The agreement between the United States of America, the United States of Mexico and Canada[1], commonly known as the United States-Mexico-Canada Agreement (USMCA), is a free trade agreement between Canada, Mexico and the United States in lieu of the North American Free Trade Agreement (NAFTA). [2] [3] [4] The agreement has been referred to as NAFTA 2.0[5][7][7] or «New ALEFTA[8][9],[9] since many nafta provisions have been introduced and its amendments have been found to be largely incremental. On 1 July 2020, the USMCA came into force in all Member States. The pact catalyzed Mexico`s transition from one of the world`s most protectionist economies to one of the most trade-friendly. Mexico had dismantled many of its trade barriers after joining the WTO`s 1986 General Agreement on Tariffs and Trade (GATT) in 1986, but it still had an average level of tariffs before NAFTA [PDF] of 10%. Since NAFTA, trade between the United States and its North American neighbors has more than tripled and grown faster than U.S. trade with the rest of the world. Canada and Mexico are the top two destinations for U.S. exports, with a share of more than one-third. Most estimates conclude that the agreement has increased U.S.
gross domestic product (GDP) by less than 0.5%, which equates to an additional $80 billion over the U.S. economy, with full implementation or several billion dollars of additional growth per year. The U.S. Department of Commerce (www.trade.gov/export-solutions) The U.S.-Mexico-Canada Agreement (USMCA in the United States, «CUSMA» in Canada and «T-MEC» in Mexico) came into effect on July 1, 2020. The trade agreement between the three countries replaces the North American Free Trade Agreement (NAFTA). Edward Alden of CFR says the fear of trade deals has increased because wages have not kept pace with labour productivity, while income inequality has increased. To some extent, he says, trade agreements have accelerated the pace of these changes because they have «strengthened the globalization of the U.S. economy.» NAFTA has boosted Mexican agricultural exports to the United States, which have tripled since the pact was implemented.