The United States and Mexico have reached an agreement to modernize the 24-year-old NAFTA into a 21st century, high-standard agreement. The updated agreement will support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.
INTELLECTUAL PROPERTY
The United States and Mexico have reached an agreement on a modernized, high-standard Intellectual Property (IP) chapter that provides strong and effective protection and enforcement of IP rights critical to driving innovation, creating economic growth, and supporting American jobs.
Key Achievement: Most Comprehensive Enforcement Provisions of Any Trade Agreement
For the first time, a trade agreement will require all of the following:
Key Achievement: Strongest Standards for Trade Secrets of Any United States FTA
This deal, if finalized, will be the first FTA to require all of the following to protect United States rightsholders from theft of trade secrets, including by state-owned enterprises: civil remedies, criminal remedies, prohibition on impeding licensing of trade secrets, protections for trade secrets during the litigation process, and penalties for government officials who wrongfully disclose trade secrets.
Key Highlights: Protections for Innovators
The new IP Chapter will:
DIGITAL TRADE
The new Digital Trade chapter contains the strongest disciplines on digital trade of any international agreement, providing a firm foundation for the expansion of trade and investment in the innovative products and services where the United States has a competitive advantage.
Key Highlights of the Digital Trade Chapter
The new Digital Trade chapter will:
DE MINIMIS
Key Achievement: Increased De Minimis Shipment Value Level
To facilitate greater cross-border trade, the United States has reached an agreement for Mexico to raise its de minimis shipment value level to $100 USD, up from $50 USD. Shipment values up to this level would enter Mexico without customs duties or taxes, and with minimal formal entry procedures, making it easier for more businesses, especially small- and medium-sized ones, to be a part of cross-border trade.
Increasing the de minimis level with a key trading partner like Mexico is a critical outcome for United States small- and medium-sized enterprises (SMEs). These SMEs often lack resources to pay customs duties and taxes, and bear the increased compliance costs that low, trade-restrictive de minimis levels place on lower-value shipments, which SMEs often have due to their smaller trade volumes.
New traders, just entering Mexico’s market, will also benefit from lower costs to reach consumers. United States express delivery carriers, who carry many low-value shipments for these traders, also stand to benefit through lower costs and improved efficiency.
FINANCIAL SERVICES
U.S. financial services firms provide services critical to every sector of the economy, including small- and medium-sized businesses. The United States exported about $115 billion in financial services in 2016, generating around a $41 billion surplus in trade in financial services.
The updated Financial Services chapter includes commitments to liberalize financial services markets and facilitate a level playing field for U.S. financial institutions, investors and investments in financial institutions, and cross-border trade in financial services. The chapter also preserves the discretion of financial regulators to ensure financial stability.
Key Achievement: Core Obligations to Prevent Discrimination Against U.S. Financial Services Suppliers
The chapter includes core obligations, such as:
Key Achievement: First Provision Against Local Data Storage Requirements
For the first time in any U.S. trade agreement, this deal includes a prohibition on local data storage requirements in circumstances where a financial regulator has the access to data that it needs to fulfill its regulatory and supervisory mandate.
Key Highlights Supporting Financial Services
The new Financial Services chapter will include:
LABOR
One of President Trump’s principal objectives in the renegotiation is to ensure the agreement benefits American workers. The United States and Mexico have agreed to a Labor chapter that brings labor obligations into the core of the agreement, makes them fully enforceable, and represents the strongest provisions of any trade agreement.
Key Achievement: Worker Representation in Collective Bargaining
The Labor chapter includes an Annex on Worker Representation in Collective Bargaining in Mexico, under which Mexico commits to specific legislative actions to provide for the effective recognition of the right to collective bargaining.
Key Achievement: Labor Rights Recognized by the International Labor Organization
The Labor chapter requires the Parties to adopt and maintain in law and practice labor rights as recognized by the International Labor Organization, to effectively enforce their labor laws, and not to waive or derogate from their labor laws.
Additionally, the chapter includes new provisions to take measures to prohibit the importation of goods produced by forced labor, to address violence against workers exercising their labor rights, and to ensure that migrant workers are protected under labor laws.
Key Achievement: New Labor Value Content Rule
To support North American jobs, the deal requires new trade rules of origin to drive higher wages by requiring that 40-45 percent of auto content be made by workers earning at least $16 USD per hour.
ENVIRONMENT
The United States and Mexico have agreed to the most advanced, most comprehensive, highest-standard chapter on the Environment of any trade agreement. Like the Labor chapter, the Environment chapter brings all environmental provisions into the core of agreement and makes them enforceable.
Key Achievement: Most Comprehensive Set of Enforceable Environmental Obligations
The Environment chapter includes the most comprehensive set of enforceable environmental obligations of any previous United States agreement, including obligations to combat trafficking in wildlife, timber, and fish; to strengthen law enforcement networks to stem such trafficking; and to address pressing environmental issues such as air quality and marine litter
Environment obligations include: