NAFTA is Now Called USMCA

After more than 13 months of tough negations and corresponding high degrees of uncertainty on Canada’s economy, politics, and financial markets, a settlement could finally be reached on the new United States-Mexico-Canada Agreement („USMCA “) that replaces the existing NAFTA regulations. USMCA is to be signed in November, but then it still has to be ratified by all three legislative chambers of the participating countries. It shall be valid for 16 years with a first review option after 6 years. 

In addition to new rules for “digital commerce”, Canada could achieve to maintain certain key arbitration procedures and, in particular, to be exempted from the threat of high tariffs (25%) on car exports, for the protection of intellectual property rights and against currency manipulations. In return, Canada, amongst other things, has to open its previously inaccessible dairy markets to US farmers partially and spread out over a longer period of time. 

Even though Canada has had to make significant concessions, there is great relief over the outcome in the politics and financial world, and ultimately decisive. Accordingly, the financial markets have responded in a very positive way. The high worries about a negative growth due to the initial stringent demands by the American negotiation party are off the table and new opportunities are opened up for additional high investments into this stable growing economy.