive, steel, and aluminum provisions in USMCA that represent
a change from NAFTA; gives a qualitative analysis of the potential effects of the provisions on the
automotive, steel, and aluminum sectors; and introduces a partial equilibrium model to estimate the
effect of USMCA’s automotive provisions on U.S. automotive production, employment, and trade.
Automotive Industry Overview
This chapter discusses three types of vehicles: passenger vehicles, light trucks, and heavy trucks.
Passenger vehicles include cars (e.g., Chevrolet Camaro, Ford Mustang), sport-utility vehicles (Chevrolet
Equinox, Jeep Wrangler), and minivans (Dodge Caravan, Honda Odyssey), while the light-truck category
includes pickup trucks (Chevrolet Silverado, Ford F-150) and workvans (Ram ProMaster, Ford Transit).
Heavy trucks are medium- and heavy-duty trucks of either the tractor-trailer or the cab and chassis
Labor Value Content (LVC)
LVC is a new formulation, not used in any previous agreements, made up partly of costs for high-wage
materials or manufacturing and partly of costs for high-wage technology, research and development, or
assembly. To meet USMCA ROO requirements, these costs must make up 40 percent of the total
manufacturing cost for PVs and 45 percent for LTs. There are three components to the LVC
calculation.121 First, high-wage technology expenditures, as a share of a vehicle producer’s annual
expenditures on production wages, can be used to make up to 10 percent of the LVC. Second, a vehicle
producer can receive a 5 percent LVC credit if it can demonstrate that it has an engine assembly,
transmission assembly, or advanced battery assembly plant that meets a minimum required capacity in
one or more of the NAFTA parties and that it pays an average production wage of at least $16/hour.
The remaining 25 to 30 percent (or more) of the LVC comes from high-wage material or manufacturing
costs. These costs are calculated as the sum total of the annual value of parts or materials purchased
from plants that are located in one or more of the party countries and that have a production wage rate
of at least $16/hour (including labor costs in the vehicle assembly plant), divided by the net cost of the
vehicle. LVC can be calculated by model line, class, or production plant for LTs or PVs within a party (but
not across parties).122 Vehicle producers must certify that they meet LVC requirements on an annual
LVC is the sum of the three different calculations. The first and largest component of the LVC calculation
is high-wage material or manufacturing costs as a share of the net cost of the vehicle (table 3.4). Highwage material or manufacturing costs are the cost of all materials that come from a supplier plant
paying $16/hour or more to its production workers, plus the cost of the wage bill from the assembly
plant (if the assembly plant pays $16/hour or more), divided by the net cost of the vehicle. The share of
high-wage material or manufacturing costs must be at least 25 percent for PVs and 30 percent for LTs.
Table 3.4 is an example of the first calculation for a hypothetical PV that has a net cost of $20,000.
Table 3.4 Calculation of credit from high-wage material and manufacturing costs
Labor value content
Total $6,000/$20,000 30 percent
High-wage assembly plant wages $4,000/$20,000 20 percent
Parts and materials from plants
paying $16/hour $2,000/$20,000 10 percent
The second component of the LVC calculation is high-wage R&D and IT expenditures as a share of annual
vehicle producer expenditures on wages in North America. Table 3.5 shows a hypothetical example,
where the company producing the vehicle spends $1 billion on wages at $16/hour or higher for highwage technology and R&D in North America, and spends $10 billion on wages (which may be less than
$16/hour) in North America. Dividing $1 billion by $10 billion yields 10 percent, which is the maximum
percentage a vehicle producer is allowed to claim from a combination of high-wage technology and R&D
expenditures for LVC.
Table 3.5 Calculation of credit from high-wage R&D and IT expenditures
High-wage technology and R&D expenditures divided by vehicle producer $1 billion 10 percent
Vehicle producer expenditures on production wages $10 billion
The third component of the LVC calculation is a credit for using a qualifying engine, transmission, or
battery plant that pays a wage of $16/hour in North America. This is a corporate credit, so the engine,
transmission, or battery plant does not have to supply each of the vehicles using the credit. If the vehicle
manufacturer qualifies, it receives the full 5 percent credit with no additional calculations required.
The sum of all three calculations—(1) high wage material and manufacturing costs, (2) high wage R&D
and IT expenditures, and (3) qualifying plant credit—must equal at least 40 percent for passenger
vehicles and 45 percent for light trucks.123 Table 3.6 shows the hypothetical calculation for a passenger
vehicle produced in North America.
Rules of Origin for Steel and Aluminum Purchases
The ROOs under USMCA contain a number of new RVC or content provisions for certain sectors that
appear intended to foster greater use of North American-produced steel and aluminum products.
Affected sectors include automotive products, certain fabricated steel products, and steel-intensive
products. The requirement that at least 70 percent of a North American vehicle producer’s purchases of
steel and aluminum by value originate in the territories of the parties, discussed previously, does not
identify the relevant classifications in the international Harmonized Commodity Description and Coding
System (HS) of tariff categories. Instead, USMCA leaves the parties to “develop any additional
description or other modification of steel and aluminum . . . , if needed, to facilitate implementation” of
this new requirement.124 The ROOs for aluminum products under the USMCA remain unchanged from
those under NAFTA. A number of other steel and steel-intensive products, which previously could
receive duty-free treatment based on a tariff shift rule,125 now must meet either RVC requirements or
originating content requirements by weight.
The new ROOs would also likely have an impact on steel and aluminum markets in the United States,
since those two metals account for the majority of the weight of vehicles produced in North America—
but steel more so than aluminum.126 U.S. steel producers expect the new rules to lead to increased U.S.
steel production, employment, and wages, with increased demand for steel from previously
nonconforming Mexican vehicle and parts production.127 However, North American aluminum
producers do not see the new rules leading to major changes in aluminum demand.128
Mexico, or Canada, while others are imported from Europe or Asia. The manufacturers also vary in the
sourcing of their parts. Foreign-owned companies that build vehicles in North America are more likely to
import their engines, transmissions, and other core parts from their home countries in Europe or Asia.129
Differences in supply chains across PV and LT models would likely result in different responses to the
new ROOs.130 Some manufacturers would already meet the new ROOs for their PV and LT models
without any adjustments in their current North American supply chains, while others would probably
not be willing to make the changes necessary to meet the new ROOs and would lose their tariff
preferences.131 A third group would be able to comply with the new ROOs, but only after making
adjustments to their sourcing of core parts. According to industry representatives, the longer a
manufacturer has been producing vehicles in North America, the better situated it is to meet USMCA
RVC and LVC requirements.132 Many parts manufacturers do not have the compliance staff necessary to
demonstrate to manufacturers that they meet RVC or LVC requirements and will need to hire staff and
develop new compliance processes. Toward this end, industry and government have been working to
standardize the certification process.133
To the extent that the new ROOs reduce the utilization of tariff preferences or lead to more costly
sourcing of core parts, PV and LT cost increases in the United States would be passed on to consumers
or subtracted from the profits. The higher cost would lower consumption of these vehicles in the U.S.
market. Even manufacturers that do not experience a direct increase in their production costs would
probably respond to the rising prices of their foreign and domestic competitors by raising their own
prices slightly, thereby marginally increasing their profits. Further, some manufacturers may choose not
to offer vehicles that would be too expensive to bring into compliance, which ultimately would lessen
Based on the Commission’s model and discussions with industry experts, the new ROOs would likely
have a positive effect on U.S. employment in the production of core parts like engines and transmissions
through reshoring (returning production to U.S. territory).135 The rules would also lead to an increase in
the industry’s capital expenditures on facilities that produce the core parts in the United States.136
Automotive industry representatives also expect the steel and aluminum provisions to increase demand for North American steel and aluminum. Vehicles produced by the largest U.S.-headquartered vehicle
manufacturers and transplants already exceed the requirements of the ROOs. However, some
transplant manufacturers with a smaller vehicle assembly footprint in North America would have to
increase their North American sourcing of steel and aluminum.137 Some industry representatives
expressed concern about whether there is sufficient existing North American steel and aluminum
capacity for the specific steel and aluminum they use in their vehicles.138
In theory, the new ROOs could also lead to efficiency gains if the new rules simplified the administrative
burden on manufacturers, as they eliminate the complex tracing requirements under NAFTA. However,
witnesses at the Commission’s hearing were skeptical that the complex new rules could produce these
kinds of efficiency gains. Industry representatives have suggested that the new ROOs will probably
increase compliance costs for vehicle manufacturers and suppliers.139
Some industry representatives have said that they do not believe that the new ROOs would lead to
major changes in the North American automotive supply chain. Even these commenters, however, state
that the new ROOs would ensure that U.S. content in vehicles produced in North America would stay at
or above current levels.140
The new ROOs for heavy trucks have a lower RVC and a longer staging period because the heavy truck
industry does not update its vehicles as often. Also, its supply chain is different from that of the lightvehicle industry; it uses larger diesel engines, heavier parts, and lower quantities of parts. The heavytruck industry was thus given more time to comply.
