The North American Free Trade Agreement (NAFTA) was the precursor of the United States-Mexico-Canada Agreement (USMCA) between Canada, Mexico, and the United States. Discuss your understanding of why USMCA replaced NAFTA, providing specific details of both agreements. In your opinion, which agreement is better, and why? The USMCA: Replacing the NAFTA for a Better Trade Agreement

The USMCA: Replacing the NAFTA for a Better Trade Agreement

The North American Free Trade Agreement (NAFTA) was a trade agreement that was established in 1994 between Canada, Mexico, and the United States. The agreement removed most tariffs and eliminated restrictions on trade between the three countries. However, by the late 2010s, NAFTA had become outdated and needed to be replaced. In 2018, the United States-Mexico-Canada Agreement (USMCA) was signed, replacing NAFTA (Ellison, 2019).  The USMCA differs from NAFTA in several ways. It requires that 75% of all auto parts be manufactured in the USMCA region to qualify for duty-free status, versus the 62.5% previously required under NAFTA. The USMCA also includes improved labor and environmental standards, such as requiring 40-45% of auto parts be made by workers earning at least $16 an hour. Furthermore, the USMCA mandates that 10% of auto parts be made by workers earning at least $16 an hour in Mexico, which is more than double the amount required under NAFTA  (Ellison, 2019). Cont…