United States-Mexico-Canada Agreement Amendments

Author:Mr Richard Dearden, Wendy J. Wagner and Hunter Fox
Profession:Gowling WLG

On Dec. 10, 2019, Canada, the United States of America, and Mexico agreed to substantial amendments to the United States-Mexico-Canada Agreement (USMCA), the trade agreement that is slated to replace the long-standing North American Free Trade Agreement (NAFTA). Canadian Deputy Prime Minister (former Foreign Affairs Minister) Cyrstia Freeland, U.S. Trade Representative Robert Lighthizer, and Mexico's chief negotiator, Jesus Seade, met Tuesday morning in Mexico City to sign the revised trade agreement.

The amendments update elements of the USMCA, including the chapters relating to state-to-state dispute settlement, labour, the environment, intellectual property, and rules of origin. The USMCA was originally signed on November 30, 2018, but had not been ratified by either Canada or the United States.

A major improvement to the dispute settlement chapter is that state-to-state dispute panels will be established automatically upon request. Under NAFTA Chapter 20, the U.S. Government blocked the creation of state-to-state dispute settlement panels for decades by not agreeing to the appointment of the panellists. The amendments also create a roster of potential panellists and introduce more clarity and transparency in the procedural rules that will guide the operation of panel hearings.

Additionally, Canada and the United States separately established bilateral mechanisms with Mexico under the dispute settlement chapter relating to labour obligations. The new mechanism provides Canada and the United States with the ability to trigger facility-specific rapid-response investigations by independent panels of labour experts of concerns relating to freedom of association and collective bargaining at Mexican facilities.

The labour chapter has been updated to increase the flexibility parties have to pursue violations relating to violence against workers. The amendments also reverse the burden of proof in the labour chapter, such that a failure to comply with the labour obligations will now be presumed to affect trade or investment, unless the defending party can demonstrate to the contrary.

The environment chapter sees a new article added to recognize the three members' existing commitments to enact multilateral environmental agreements (MEAs) to which they are a party. Canada has several MEAs that will be implemented as a result of this new article, including the Montreal Protocol on Substances that Deplete the Ozone Layer. The amendments also...

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