Summary of Key Provisions
USMCA makes three significant changes that impact the MNRE (Manufactured Goods and Natural Resources and Energy Products) sectors. First, it revises ROOs applicable
to several MNRE sectors, such as tariff-shift changes for certain electronic products. Second, USMCA
adds new provisions such as nontariff measures affecting ICT, a national treatment exception for
Mexico’s energy export license program, and a customs enforcement provision affecting textiles and
apparel (table 4.2).156 Third, it increases the allowance for non-originating fibers or yarns
in textiles from 7 percent to 10 percent and provides new market access rules for remanufactured goods
and goods that incorporate cryptography.
The USMCA’s Pharmaceutical Annex calls for parties to cooperate and collaborate on the regulations,
standards, and processes used to develop and implement national marketing authorizations for
pharmaceuticals. These authorizations are to be based on best scientific practices and not on sales,
financial, and/or pricing data. The Pharmaceutical Annex also calls for a public identification of each
party’s regulatory authority; the streamlining and alignment of the parties’ regulations and approval
processes, using a science-based approach; enhanced transparency in inspecting pharmaceutical
manufacturing facilities; the exchange of information and data on pharmaceuticals between parties,
taking care to ensure that the information and data are not disclosed; and adoption of mutual
The USMCA section on Transparency and Procedural Fairness for Pharmaceutical Products and Medical
Devices addresses transparency in pharmaceutical approval and reimbursement, aiming to balance four
goals: (1) promoting public health; (2) enhancing patient access to pharmaceuticals; (3) continuing
emphasis on research and development; and (4) ensuring competitive and appropriate market pricing
for pharmaceuticals.163 The pharmaceutical transparency annex says that reimbursement decisions
should be made in a timely and transparent way by the national healthcare authorities. It further says
that stakeholders—e.g., applicants and the public—should have access to information on how these
decisions were made (apart from confidential business information) and also have opportunities to
comment on the process.164 This provision also addresses the scope and truthfulness of information
about pharmaceuticals that manufacturers publish on their websites, including “a balance of risks and
benefits.” Parties also must have the opportunity to consult with each other.
The U.S. pharmaceutical industry’s concerns about the agreement largely focuses on IPRs. These
concerns are addressed in chapter 8 of the report. Also, industry submissions from the American
Chemistry Council (ACC) and Society of Chemical Manufacturers & Affiliates (SOCMA) asserted that the
original NAFTA prohibition on duty drawback should have been eliminated.165
The USMCA chemicals and pharmaceuticals provisions (excluding the crosscutting provisions such as
intellectual property rights and digital trade that are discussed in a separate section below) are likely to
have an insignificant impact on U.S. trade in chemical and pharmaceutical goods. This is particularly likely since over 95 percent of U.S. imports of these products from Canada and Mexico already entered
duty free in 2017 under NAFTA.166 Regarding specific provisions, the additional process ROOs in USMCA
are the same as those in other recent U.S. free trade agreements (e.g., the U.S.-Korea Free Trade
Agreement); the process rules are additional criteria for determining origin. Although the effects cannot
be quantified, industry representatives have stated that the primary benefits of the additional criteria
are that they would parallel similar provisions in other recent agreements and provide alternative
options to RVC rules.167 Likewise, the transparency annexes generally adhere to existing practices.
Industry has not commented on the transparency provisions.
Key USMCA Provisions
USMCA would alter many of the existing rules of origin (ROOs) for electronic items. The NAFTA-specific
ROOs chapter for televisions, parts, and electronics reduces regional value content (RVC) requirements
for certain electronic products, converts tariff-shift requirements for other electronics products to RVC
requirements, and adjusts tariff shifts on other items from the Harmonized System (HS) heading level to
subheading level. For example, under current NAFTA regulations, static converters can enter the United
States from Mexico or Canada duty free under either (1) a 4-digit-level HS tariff shift or (2) a 60 percent
transaction value (TV) combined with a 50 percent net cost (NC) calculation. Under USMCA, the tariff
shift for static converters would instead be at the HS 6-digit subheading level, and the RVC option would
be removed, improving trade prospects for converters throughout the North American electronics value
Other goods face simpler rules of origin changes, often with reductions in the RVC required to secure
tariff-free access to the U.S. market. For example, parts used for monitors and projectors currently
receive duty-free access from Mexico and Canada with a tariff shift at the item level or a 60 percent
TV/50 percent NC RVC requirement. Under USMCA, this provision would be replaced with a lower
content requirement (40 percent TV and 30 percent NC).
Chapter 12 of the USMCA includes two annexes that address the ICT and medical device subsectors,
respectively. The agreement’s Information and Communications Technology annex (Annex 12-C) focuses
principally on preventing the imposition of nontariff measures that may impact trade in ICT products
(particularly in telecommunications and cryptography) and ICT services. The annex thus contains
provisions to remove or prevent technical barriers to trade (TBTs) in ICT products, with specific focuses on telecommunications equipment and cryptographic goods. Generally, the provisions of the ICT annex
would not affect current policies within USMCA member states, but rather would constrain the ability of
a USMCA state to impose trade-restricting actions in the future.
One major provision of the USMCA’s ICT annex bans a member state from requiring the mandatory
transfer or access of proprietary cryptography (which is defined to include private keys, algorithm
specifications, or design details) to a government agency or person, with exceptions.179 This provision
also precludes a USMCA party from requiring a firm to partner or cooperate with any particular person
or organization in the manufacture, distribution, or use of the product. It also prevents a country from
requiring a firm or person to use or integrate a specific type of cryptographic algorithm or cipher into
their digital products.
The second major provision of the ICT annex establishes the compatibility of ICT product regulations
within the USMCA market, particularly with relation to certain testing and conformity assessments,
particularly on electromagnetic compatibility. The USMCA ICT annex would require any country within
USMCA to accept a supplier’s declaration of conformity from any USMCA party: for example, a USMCA
party must recognize the certifications of electromagnetic compatibility in other USMCA parties, subject
to certain requirements. Similar language extends this provision to telecommunications equipment
testing and mutual recognition of conformity among USMCA member states.
Finally, the ICT annex contains a provision indicating the conditions under which parties can establish
regulations, standards, or procedures regarding terminal equipment attached to public
telecommunications networks. These conditions encompass any measures designed to prevent damage
or degradation to public networks, prevent electromagnetic interference and ensure compatibility with
the electromagnetic spectrum, prevent billing malfunction, or ensure safety and access.
With regard to medical devices, Annex 12-E addresses the application of standards, technical
regulations, and conformity assessment procedures. As with the ICT annex, the annex on medical
devices aims to avoid the adoption of TBTs. For example, the annex includes language that specifically
discourages duplicative regulatory procedures, while encouraging the recognition of audits of medical
device manufacturers operating in each of the member countries. Further, the annex encourages
conforming medical device standards with those of international best practices, including the adoption
of a risk-based classification system.
USMCA provisions related to electronics products would have a small positive impact on production and
trade behavior in the electronics sector. While the ICT annex provisions are unlikely to have strong
effects, changes to the ROOs on electronic products may be associated with some slight trade increases
in electronics. This assessment is based on Commission industry expertise and feedback from industry
Key USMCA Provisions
USMCA modifies the provisions of NAFTA by altering certain ROOs and modifying the relevant tariff
preference levels (TPLs). USMCA also adds a textile chapter, including textile-specific customs
enforcement language. These provisions give guidelines outlining how officials from the importing party
may conduct on-site production verification visits to manufacturers in an exporting party.222
USMCA’s ROOs for textiles and apparel are less restrictive in some ways, but somewhat more restrictive
in others. The USMCA tariff shift rules for textile and apparel products maintain the basic concepts
established for textile and apparel products under NAFTA with a few modifications. Those rules follow a
“fiber-forward” concept for yarns and knit fabrics223 and a “yarn-forward” concept for woven fabric,
apparel, and made-up textile articles.224 However, under USMCA, the rules would no longer require
certain rayon fibers225 or non-cotton vegetable fiber yarns226 to be sourced from the United States,
Canada, or Mexico when used to produce textile or apparel goods.227 In addition, USMCA increases the
NAFTA textile de minimis allowance from 7 to 10 percent.228
USMCA would also modify the “chapter rules” for goods classified in HTS chapters 61 and 62 (knit and
woven apparel) by eliminating the NAFTA requirement that visible linings must be sourced from one of
the parties. At the same time, however, it would add new requirements for narrow elastic fabrics, sewing thread, and pocket bag fabric.229 The three new chapter rules would require these inputs to be
formed and finished in one of the party countries to allow the garments containing these materials to
qualify for preferential treatment.230 USMCA builds in transition periods for each of the new chapter
rules.231 In addition, for certain made-up articles (HTS chapter 63), USMCA add a new chapter rule
requiring fabrics coated with plastics (of HTS chapter 59) to be formed and finished in one of the parties
to allow finished goods of those fabrics to qualify for preferential treatment.232
USMCA keeps all of the NAFTA TPLs, which allow preferential duty treatment for a limited quantity of
non-originating goods, with some changes to the quantities and scope of the coverage (see table 4.3). In
general, these changes would maintain or lessen the duty-free amount that Canada and Mexico can
export to the United States, and maintain or increase the amount that the United States can export to
Canada and Mexico.233 In addition, USMCA includes new trilateral administrative guidance intended to
make the management and utilization of the TPLs more transparent and predictable.
