Mexico praises USMCA - but Canada drags its feet on ratification

Legislation | | MIC Customs Solutions |

Mexico is keen for the USMCA to happen, but Canada now appears to be holding back.

A representative from Mexico has said he is looking forward to some positive effects for the automotive industry to come out of the new USMCA.

The free trade agreement between the United States, Mexico and Canada is currently going through the final stages of the legislative process and Jesus Seade Kuri from the Mexican Ministry of Foreign Affairs said he expects it to be a good deal for his nation.

Speaking at the recent Automotive Logistics Mexico conference, he called USMCA a "significant improvement" on the old North American Free Trade Agreement (NAFTA), Automotive Logistics reports.

"The disciplines are much improved, lots of ambiguities in NAFTA were tightened and made more precise, timelines made more realistic ... rules were created where they didn't exist," Mr Kuri commented.

"Now we are telling the industry: you have some protection if you invest in Mexico or anywhere in North America. I think [USMCA] is a good agreement for Mexico and a good agreement for the industry."

When the USMCA was officially signed and passed back in December, it had been predicted that ratification would take place by January 2020. However, Canada - the country that had been most proactive in arguing for the deal - is now the only member not to have implemented formal ratification.

Negotiations are still being carried out by its parliament's Foreign Affairs and International Trade Committee and it has been suggested this could delay the process as late as April.

The New Democratic Party (NDP) and the Bloc Québécois are reportedly concerned over labour protections and the omission of Canadian aluminium from a provision that requires all steel to be melted and poured in North America in order to receive preferential treatment.

However, there have been suggestions that Canada may not take too much longer, with the NDP having recently agreed to speed up the process.

Nevertheless, the USMCA deal will not come into effect until the first day of the third month after the final nation ratifies it, so Mr Kuri will still have some time to wait before he sees the positive effects he is hoping for.

A replacement for NAFTA and often referred to as NAFTA 2.0, the USMCA aims to keep the majority of trade between the three nations tariff-free in order to widen the scope of trade and help businesses.

It also makes the Canadian dairy market more open to US farmers and requires 75 per cent of a car's parts to be made in North America in order to remain free from levies, up from 62.5 per cent previously.

Other conditions include new regulations on e-commerce to ensure the deal is fit for the 21st century and its digital economy, and the elimination of patent provision for certain drugs.

With everything now in place, the world must wait with bated breath for Canada to push ratification through and start the ball rolling on what is sure to be one of the most significant FTAs to happen in decades.