After 25 years, the North American Free Trade Agreement (NAFTA) is being replaced by the United States-Mexico-Canada Agreement (USMCA) amid criticisms of the benefits achieved so far. On 19 December 2019, the U.S. Congress approved the new agreement which is expected to be presented to the Senate for its ratification. Mexico’s legislature has already approved of USMCA while Canada is awaiting the approval of the U.S. lawmakers.
In today’s article, we examine NAFTA’s provisions, its achievements so far, and the merits or otherwise of its criticisms. We will then review the contents of USMCA to ascertain the changes that have been made, and their implications for future trade between the United States, Mexico and Canada. Perhaps, there are important lessons to be learned for any review and possible amendment to CARICOM Single Market and Economy (CSME) of which Guyana is part. The CSME is being implemented in a number of phases and involves mainly free movement of skills/labour, goods, capital and services as well as the right to establish businesses. A key outcome of the CSME is the establishment of the Caribbean Court of Justice.
NAFTA in perspective
The Canada-United States Automobile Products Agreement (‘Auto Pact’) was entered into in 1965 to boost trade between the two countries. Since then, 90 percent of Canada’s auto production was sold to the United States while a similar percentage of Canada’s consumption was from the United States, an indicator of the level of integration of the two economies in automobile manufacture. The Agreement was particularly advantageous to Canada since it enabled the country to modernize its auto industry.