Most trade in agricultural products between the United States, Canada, and Mexico is duty free under
NAFTA and would continue to be duty free under USMCA. However, some restrictions on agricultural
trade remain. Canada maintains a supply management system including tariff-rate quotas (TRQs) that
protect its domestic producers of dairy products and poultry and egg-containing products from imports.
At the same time, the United States maintains TRQs on sugar and sugar-containing products (SCPs) and
dairy products. Restrictions on trade in these products would be slightly eased under USMCA. According
to the Commission’s economy-wide modeling results, USMCA is likely to lead to slight increases in U.S.
exports of dairy products, poultry meat, eggs, and egg-containing products to Canada, and to a slight
increase in Canada’s exports of dairy products to the United States and a minimal increase in Canada’s
exports of sugar and SCPs to the United States. Additionally, USMCA provisions address nontariff
measures that will likely increase exports of U.S. wheat and alcoholic beverages to Canada. Overall,
USMCA will likely increase annual U.S. agricultural and food exports to the world by $2.2 billion
(1.1 percent) when fully implemented, including all other USMCA provisions described in chapter 2 of
this report.241 A Commission simulation that considered only the effects of the agriculture market access
provisions in USMCA showed increased U.S. agriculture and food exports to the world of $435 million.242
This chapter focuses on USMCA provisions affecting trade in agricultural goods with Canada and Mexico.
These include provisions that provide additional market access for the dairy, poultry, and sugar sectors;
provisions that reduce nontariff measures affecting alcoholic beverages and wheat trade; and
crosscutting provisions affecting sanitary and phytosanitary (SPS) measures, TRQ administration, and
biotechnology. The chapter begins with a snapshot of agricultural trade with Canada and Mexico in
2017, followed by a summary of key USMCA provisions. Several sectoral and crosscutting sections follow
which highlight specific provisions and their likely effect on trade.
Estimates of increased trade in dairy, in poultry and eggs, and in sugar resulting from the market access
provisions for those products were generated from sectoral results of the Commission’s economy-wide
model. Effects of the other USMCA provisions for agriculture presented in this chapter are based on
USMCA provides additional market access for U.S. dairy products through new Canadian TRQs
exclusively for the United States for products including fluid milk, cream, butter, skim milk powder,
cheese, and other dairy products (table 5.3). In-quota imports enter duty-free and out-of-quota imports
face duties ranging from 201.5 percent to 313.5 percent.245 The quota volumes increase rapidly in the
first six years of the agreement, and then increase at a rate of 1 percent annually through year 19,
except for whey, which becomes duty free after year 10. For the fluid milk, cream, and butter and cream
powder TRQs, up to 85 percent of the TRQ volumes are dedicated to bulk products for processing into
dairy products used for secondary manufacturing, with the remainder of the quotas available for
products for any use. For the butter and cream powder TRQ, the portion dedicated to bulk products
drops to 50 percent over five years. Previously, Canada considered fluid milk TRQs filled by consumer
cross-border purchases and did not issue import permits. U.S. access through WTO TRQs and Canada’s
Import for Re-Export Program (IREP) and Duties Relief Program (DRP), or similar programs would
continue as long as such programs are in place.
The services-related provisions included in USMCA include changes to the parties’ obligations as
compared to their obligations under both NAFTA and the WTO’s General Agreement on Trade in
Services (GATS). Most notably, USMCA introduces binding obligations on market access that build on
U.S., Canadian, and Mexican GATS commitments. In addition, it makes some potentially important
changes to provisions affecting certain industries. Specifically, provisions on international data transfers
in financial services and other sectors, as well as provisions on long-haul trucking, may affect services
providers in these industries.
However, even with these exceptions, USMCA provisions on services trade are unlikely to have a
substantial impact on output in the U.S. services sector, though services trade in North America is
expected to rise. Many of these provisions simply afford greater transparency, as they capture
obligations that are already in place in NAFTA and GATS and practices that are currently allowed under
the parties’ domestic regulation. There are a few instances where these provisions reflect effective
liberalization of the parties’ current international obligations—specifically, to market access
commitments and nonconforming measures. Such effective changes are included in the quantitative
analyses, which appear in tables 6.4 and 6.5 and are inputs into the economy-wide model reported in
chapter 2. These changes typically reflect commitments to the current regulatory conditions in each
industry and reduce uncertainty about future policy changes, with the largest effects stemming from
commitments to maintaining current foreign equity requirements in the member countries.
Services trade between the United States, Canada, and Mexico is currently subject to commitments in
both NAFTA and GATS. Among those commitments, NAFTA requires parties to grant national treatment
to other parties’ services providers, except as indicated in the countries’ lists of nonconforming
measures (NCMs). Under GATS, NAFTA members made commitments to grant market access and
national treatment to foreign individuals and firms that provide specified services through certain
modes or methods (box 6.1).319 USMCA’s services provisions build on the services trade obligations in
both of these agreements by deepening, clarifying, and increasing the transparency of the national
treatment commitments included in NAFTA, as well as adding to the parties’ market access
commitments under GATS.
Digital Trade and E-commerce
The Commission estimates that USMCA is likely to have a significant, positive impact on the many U.S.
industries that rely on cross-border data flows and digitally enabled trade, including e-commerce.412 Key
provisions in USMCA’s digital trade chapter require the parties to ensure free movement of data crossborder, and also forbid them to adopt restrictive data measures in the future. As was shown in chapter
2, these international data transfer measures contribute significantly to the estimated gains in the
economy-wide model in many sectors, as the movement of data is an issue for most industries at least
to some degree. In particular, the USMCA would benefit U.S. computer services and digital platform
services firms by ensuring that data flows remain unencumbered, proprietary source codes and
algorithms are protected, and intermediary liability protection is provided. The U.S. telecommunications
(telecom) industry would gain increased access to telecom networks and interconnection provisions.
U.S. exporters of low-value shipments (including e-commerce exports) and express delivery services
would likely experience faster shipping and lower-cost customs processing.413 U.S. payments services
would likely benefit from fuller market access and national treatment.
This chapter discusses the effect of the USMCA provisions related to digital trade and e-commerce
across U.S. economic sectors, focusing on the provisions’ likely impacts on selected data-intensive
industries (industries that gather, store, and process data in the course of conducting their operations)
and electronic services.414 The relevant USMCA provisions are found primarily in the following chapters
of the agreement (listed in order of significance): 19 (Digital Trade), 18 (Telecommunications), 17
(Financial Services), and 7 (Customs Administration and Trade Facilitation), and in Annexes II and III.415
The chapter begins with a summary of key digital provisions covering computer services and online
platforms, telecommunications, e-commerce, express delivery, and payment services. Next, it examines
the impact of USMCA on these industries,416 including quantitative assessments of the benefits of
USMCA provisions that ensure unimpeded data flows, prohibit data localization measures, and establish
higher de minimis thresholds on U.S. exports. The impacts of USMCA’s data transfer provisions are
analyzed for the whole economy and these results are detailed below.
Summary of Key Provisions
If enacted, USMCA would be the first U.S. free trade agreement to include a chapter on digital trade. As
a result, nearly all of the digital trade and e-commerce-related provisions in the agreement are new
relative to NAFTA (table 7.1). These provisions are also crosscutting, applying broadly to U.S. firms
across the economy. Businesses likely to be affected include traditional data-intensive, internet-based
firms, but also firms in the services, manufacturing, and agricultural industries that rely on data and
information flows in their business models and have strong competitive advantages globally. Building on
the Trans-Pacific Partnership (TPP) framework, the USMCA Digital Trade chapter would ensure that data
restrictions are not enacted in the future, and would establish trade commitments on other digital trade
matters that have emerged since NAFTA was enacted.Moreover, the Digital Trade chapter contains
trade-facilitating measures that would be particularly beneficial to small and medium-sized enterprises
(SMEs) that rely on the internet to reach foreign customers.
Perhaps the most important provisions in the Digital Trade chapter—those that have the broadest
implications for all U.S. digitally intensive industries—are the international data transfer provisions.
