The United States and Mexico have been long-standing trading partners for decades, and in recent years, their economic relationships have only grown stronger. In 2018, the two countries announced that they had reached a new trade agreement, which would replace the North American Free Trade Agreement (NAFTA).
The U.S.-Mexico Trade Agreement, as it is now known, has been designed to modernize and update NAFTA, which had been in place since 1994. The new agreement includes provisions related to digital trade, intellectual property, and labor rights, among other things.
One of the most significant changes in the U.S.-Mexico Trade Agreement is the new rules of origin for the auto industry. Under NAFTA, a car needed to have 62.5% of its components manufactured in North America in order to qualify for duty-free treatment. The new agreement increases this requirement to 75%, with a significant portion of those components needing to be made in high-wage factories in North America.
The agreement also includes several provisions aimed at protecting intellectual property, particularly in the pharmaceutical industry. For example, it includes a 10-year period of exclusivity for biologic drugs, which means that other companies cannot produce a similar product during that time.
In addition to these changes, the U.S.-Mexico Trade Agreement includes a chapter on labor rights. This chapter includes provisions that require Mexico to make significant changes to its labor laws and enforcement mechanisms, in order to provide greater protections for workers and to allow for more collective bargaining.
The U.S.-Mexico Trade Agreement is a significant achievement for both countries, as it provides a framework for modernizing and strengthening their economic partnership. While the agreement still needs to be ratified by both countries` governments, it represents an important step forward in the ongoing efforts to improve free trade between the U.S. and Mexico.