NAFTA Revamped: Are Oil and Gas the Big Beneficiaries?
- The Knowledge Group
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A new agreement has finally been drafted to replace NAFTA and guide trade among three countries: the United States, Mexico, and Canada. The US-Mexico-Canada Agreement, or USMCA, retains multiple features important to the oil and gas sector. These include provisions that shield U.S. oil companies’ investments overseas and provisions that enable the tax-free movement of raw and refined oil products across the two international borders.
NAFTA’s key mechanisms to resolve international trade disputes will stay in. For example, USMCA enables multinationals to sue a government for imposing regulations that impact the industries. A few economic sectors, including petroleum, telecommunications, and transportation, will get to keep this highly significant legal protection in Mexico.
Significantly, USMCA does not discuss climate change.
Key Provisions in the US-Mexico-Canada Agreement
- Cars must consist of 75% parts made in the United States, Mexico, or Canada to avoid tariffs (NAFTA required 62.5%). Between 40 and 45% of parts must be manufactured at an hourly pay rate of $16+ by 2023.
- USMCA phases in some protections for Mexican workers, including union representation rights, migrant worker protection, and gender equity. The countries can hold each other accountable through the law.
- USMCA lengthens the span of copyright protection to 70 years after an author dies (up from 50).
- USMCA lengthens the time pharmaceutical companies can sell a drug before opening it to generics.
- USMCA precludes duties on electronic books and music, and shields internet service providers from liability for user content.
Mixed Opinions in Canada
Canadians will lose “privacy bulwarks” that involve physically storing Canadians’ data in Canada—presumably safeguarding it from U.S. surveillance or police warrants. Some Canadian commentators criticized this “digital free trade” as a loss of Canadian sovereignty.
Canada also failed to obtain protections from metal tariffs (but got a side agreement to avert auto tariffs). And Canada must open its markets to the U.S. dairy industry.
Canada and Mexico are expected to ratify USMCA at the G20 Summit in November. But the U.S. senator still needs to approve it, and meanwhile, they’re busy planning for the midterm elections.
Related Webcast: Oil and Gas Restructuring: Promises and Perils in 2018
Time/Date: Wednesday, October 24, 2018, from 3:00pm to 4:00pm (EST) and on-demand after date of broadcast