These provisions largely prohibit (1) discriminatory treatment of cross-border data transfers (19.11), and (2) forced localization of computing facilities (19.12). Both measures were strongly advocated by U.S.
industry representatives and are regarded as essential for the continued development of the global
Other key Digital Trade chapter provisions include a ban on import duties or other discriminatory
customs measures on digital products (e.g., e-books, videos, music, software, and games) (19.3), and
prohibition of legal discrimination against digital products produced or created in other signatory
countries (19.4). The chapter also addresses issues encountered by online consumers and businesses,
including fraud protection (19.7), and adds protections for consumers’ personal information and data as
well (19.8). USMCA member governments have agreed to cooperate on cybersecurity threats, including
building capacity to identify and respond quickly to intrusions, and to strengthen existing collaboration
on threats and cybersecurity best practices (19.15). Further, the member governments have agreed to
counter cybersecurity threats using risk-based approaches that rely on consensus-based standards, and
to encourage enterprises to do the same.
In addition, USMCA’s Digital Trade chapter contains important provisions aimed at facilitating crossborder trade, such as rules for electronic authentication and signatures (19.6) that would particularly
benefit e-commerce firms and electronic payment services. The chapter would also protect U.S. firms
from forced transfer of the proprietary source code and algorithms (19.16) that underpin U.S. IT firms’
competitive advantage. Moreover, it would give interactive computer services firms protection from
liability for third-party content, a stance that is viewed as consistent with U.S. law under § 230 of the
Communications Decency Act.423 In USMCA’s telecommunications chapter (Chapter 18), key provisions
would give U.S. telecommunications service providers access to Canadian and Mexican telecom
networks and improve the terms by which such access is granted by domestic telecom carriers.
Crosscutting Provisions: InvestorState Dispute Settlement, Intellectual
Property Rights, and Labor
This section assesses the likely impact on the U.S. economy and industry sectors of changes to the
following three “crosscutting” chapters of USMCA: the discussion of investor-state dispute settlement in
the investment chapter (Chapter 14); the chapter on intellectual property rights (IPRs) (Chapter 20); and
the chapter on labor (Chapter 23). To do so, this section summarizes the major provisions, identifies key
changes to commitments (relative to NAFTA or other prevailing agreements), and assesses the impact of
those changes both qualitatively and quantitatively. The Commission’s assessment of the impact of
these chapters draws on information found in the literature and provided to the Commission during the
course of the investigation (e.g., through the Commission’s public hearing on November 15–16, 2018),
as well as the Commission’s own qualitative and quantitative analysis.
Changes in provisions in three crosscutting issues examined in this chapter are together expected to
generate moderate gains for the overall U.S. economy. Because of the crosscutting nature of these three
USMCA chapters or chapter sections, the new provisions are expected to affect multiple sectors of the
U.S. economy and to do so in different ways. These effects should be considered as supplementary to
the discrete effects identified in the earlier sections of this report. The analysis of these USMCA
provisions is organized by their corresponding chapter number in USMCA.
Chapter 23 of USMCA includes enforceable labor provisions that are subject to the same dispute
settlement mechanism as other provisions in the agreement. Every U.S. trade agreement since the U.S.-
Jordan Free Trade Agreement in 2000 has included labor provisions within the main text of the
agreement, and these provisions have become increasingly stringent over time. However, the USMCA
provisions represent a significant departure from NAFTA, which does not include a labor chapter.
Instead, NAFTA parties addressed labor rights in a side agreement—the North American Agreement on
Labor Cooperation (NAALC)—which includes far fewer obligations than USMCA and a separate dispute
U.S. negotiators assert that, as a whole, the USMCA labor chapter establishes mechanisms that would
oblige all parties to protect labor rights, so as to ensure that no one party could gain a competitive
position by disregarding those rights.601 Some observers contend that USMCA labor provisions could
have a positive impact on labor conditions in Mexico and on Mexican and U.S. wages over the long term.
While labor groups generally view the USMCA labor chapter as an improvement upon the NAALC, they state that the impact of these provisions will largely depend on the parties’ willingness to proactively
enforce these obligations.602
The Commission sought to estimate the effects associated with the collective bargaining provision of
USMCA. It did this by econometrically modeling how changes in Mexican wages could change given
changes associated with collective bargaining legislation. The Commission estimates that the collective
bargaining legislation will likely increase unionization rates and wages in Mexico and also increase
Mexican output. This, in turn, would be expected to increase U.S. output and employment also,
resulting in a small (0.27 percent) increase in U.S. real wages to attract the new workers.
The USMCA labor chapter includes provisions that obligate parties to enforce their labor protections,
and refrain from weakening them; prohibit imports of products made by using forced labor; maintain
laws that protect workers from violence and discrimination; ensure that their labor regulations protect
migrant workers; and set up mechanisms for cooperation and consultations among the parties, among
several others. Table 8.5 lists some of the key provisions in Chapter 23 (Labor) of USMCA and compares
these provisions to NAFTA parties’ obligations under the NAALC.603
Assessment of Changes to Key Labor Provisions
While many reviews of USMCA highlight labor as one of the areas in which the new agreement differs
substantially from the NAFTA, the likely impact of these changes remains unclear. It is possible that
USMCA labor provisions will promote higher wages and improved labor conditions in member markets,
but observers argue that the likely impact of these provisions will wholly depend on the effectiveness of
Labor groups and other observers indicate that the USMCA chapter on labor rights improves upon the
NAALC in several ways. The inclusion of enforceable labor provisions in the text of USMCA (rather than
inclusion as unenforceable obligations in a side agreement) is reportedly a key change that may lead to
stronger labor protections, particularly as Mexico’s judicial system places great importance on
international treaties.617 Labor groups favor the inclusion of new provisions on forced or compulsory
labor, violence against workers, migrant workers, and discrimination, as well as clarifications to the terms “minimum wages” and “freedom of association” in the footnotes to the text.618 One source
suggests that USMCA labor provisions will improve the competitive environment for small, medium, and
minority enterprises (SMMEs).619 Further, some observers note that the Mexican government has
already made some progress towards improving its labor legislation, as would be required under
USMCA, and that Mexico’s new president has expressed support for improving labor conditions.620
A number of observers highlight the agreement’s new provisions on collective bargaining rights in
Mexico (found in Annex 23-A) as a positive change.621 One source suggests that this provision may speed
the establishment of labor legislation in Mexico and protect this new legislation from future changes,
while another contends that it will allow workers to exercise influence over union contracts and lead to
the recertification of existing protection contracts.622 Some observers indicate that these Annex 23-A
provisions could lead to increased wages in Mexico, as they may strengthen workers’ ability to negotiate
wage increases.623 Further, U.S. workers may benefit from higher Mexican wages, as reduced wage
disparity may decrease U.S. firms’ motivation to outsource production to Mexico and increase workers’
leverage in wage negotiations624 and could provide an export market for U.S. products. However, these
wage increases would likely occur over the long term and may depend on technical assistance from the
United States, as the establishment of unions and the education of Mexican workers regarding their
collective bargaining rights would not occur quickly.625
At the same time, some argue that the chapter has several weaknesses. Labor groups argue that the
chapter’s adherence to the ILO Declaration of Fundamental Principles and Rights at Work and its FollowUp (rather than specific ILO conventions), as well as a footnote that further describes the relationship
between the chapter’s labor rights provisions and the ILO, create ambiguity that may hamper the
enforcement of USMCA labor provisions.626 Further, while one source indicates that a new footnote
defining the phrase “in a manner affecting trade and investment between the parties” may provide greater clarity in the event of a labor dispute, labor groups state that the footnote’s coverage is
ambiguous and may allow employers in the public sector to suppress wages.627
Overall, labor organizations and other observers express the view that USMCA labor obligations will
have no impact on wages or labor conditions if member countries fail to enforce these provisions.628
Despite the agreement’s new and strengthened labor provisions, some groups criticize the agreement’s
lack of measures guaranteeing the enforcement or monitoring of its labor obligations.629 Some
observers have expressed concern that the enforcement of USMCA labor provisions—like those in
existing U.S. trade agreements—partly relies on voluntary action by the parties to the agreement, noting
that parties to existing agreements have demonstrated a reluctance to initiate enforcement actions in
Several sources indicate that labor provisions in existing U.S. FTAs have not been enforced, and that the
resolution of labor violations under FTA dispute settlement provisions can be a lengthy process.631 For
example, in its testimony before the Commission, the AFL-CIO reported that U.S. disputes with Bahrain,
the Dominican Republic, and Honduras each remain open and unresolved after more than six years.632
The AFL-CIO has also noted that it took nine years to reach a conclusion concerning a challenge from
workers in the United States and Guatemala under the U.S.-Dominican Republic-Central America Free
633 Further, labor groups assert that USMCA’s dispute settlement provisions allow
parties to prevent the establishment of a panel, which may hinder USMCA members’ ability to enforce
the agreement’s labor provisions.634 The AFL-CIO has stated that it does not endorse the current draft of
USMCA due to uncertainty regarding Mexico’s labor reforms and the implementation and enforcement
of the agreement.635 Labor groups indicate that their support for USMCA will depend, in large part, on whether the U.S. implementing legislation for the agreement provides for the enforcement of its labor
Modeling of Labor Provisions: Collective Bargaining in Mexico
Further assessment of the collective bargaining provision sought to identify statistically how
improvements in the ability of Mexican workers to form labor unions affect wages in Mexico. It relied on
estimating a union wage premium from microdata about Mexican workers’ wages and unionization
status, as well as on methodology found in the literature on the union wage premium.637 Econometric
modeling of the union wage premium linked changes in collective bargaining legislation to changes in
wages, assuming characteristics of workers and rates of unionization did not change. To estimate union
wage premium taking into account the issue of protection contracts described above, workers who
belong to public sector unions were compared to all other Mexican workers.638 This analysis found that
on average, the collective bargaining provision would increase wages of unionized Mexican workers by
In 2017, the unionization rate in Mexico was on average 14.5 percent.640 However, some sectors had
much higher unionization rates than others. For example, workers in public sectors, such as employees
of utility providers and providers of educational services, had unionization rates above 50.0 percent. On
the other hand, only 0.2 percent of agricultural workers were unionized.641 When incorporating the
estimation results into the economy-wide model, Mexico’s unionization rates by sector were assumed
to remain at their 2017 rate. The wage increase of 17.2 percent was then applied to a portion of each
sector’s workforce determined by that sector’s rate of unionization.
