BUSI604 DISCUSSION: USMCA 2
1. Key Term and Why You Are Interested in It
The key term that I am interested in is the United States-Mexico-Canada Agreement, or
USMCA, for short. The United States-Mexico-Canada Agreement substituted for the North
American Free Trade Agreement creating a balanced trade to support high-paying jobs to grow
the North American economy. After reading about the term in the textbook, I was curious to learn
how the United States-Mexico-Canada Agreement affects my daily life. Coming from a rural
community with a large presence of farming, I was particularly interested in the benefits
mentioned in the textbook for farmers by “modernizing and strengthening food and agriculture
trade in North America” (Satterlee, 2023).
2. Explanation of Key Term
The United States-Mexico-Canada Agreement was an update to the North American Free
Trade Agreement on July 1, 2020, to support freer markets, fairer trade, and economic growth.
The major categories of the update were intellectual property, de minis, financial services,
currency, labor, and the environment. Key highlights of the update for intellectual property,
which had a large number of changes, include protections for United States innovators and
creators, the most comprehensive enforcement provisions of any trade agreement, and the
strongest standards of protection for trade secrets of any prior free trade agreement. Another
category with a high number of changes was labor benefits, including worker representation in
collective bargaining, labor rights recognized by the ILO, enhanced labor enforceability, and new
labor value content rules.
3. Major Article Summary
The article that I chose to dive into detailed the impact of the United States-Mexico-
Canada Agreement, specifically as it relates to small businesses. What was first noted was that
BUSI604 DISCUSSION: USMCA 3
the biggest changes gave higher attention to high-value goods: steel and automotive products, to
be specific. The companies that sell these high-value goods were impacted in more regions and
in more aspects of their supply chain. Despite this, there were key changes in the switch from the
North American Free Trade Agreement, NAFTA, to the United States-Mexico-Canada
Agreement, USMCA, which affected the ability of small companies to participate in trade
throughout North America. Three changes included an increased de minimis threshold in Canada
and Mexico, different form requirements for the Certificate of Origin, and updated Rules of
Origin principles that encourage local manufacturing and sourcing (Reid, 2023).
De Minimis comes from the Latin phrase meaning “the law cares not for small things”,
which in terms of trade, indicates a “fixed value below which [a country] will not attempt to affix
a dollar amount to a good or product for the purpose of charging tax or duty” (Porter, n.d). Under
the USMCA, the Canadian de minimis was increased from $20 to $40. The change will allow
small companies selling low-cost goods to participate more freely in cross-border trade. The
change to the Certificate of Origin no longer required the certificate, which streamlines customs
forms and reduces operational costs. The change to the Rules of Origin encourages more US
manufacturing by requiring companies to source more from the United States to meet a new
regulation (Reid, 2023).
4. Discussion
The article detailing the changes that the USMCA had on businesses in the United States
helped me understand how these agreements impact businesses. Oftentimes, these agreements
seem like they would not impact someone locally. However, it can be seen that even small
changes to a policy can impact many industries and improve American businesses. Additionally,
there are impacts that expand beyond just those who are running the businesses that are engaged
BUSI604 DISCUSSION: USMCA 4
in international trade; the whole supply chain, the employees of the business, and the
communities that these businesses are in are all impacted when these American businesses are
able to gain and maintain a competitive advantage (Reid, 2023).
One thing that was important to gather with research on other articles was the potential
downfalls of the United States-Mexico-Canada Agreement. One argument against the USMCA is
that its protectionist measures could constrain growth in some manufacturing sectors. Another
argument is that the United States auto sector could be hurt by the rules of origin changes;
reducing outsourcing has the ability to increase the price of vehicles and therefore reduce
outputs. Lastly, an argument against the USMCA was that while the labor regulations were better
than other American pacts, there was not a great plan for enforcement of the regulations (Schott,
2021).
References
BUSI604 DISCUSSION: USMCA 5
Porter, D. (n.d.). What is de minimis value?: What is the de minimis rule in... Curtis, Mallet-
Prevost, Colt & Mosle LLP. https://www.curtis.com/glossary/international-trade/de-
minimis#:~:text=De%20minimis%20refers%20to%20the,product%20for%20the
%20purpose%20of
Reid, H. (2023, September 23). How does the USMCA agreement affect small businesses?. DCL
Logistics. https://dclcorp.com/blog/news/usmca-small-business/
Satterlee, B. C. (2023). International Business with Biblical Worldview. McGraw-Hill Education.
Schott, J. J. (2021, January 7). Five flaws in the USMCA. Jewish Policy Center.
https://www.jewishpolicycenter.org/2021/01/07/five-flaws-in-the-usmca/
United States–Mexico–Canada trade fact sheet modernizing NAFTA into a 21st Century trade
agreement. United States Trade Representative. (n.d.). https://ustr.gov/trade-
agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-
sheets/modernizing
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