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USMCA trade deal supersedes NAFTA amid lingering issues, COVID-19

USMCA trade deal supersedes NAFTA amid lingering issues, COVID-19
The United States-Mexico-Canada Trade Agreement, signed into law by President Donald Trump went into effect on Wednesday, amid lingering issues and the COVID-19 pandemic. Photo by Oliver Contreras/UPI | License Photo

July 1 (UPI) -- The United States-Mexico-Canada Agreement went into effect on Wednesday rewriting the terms of trade between the three countries.

President Donald Trump signed the agreement in January to replace the maligned North American Free Trade Agreement of 1994 with the White House declaring that the deal will result in "stronger economic growth, more jobs for American workers and fairer trade for our country."

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The USMCA mostly preserves duty-free trade and economic integration provided by NAFTA while adding new rules surrounding digital trade and altering what products can be traded across borders without facing tariffs.

"I'm sure glad it was renegotiated," Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said. "I'm not sure that I agree with the president that it was the worst agreement ever, but it needed to be renegotiated and part of it's because things like digital economy was never an issue 30 years ago."

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Even as the deal goes into effect, however, issues such as U.S. tariffs on metals and Mexican labor standards persist.

U.S. Trade Representative Robert Lighthizer expressed concern during a June 18 hearing before Congress about a surge of aluminum imports from Canada, leading to speculation that the United States may reinstitute 10 percent tariffs on aluminum it removed while negotiating the USMCA.

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The Aluminum Association sent a letter signed by 15 CEOs and executives in the industry calling on Lighthizer and the administration not to reverse its decision on the tariffs.

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"After all of the hard work that has gone into making the USMCA a reality, it would be a shame to move backward by reapplying tariffs or quotas on aluminum," said Aluminum Association President Tom Dobbins.

Further, changes to Mexico's labor rules to ensure workers were granted the freedom to form unions and negotiate better wages were included in the deal but have yet to clear their way through the Mexican legal system.

"What people have to understand is the changes required by USMCA, if it's to be real, are changing root and branch deeply entrenched systems of protection contracts ad phony unions," Rep. Andy Levin, D-Mich., said.

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The COVID-19 pandemic has also put a strain on the launch of the new deal as border closures to prevent the spread of the virus have slowed down trade.

Lighthizer pushed to have the deal take effect on Wednesday despite the pandemic to allow for the new rules to be enforced.

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