Inclusion of union wage premium in the economy-wide model had some impact on the Mexican
economy. Household income and real GDP in Mexico increased slightly as a result of increase in the
wages of unionized workers. However, this increase had negligible impacts on Mexico’s product prices
and trade with the United States. Ultimately, the effect of the collective bargaining provision in Mexico
on the U.S. economy was small relative to other modeled provisions.
To check for sensitivity of the economy-wide model to the assumption of constant unionization rates, an
alternative specification of the model assumed that unionization rates in each sector would double.
Other Crosscutting Provisions
This section assesses crosscutting chapters of USMCA that are not broadly analyzed elsewhere in this
report. It will summarize what each of these chapters are and identify key changes to their provisions
under USMCA (relative to NAFTA or prevailing laws). As the economic impacts of these provisions are
difficult to determine either qualitatively and quantitatively, assessments of the impacts are limited.
However, views of industry representatives are included in the discussion of many of the provisions.
Since the analyzed USMCA provisions are crosscutting in nature, as they were in the prior chapter, their
changes are likely to affect multiple sectors of the U.S. economy. The analysis of their effects should
thus be considered as supplements to the discrete effects identified in the earlier chapters of this
report. The analysis is organized by its corresponding chapter number in USMCA, as is shown in table
Table 9.1 USMCA chapters described in this chapter
Chapter number Chapter title
4 Rules of Origin
5 Origin Procedures
7 Customs and Trade Facilitation
10 Trade Remedies
11 Technical Barriers to Trade
13 Government Procurement
16 Temporary Entry
21 Competition Policy
22 State-Owned Enterprises and Designated Monopolies
25 Small and Medium-Sized Enterprises
28 Good Regulatory Practices
29 Publication and Administration
30 Administrative and Institutional Provisions
31 Dispute Settlement
32 Exceptions and General Provisions
33 Macroeconomic Policies and Exchange Rate Matters
34 Final Provisions
Trade Remedies (Chapter 10)
Trade remedies are measures used to take remedial action against surges in imports that are causing
serious injury to a domestic industry (“safeguard measures”) or against unfairly traded imports that are
causing material injury to a domestic industry (“antidumping or countervailing measures”). USMCA
Chapter 10 sets out certain provisions for trade remedies matters undertaken or enforced by any of the
three USMCA parties. These include provisions concerning safeguard investigations, duty evasion,
dispute settlement for antidumping and countervailing duty determinations, as well as an annex
addressing best practices for antidumping and countervailing duty investigations.
Table 9.5 Summary of USMCA’s key trade remedy provisions
Comparison to NAFTA
Safeguard Exclusion. This exists for imports of North American
goods unless “substantial share” and “contribute importantly”
criteria are met.
Same as NAFTA
Dispute Settlement. Could use binational panel dispute
settlement for AD/CVD cases, in lieu of domestic court review.
Modified in USMCA. Under USMCA, now
incorporated into trade remedies chapter, rather
than standalone chapter.
Duty Evasion. Procedures for cooperation on preventing duty
evasion of trade remedy laws.
New in USMCA
Transparency and Inclusion. Annex provisions to promote
transparency in AD/CVD proceedings and to ensure the
opportunity of all interested parties to participate
meaningfully in such proceedings.
New in USMCA
Source: USMCA text.
USMCA Chapter 10 covers topics related to trade remedies. It incorporates provisions contained in
NAFTA: both the previous safeguard exclusion provisions (Chapter 8) and the dispute settlement
provisions for antidumping and countervailing duty disputes (Chapter 19). USMCA also contains new
661 Limitations on the number of ports or locations are removed provided that the customs broker is licensed to
operate at the port or location from which the filing of customs documentation occurs. USMCA, Chap. 7, Art.
7.21.3, Customs Administration and Trade Facilitation,
ation.pdf. 662 Michael Mullen, prehearing written submission to the USITC, November 15, 2018. 663 ITAC 12, Report of the Industry Trade Advisory Committee on Customs Matters and Trade Facilitation,
September 27, 2018, 8.
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With respect to safeguards as well as antidumping and countervailing duty measures, Section C of
USMCA adds provisions addressing cooperation among the parties for the purposes of enforcing or
assisting in the enforcement of their measures concerning duty evasion. In its report of September 27,
2018, the Advisory Committee for Trade Policy and Negotiations (ACTPN) stated that “several ACTPN
members support the innovative provisions of this chapter including those addressing cooperation and
verification of evasion and circumvention of antidumping, countervailing, and safeguard duties and
information sharing.”664 At the Commission hearing, several witnesses—including the General Counsel
of the American Iron and Steel Institute, the president/CEO of the association, and the president of the
Steel Manufacturers’ Association—likewise endorsed USMCA’s provisions for increased cooperation and
information sharing to address circumvention and evasion of trade remedy orders.665
USMCA Section A applies to safeguard measures only. Article 10.1 retains the language from NAFTA
(Chapter 8) requiring exclusion from a safeguard for imports from each other party unless imports from
that party account for a substantial share of total imports and contribute importantly to the serious
injury, or threat thereof, caused by imports.
Specific to antidumping and countervailing duty actions, USMCA incorporates one set of existing
provisions, while Annex 10-A adds new provisions on process and transparency. The existing provisions,
now set out in Section D of USMCA and previously contained NAFTA (Chapter 19), set out procedures for
binational panel review of antidumping and countervailing duty determinations. As in NAFTA, USMCA
Section D, Article 10.12 continues to provide parties the option of seeking binational panel review in lieu
of judicial review of antidumping and countervailing duty determinations. The views of stakeholders
concerning the continued inclusion of these provisions appears to be mixed, as reflected, for example, in
the report of the ACTPN. As of September 27, 2018, when the agreement negotiated between the
United States and Mexico would have eliminated binational panel dispute resolution for antidumping
and countervailing duty determinations, the committee reported that
[s]ome members . . . support the removal of the dispute resolution mechanism for
antidumping and countervailing decisions and strongly suggest that should an
agreement with Canada be reached, such provisions should not be reintroduced.
The original dispute settlement provisions under Chapter 19 have been overtaken
by developments in international trade law including the WTO’s implementation of
a binding international dispute settlement mechanism. Other ACTPN members are
concerned about the importance of having a strong dispute settlement provision
within the agreement because they view the WTO’s process as inoperable at this
At the Commission hearing, the president/CEO of the National Grain and Feed Association (NGFA) stated
that NGFA and the North American Export Grain Association were “pleased that USMCA maintains the
664 ACTPN, Advisory Committee Report, September 27, 2018, 7. 665 USITC, hearing transcript, November 16, 2018, 367 (testimony of Kevin Dempsey, American Iron and Steel
Institute), 374 (testimony of Heidi Brock, Aluminum Association), and 379 (testimony of Philip Bell, Steel
666 ACTPN, Advisory Committee Report, September 27, 2018, 7.
Other Crosscutting Provisions
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dispute settlement process for anti-dumping and countervailing duty cases.”667 He explained that
inclusion of this dispute settlement process “has been used successfully to maintain U.S. agricultural
market access under NAFTA.”668
Annex 10-A to Chapter 10 of USMCA includes new provisions intended to promote transparency and
ensure opportunity of all interested parties to participate meaningfully in antidumping and
countervailing duty proceedings. This annex covers matters such as notifications, disclosures, and
electronic filing and access to documents.
Some commenters discussed a topic that was included in USTR’s negotiating objectives, but was not
covered by the negotiated agreement. That topic concerned seeking a separate domestic industry
provision for perishable and seasonal products in antidumping and countervailing duty proceedings.669
The Intergovernmental Policy Advisory Committee (IGPAC), in its report of September 27, 2018, noted
that it had varying opinions on the dropping of this provision.670 The report stated that “the IGPAC
representative from Florida is disappointed that this provision was left out of the agreement while the
representatives from Washington and Arizona support the elimination of this proposal.” At the
Commission hearing, the Commissioner of Agriculture for the Florida Department of Agriculture and
Consumer Services as well as the Chief Executive Officer of the Florida Fruit and Vegetable Association
(FFVA) expressed disappointment that USMCA does not address the “unique seasonal circumstances”
affecting Florida and other southeastern growers who are limited to a winter growing and marketing
According to FFVA, the adverse “industry trend lines evidenced under NAFTA are likely to accelerate
under USMCA unless specific measures are pursued to deliver effective relief against unfairly traded
Mexican produce in the near term.”672 Thus, by FFVA’s projection, because the southeastern United
States and Mexico produce a number of the same specialty crops and share the similar winter growing
season, under existing NAFTA, vegetable imports from Mexico have had a “disproportionally negative
impact on southeast farmers,” and could continue to do so absent tools to address this issue.673
Technical Barriers to Trade Provisions
Chapter 11 of USMCA applies to technical barriers to trade (TBTs), which collectively refer to the
preparation, adoption, and application of standards, technical regulations, and conformity assessment
procedures of central governments, which may affect trade in goods between the parties. The initial
USTR negotiating objective on TBTs was to require that USMCA countries apply decisions and
667 USITC, hearing transcript, November 15, 2018, 159–62 (testimony of Randy Gordon, National Grain and Feed
668 USITC, hearing transcript, November 15, 2018, 159 (testimony of Randy Gordon). 669 See USTR, “Summary of Objectives for NAFTA Renegotiation,” July 17, 2017, 14. 670 IGPAC, Advisory Committee Report September 27, 2018. 671 USITC, hearing transcript, November 15, 2018, 136-46 (testimony of Putman and Stuart). 672 Fruit and Vegetable Association, post-hearing submission to the USITC, November 21, 2018, 1–2. 673 USITC, hearing transcript, November 15, 2018, 141 (testimony of Putman).
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recommendations adopted by the WTO TBT Committee, include strong provisions on transparency and
public consultation, ensure national treatment of conformity assessment bodies, and establish an active
TBT Chapter Committee.674 The chapter does not apply to technical standards prepared by a
governmental body for production or consumption requirements of a governmental body, or to sanitary
or phytosanitary measures.675 The goal of the chapter is to harmonize standards and procedures, where
appropriate, to ensure nondiscrimination, and remove unnecessary obstacles to trade. The provisions of
NAFTA (Chapter 9) that address standards-related measures entered into force before the provisions in
the WTO Agreement on Technical Barriers to Trade (TBT Agreement). Chapter 11 of USMCA modernizes
the treatment of TBTs in line with existing WTO commitments and includes some additional WTO
Table 9.6 Summary of USMCA’s key technical barriers to trade provisions
USMCA provision Comparison to NAFTA provisions
Standards. These provisions affirm that standards set by U.S.-
domiciled standards setting organizations are recognized as
“international” standards. NAFTA predated the decision of the WTO
Agreement on Technical Barriers to Trade.
Same as NAFTA
Certification Facilities. Allows manufacturers to use laboratories or
certification facilities in Canada, Mexico, or the U.S. to qualify
products for market access in all three countries.
New in USMCA
Third Parties. These provisions prohibit all parties from entering in to
an agreement with a third party that would lower the standards
agreed to under the USMCA.
Modified in USMCA. Expands upon similar
CTBT. Renews the Committee on Technical Barriers to Trade. Modified in USMCA. Expands upon similar
Source: USMCA text.
The TBT chapter would help eliminate cross-border trade frictions in goods and services by ensuring that
voluntary and mandatory product standards and procedures for determining whether products conform
to those standards do not create unnecessary obstacles to trade between the United States, Mexico,
and Canada. Under the TBT chapter, the parties commit to offer more transparency and greater access
to the regulatory process for stakeholders from all three countries and to cooperate on common
regulatory approaches. Importantly, USMCA (Chapter 11, Article 11:4) adopts the definition of
“international standards” used by the WTO. This would preclude discrimination based on the location of
a standards development organization. In addition, Article 11:6 removes in-country presence
requirements on conformity-assessment providers, which would allow the services they provide to be
considered valid regardless of geographic location. The chapter also creates new requirements for all
parties that would permit foreign firms to participate in regulatory, standards, and conformity
assessment processes on an equal footing with parties’ domestic interests.
NAFTA (Chapter 9) included an annex that addressed several industry-specific standards-related issues.
A separate chapter of USMCA (Chapter 12) contains a series of TBT-related annexes that address
chemical substances, cosmetic products, information and communications technology (ICT), energy
performance standards, medical devices, and pharmaceuticals.
674 See USTR, “Summary of Objectives for NAFTA Renegotiation,” November 2017, 6. 675 See USMCA, Chap. 11, Art. 11.2 (Scope).
Other Crosscutting Provisions
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Government Procurement Provisions (Chapter
The USMCA chapter on government procurement (Chapter 13) aims to establish fair, transparent,
predictable, and nondiscriminatory rules that ensure reciprocity in market access.676 The USMCA
chapter largely extends the provisions in NAFTA without additional commitments. However, this chapter
only applies to procurement activities between Mexico and the United States, while government
procurement activities under NAFTA (Chapter 10) applied to all three member countries. Still, U.S. firms
will continue to have access to Canadian government procurement through the WTO Government
Procurement Agreement (GPA), as both the United States and Canada are member countries.
Temporary Entry Provisions (Chapter 16) Did u realize that every single immigrant at the BORDER WALL could enter America claiming this one thing-Temporary Entry for a Business Person!
Temporary Entry for Business Persons is addressed in Chapter 16 of USMCA. As in NAFTA, the chapter’s
provisions obligate parties to allow business visitors, traders and investors, intra-company transferees,
and professionals from signatory countries to enter into their territories for the purpose of engaging in
sales, marketing, and other activities that are specifically listed in the chapter’s appendixes. Notably,
USMCA is the first U.S. trade agreement since the U.S.-Chile and U.S.-Singapore FTAs—both of which
entered into force on January 1, 2004—to include a chapter on temporary entry. However, USMCA
provisions on temporary entry are largely similar to those in NAFTA’s chapter on temporary entry, and
as such, represent minimal change from the status quo that exists between the United States, Canada,
The USMCA chapter on temporary entry for businesspersons shares much in common with NAFTA. Both
agreements include almost identical provisions which are subject to their respective agreements’
general provisions on dispute settlement (table 9.18). Further, the lists of activities that qualify an
individual for temporary entry as a business visitor under USMCA, as well as the categories of
professionals that are eligible for temporary entry under that agreement, are virtually identical to those
There are only a few minor differences between USMCA and NAFTA provisions on temporary entry.
Unlike NAFTA, USMCA includes several provisions on scope. These provisions largely clarify what is not
covered in the agreement; among other things, they specify that the chapter does not cover permanent
employment or citizenship, does not prevent the application of the parties’ temporary entry regulations,
and does not exempt business persons from licensing or similar requirements.682 USMCA requires
parties to consult with potentially affected parties regarding current visa rules and before establishing a
new visa requirement for any of the four categories of businesspersons covered by the agreement with
the aim of avoiding or removing of such rules.683 This provision represents an expansion of obligations,
as NAFTA includes this requirement in its provisions on business visitors, intra-company transferees, and
professionals, but not in its provisions on traders and investors. Further, the NAFTA allowed parties to
limit the number of professionals that enter into their territory, and directs parties to aim for the
gradual increase and eventual elimination of these numerical limits. This provision does not appear in USMCA, reflecting the December 2003 expiration of the United States’ numerical cap on the entry of
USMCA text largely clarifies NAFTA provisions rather than imposing new obligations on the parties. Thus,
USMCA would likely have little or no impact on the movement of persons between the United States,
Canada, and Mexico.685 White & Case, an international law firm, reports that business groups are largely
pleased with this outcome, as they had been concerned about the potential disruption of the current
NAFTA visa regime.686 The Entertainment Software Association (ESA) stated that it would have preferred
an update of the list of professional categories under which individuals are eligible for temporary entry
under the agreement. Overall, however, the ESA stated that it is pleased that USMCA largely preserves
NAFTA visa provisions, as the development of video games relies on the ability to transfer skilled
workers between offices in USMCA partner countries.687
Competition Policy Provisions (Chapter 21)
USMCA’s Competition Policy (Chapter 21) expands on the provisions of NAFTA (Chapter 15) which
sought to ensure fair competition by requiring parties to adopt and maintain laws against anticompetitive business conduct. This chapter features nearly all of USTR’s negotiation objectives, including
rules that prohibit anticompetitive business conduct and rules for procedural fairness on competition
law enforcement.688While it is an update to NAFTA’s Chapter 15, the new Competition Policy chapter’s
provisions are not new to FTAs negotiated by the United States. For example, nearly identical chapters
are found in the final texts of the U.S.-Korea FTA and the TPP Agreement.
State-owned Enterprises and Designated Monopolies Provisions (Chapter 22)
State-owned enterprises (SOEs) are companies that are directly or indirectly owned or controlled by the
government as a majority or minority owner. Such SOEs, and designated monopolies, are the subjects of
Chapter 22 of USMCA. This chapter aims to ensure that these entities are regulated impartially, and do
not benefit from special treatment and unfairly infringe upon the activities of private firms.701 The
definition of SOEs and designated monopolies (DMs) is broad, but many types of activities, such as state
pension funds, regulatory and supervisory activities of a financial entity, and various party-specific
organizations, are exempt.
SOEs and DMs have a greater presence in Canada than in the United States or Mexico, especially as they
related to Crown corporations (independent companies owned by the federal or provincial
government). Thus, the provisions of this chapter are expected to benefit U.S. firms operating in Canada,
and in Mexico to a lesser extent. The Intergovernmental Policy Advisory Committee states that this
chapter is expected to increase the transparency of SOE operations and enable U.S. firms to compete on…
Environmental Provisions (Chapter 24)
The objectives of USMCA Chapter 24 on the environment are to promote mutually supportive trade and
environmental policies and practices; promote enforcement of environmental laws; and enhance
cooperation to support sustainable development.
Although the NAFTA did not contain an environment chapter, the parties signed a separate side agreement called the North American Agreement on
Environmental Cooperation (NAAEC).705 This was unique at the time in that the parties formally linked environmental protection with a major regional trade agreement.
Trump enacted an Environmental Protection Link to a Major Trade Agreement!
706 In addition to modernizing the
NAAEC, USMCA’s environment chapter draws extensively from TPP Agreement, Chapter 20.707
The impact of USMCA’s environment chapter on the U.S. economy and trade is difficult to measure
quantitatively because of the complexity in measuring the economic impacts of environmental policies
(especially those that are nonbinding). There does not appear be any public analysis of the potential
economic impact of the chapter; commentaries have focused on the environmental aspects.
More generally, in the environmental economics literature, there are two major camps on the impact of
environmental policies on competitiveness: the pollution haven hypothesis and the Porter hypothesis.708
The pollution haven hypothesis, which draws from the Heckscher-Ohlin model of international trade,
theorizes that imposing stronger environmental policies can erode the competitiveness of industries with high compliance costs, shifting production to countries with weaker environmental policies. 709 The
Porter hypothesis, in contrast, theorizes that stronger environmental policies will lead to cost-cutting
and innovation at regulated industries, which will improve their competitiveness over time.
Small and Medium-sized Enterprises Provisions (Chapter 25)
The chapter on small and medium-sized enterprises (SMEs) is new to USMCA.716 The main provisions
involve cooperation, information sharing, and setting up a committee to identify ways to increase trade
and investment by SMEs.
Table 9.12 Summary of USMCA’s key small and medium-sized enterprises (SME) provisions
Comparison to NAFTA
Promote SME Trade/Investment. Parties agree to cooperate to increase trade and
investment opportunities for SMEs through export-assistance centers, business
incubators, information exchanges, and other means.
New in USMCA
Public Website. Parties will establish or maintain a public website with information
about this agreement and other information to facilitate trade for SMEs.
New in USMCA
SME Committee. Parties will establish a committee with government
representatives to identify and promote ways to increase trade and investment by
SMEs. The committee will also foster dialogue between private-sector SMEs,
relevant nongovernmental organizations, and academic experts
New in USMCA
Source: USMCA text.
SMEs often lack expertise in trade and are adversely affected by complicated regulations. The provisions
in USMC’s chapter on SMEs are designed to make it easier for smaller businesses to learn about the
opportunities and requirements for exporting to Mexico and Canada, disseminating information though
the public website, export assistance centers, and information exchanges. The involvement and
investment of a committee devoted to SME export promotion is also intended to contribute to growing trade opportunities for SMEs.717 These provisions would enhance SMEs’ ability to export, but the impact
would depend on how SMEs respond to these export-facilitating assistance tools.
In addition to the provisions in USMCA’s chapter on SMEs, provisions in other chapters are expected to
benefit SMEs. For example, efforts to increase mutual recognition and harmonization of regulations and
standards should benefit SMEs. Provisions related to agriculture could also benefit SMEs, although the
Industry Trade Advisory Committee for small and minority business (ITAC 9) states that SMEs may need
assistance in order to access dairy, poultry, and egg markets that Canada is opening.718 The higher de
minimis thresholds for express shipping in Chapter 7 of USMCA are also expected to benefit SMEs,
particularly those engaged in e-commerce.719
Competitiveness (Chapter 26)
The Competitiveness chapter of USMCA has no counterpart in NAFTA. The chapter provides for the
establishment of the North American Competitiveness Committee, which is to be composed of
government representatives from each party. The committee’s stated purpose is to promote further
economic integration among the parties and enhance the competitiveness of North American exports. It
is tasked with identifying projects and policies “to develop a modern physical and digital trade- and
investment-related infrastructure, and improve the movement of goods and provision of services within
the free trade area.” The committee is also asked to “provide advice and recommendations to the [Free
Trade Commission] on ways to further enhance the competitiveness of the North American economy.”
The text of the chapter provides that the committee may work with any other groups set up by USMCA,
as well as seek advice from appropriate outside experts. It further requires that each party establish or
maintain a means for regular and timely input from interested persons on matters relevant to enhancing
competitiveness. Finally, it provides that the committee should meet annually, beginning one year after
it is signed by the parties.
Anticorruption Provisions (Chapter 27)
USMCA Chapter 27 on anticorruption has no counterpart in NAFTA. The text of the chapter is based
largely on the text of chapter 26 of the TPP Agreement. The parties’ main aim in USMCA Chapter 27 is to
affirm their commitment to deter corruption and bribery in international trade and investment through,
among other things, domestic enforcement of anticorruption laws and application of accounting
Table 9.14 Summary of USMCA’s key anticorruption provisions
Comparison to NAFTA
Bribery and Corruption. New in USMCA. Parties affirm their resolve to prevent and
combat bribery and corruption in international trade and investment.
New in USMCA. Based on
prior TPP language.
Anticorruption Laws Related to Public Officials. Parties must adopt or maintain
laws that prohibit corrupt practices aimed at influencing the actions of public
New in USMCA. Based on
prior TPP language.
Accounting Standards. To prevent corruption, parties must adopt or maintain
measures regarding the maintenance of books and records; financial statement
disclosures; and accounting and auditing standards.
New in USMCA. Based on
prior TPP language.
Best Practices. Parties should promote integrity among their public officials by
adopting or maintaining several specified best practices.
New in USMCA. Based on
prior TPP language.
Other Anti-Corruption Measures. Parties must promote the participation of
groups outside the public sector in the prevention of corruption in international
trade and investment.
New in USMCA. Based on
prior TPP language.
Enforcement. Parties must enforce their international trade and investment
anticorruption laws, while also retaining the right to exercise discretion with
respect to enforcement of those laws.
New in USMCA. Based on
prior TPP language.
Final Provisions (Chapter 34)
USMCA Chapter 34 lists procedures and provisions regarding the agreement’s entry into force,
amendment, withdrawal or termination. When it commenced negotiations, USTR announced its intent
that a new agreement “provide a mechanism for ensuring Parties assess the benefits of the agreement
on a regular basis,” and the result is Article 34.7.759 While USMCA includes 6-year reviews, it also
includes a termination clause that states that the agreement will terminate 16 years after it enters into
force unless each party confirms that it wishes to continue the agreement for another 16-year term
following these reviews. Article 34.6 also includes a withdrawal provision. That provision states that a
party may withdraw from the agreement “by providing written notice of withdrawal to the other
Parties. A withdrawal shall take effect six months after a Party provides written notice to the other
Parties.” The agreement would remain in force for the remaining parties.
During Commission hearings, parties have expressed a variety of views on the 16-year termination
provision. Several commentators noted that flaws in NAFTA only became apparent over time, and they
believed that building regular reviews into the agreement would be beneficial to address any such issues that may emerge in USMCA.761 One party approved of coupling 6-year reviews with a 16-year sunset
term, noting that this essentially allows 10 years for negotiations on problems that arise under the
agreement.762 Another party supported the possibility of termination after 16 years because of the
importance of issues that may arise after USMCA’s negotiation but that are not addressed in the
However, other parties expressed concern at possible uncertainty that arises under this provision.
Parties noted that such a sunset clause could discourage long-term investment, including in the
automotive industry.764 Representatives from the apparel industry also expressed concern that the
provision would lead to “premature termination” and ultimately discourage business investment.765
Industry representatives requested that businesses be included in 6-year reviews to ensure that
negotiators considered the impact of the discussions on business investments.766
And what’s left? I mean who put all of this together?
Folks, after reading all of it, I did find some interesting things and sure, you need to read it because it might affect you as well. One thing does stick out to me is this-INVESTOR BEWARE! Why? After six years in, any Party can declare it null and void and demand renegotiating.
American Federation of Labor and Congress of Industrial Organizations
As AFL-CIO President Richard Trumka stated upon the signing of the renegotiated NAFTA:
“[T]his agreement has not earned the support of America’s working families. Without major improvements, this supposed overhaul will prove to be nothing more than a rebranded corporate handout.
Any progress made by this deal is meaningless without swift and certain enforcement
tools to safeguard key labor protections. Real steps forward start with changes in the
text, comprehensive labor law reform from Mexico and a strong implementation bill
from the United States.
The Trump administration still has an opportunity to make that happen. We
encourage the administration and Congress to continue working with us to deliver a
fair and just agreement for working families. In addition to enforcement provisions,
that means securing tools to combat outsourcing in key sectors such as aerospace,
meat packing, food processing and call centers; tightening auto rules of origin; and
eliminating rules that keep prescription medicine prices sky high and interfere with
the creation of workplace safety and other public interest protections.
Working people have lived through the devastation of failed, corporate-written trade
deals for too long. That’s why we will continue the fight for an agreement that creates
good jobs and raises wages here at home while protecting the rights and dignities of
workers across all borders.”
In comparison to the original, the new NAFTA:
• Includes modest but meaningful improvements to the labor obligations (but without a swift and
certain enforcement mechanism);
• Requires a periodic performance review;
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United States International Trade Commission | 289
• Slashes the unjustifiable and indefensible investor-to-state dispute settlement (ISDS)
• Has stronger, innovative rules of origin (although we lack evidence to conclude that they will
create the promised jobs).
However, the new NAFTA could harm working families by:
• Limiting public interest regulations, including with respect to chemical safety and financial
• Keeping drug prices sky-high;
• Failing to protect private data;
• Taking no action to stop outsourcing in industries including aerospace, call centers, and baked
• Failing to reinstate country-of-origin labeling (COOL).
In addition, the final text weakened an important new rule against workplace discrimination on the basis
of gender, gender identity, sexual orientation, pregnancy, and caregiving status. Importantly, we still do
not know whether Mexico will comply with its obligation to reform its labor laws or whether the U.S. will
ensure that labor and environmental enforcement will be swift and certain.
By design, the original NAFTA distorted power relationships in favor of global employers over workers,
weakening bargaining power, and eliminating good manufacturing jobs. Equitable economic growth
requires fundamental changes to trade policy. The new NAFTA should stimulate trade while promoting
wage-driven growth and high standards for working families and democracy across North America.
The deal before us falls short of this ambitious, transformative changes needed, most critically be
weakening, rather than strengthening labor enforcement provisions. Its current terms are insufficient to
significantly reduce outsourcing and otherwise benefit ordinary working families across the continent. It
must be reopened and improved to earn the support of working people.
The USMCA clearly sides with the originator pharmaceutical industry at the expense of
generic/biosimilar companies. The terms set in the intellectual property chapter would delay the entry
of competition in the pharmaceutical market thus hindering access to more affordable medicines and
putting at risk the sustainability of the generic/biosimilar industry which would face new barriers to
entry to the markets of the Parties involved. Furthermore, the USMCA includes several provisions that
may change U.S. law further hindering the generic/biosimilar industry, as well as consumers and payers
whose access to more affordable drugs may be delayed and/or blocked. This requires that the
agreement be rectified and the easiest way to do so would be through the adoption of the terms for the
protection of intellectual property rights set in the New Trade Policy or May 10th Agreement, which
reflected a more balanced compromise that garnered bipartisan support. In addition, the USMCA should
also include other provisions to ensure the expedited launch of competition such as incentives to
challenge the validity or enforceability of patents, the disclosure of the best mode in patent applications
and penalties for those who misuse IP rights to prevent competition.
Given that the USMCA will also set a precedent for future trade agreements it is essential that it be
amended to strike a balance that fosters both innovation and competition, thus ensuring patients
expedited access to more affordable drugs, as well as benefiting both originator and generic/biosimilar
companies and maximizing U.S. pharmaceutical exports.
Mylan supports this Administration’s goals of promoting competition and affordability in the
pharmaceutical market. However, USMCA contains provisions that will be harmful in all three countries,
including the United States, by delaying access to biosimilars and generics. We strongly encourage the
Administration to not allow these detrimental provisions to stand in this agreement or as a template for
future trade agreements.
Appendix D: Summary of Views of Interested Parties
United States International Trade Commission | 297
Increasing access to biosimilars and generics is critical to increase competition and affordability. A major
concern is that the USMCA definition of biologic may be broader than the US definition. Also, the
USMCA could allow a transitioning biologic to receive both 5-year and 3-year exclusivity for a small
molecule product, and then potentially an additional 10 years for biologic product exclusivity. It is
premature to establish any type of exclusivity for biologics in a trade agreement when there are only six
biosimilars on the US market. Furthermore, the FTC clearly states that no exclusivity is necessary for
biologics, and the USMCA should not enshrine unnecessary barriers to entry for biosimilar drugs
preventing Congress from making a different judgment in the future. The provision changing biologic
exclusivity to 10 years will also hinder access to foreign markets in Mexico and Canada, which is
necessary so that companies can gain capital to invest in the challenging US market and patients can
gain access to affordable medicines.
Another concern is that the terms used for the criteria for small molecule exclusivity are ambiguous.
Also, the USMCA’s standard of barring “same or similar” products from the market could keep entire
therapeutic classes off the market. Further, if USMCA does include patent term extensions, it should
include the same conditions and limitations currently in US law.
Finally, the agreement has language requiring that ANDA applicants that relied on the evidence or
information about the safety and effectiveness of a previously-approved product give notice to that
patent owner prior to marketing. This would change how notice to patent owners works under US law
and be onerous and intrusive for generic companies. It could also be used by patent owners to delay
While USMCA provisions should be amended because of the issues above, there are also certain
provisions that should be added to further promote competition. For example, a more encompassing
regulatory review exception and a best mode requirement should be included.
Mylan urges the Administration to change, clarify, and add these important provisions to the USMCA to
increase competition, access, and affordability in the US. The USMCA should be revised to provide
balance that encourages and does not hinder access to more affordable generics and biosimilars.
The U.S.-Mexico-Canada Agreement (USMCA) incorporates the same provisions contained in the 1994 North American Free Trade Agreement (NAFTA) regarding cattle and beef trade.
The results of those provisions are now known and measurable. Those results are substantially negative and include:
1. Twenty percent of all U.S. beef cattle operations exited the industry from 1994 to 2012, based on
latest available census data.
2. Seventy-five percent of all U.S. cattle feedlots exited the industry from 1996 to 2017.
3. By 2014, the U.S. beef cow herd declined to the lowest level in seven decades and today is nearly
three million head less than it was in 1994.
4. Forty-eight U.S. beef packing plants exited the industry between 1995-2014, and there have been
very few new entrants into the sector or new packing plants built.
5. The average annual returns per bred cow for U.S. cow/calf producers declined from an average of
$50 during the seven years prior to 1994 to only $37 from 1994 through 2017.
6. The only years cow/calf returns per bred cow exceeded the NAFTA period’s $37 average were in
2004-2005 when the U.S. banned Canadian cattle imports; and after the 2009 implementation of
country-of-origin labeling (COOL).
7. Under NAFTA, the U.S. cattle industry suffered on average an annual $1.4 billion deficit in the trade
of cattle, beef, beef variety meats and processed beef, resulting in a cumulative NAFTA trade deficit
of negative $31 billion.
8. In 2014, the U.S. cattle industry suffered a 41 percent value-based import surge from Canada and
Mexico, resulting in the collapse of U.S. cattle prices beginning in 2015.
9. The U.S. cattle producers’ share of every consumer beef dollar declined from 56 percent the year
before NAFTA to just 45 percent in 2017; consequently, packer margins reached unprecedented
levels in recent years, averaging $216 per head from 2016 through mid-2018.
10. Average returns to U.S. cattle feeders during the past 18 years under NAFTA were a negative $20.40
per head per month.