For any entrepreneur, staying informed about the trade agreements between neighboring countries is crucial to understand the environment in which they operate and to seize the opportunities that arise in the international market.
The T-MEC is not just another agreement between countries; it is a pact that redefines the rules of the game in a region key to global trade. For an entrepreneur, understanding the scope of this treaty not only involves being aware of the conditions under which trade will take place among these three economic powerhouses, but also understanding how these new provisions will directly impact their company, its operations, and its business strategy.
In an increasingly complex and globalized commercial environment, having a specialized international law firm in the T-MEC is essential to successfully navigate this trade agreement.
Canada-United States-Mexico: From NAFTA to USMCA
For decades, the trade relations between Canada, the United States, and Mexico have been fundamental for the economic development of the North American region. These three countries have maintained trade agreements with the aim of promoting the exchange of goods and services, as well as boosting economic growth and competitiveness on the international stage.
One of the most significant milestones in this relationship was the signing of the North American Free Trade Agreement (NAFTA) in 1991, which laid the groundwork for greater economic integration among the participating nations. However, after more than two decades in force, NAFTA revealed the need to adapt to the new challenges and realities of international trade.
This led to the emergence of the United States-Mexico-Canada Agreement (USMCA), an update to the previous agreement aimed at modernizing and strengthening the trade relationship between these countries. The USMCA, which came into effect in July 2020, represents a new chapter in the history of regional economic cooperation, with significant changes addressing key issues such as digital trade, labor and environmental standards, and intellectual property protection.
A new horizon for these three nations. Here we will develop a little history of these treaties and the novelties proposed for a promising future.
What are the treaties?
The treaties are NAFTA and T-MEC.
NAFTA: North American Free Trade Agreement
It was signed on 11-30-1991 between George Bush (United States), Carlos Salinas de Gortari (Mexico), and Brian Mulroney (Canada)
T-MEC: Mexico, United States and Canada Treaty,
It will take effect from 1-7-2020 between Donald Trump (United States), Enrique Peña Nieto (Mexico), and Justin Trudeau (Canada).
NAFTA
This treaty was intended to facilitate trade through agreements, through the liberation of border obstacles, promoting free movement and the creation of new jobs, the protection of intellectual property, activating exports, consolidating the national industry, and improving prices.
Also, the prices in automotive production would be protected and financial services standards would be modernized. It promoted a notable increase in investments. The industry benefited from improvements in its technology, with administration and resolution of conflicts between the three participating countries.
Canada strengthened trade in dairy, wood, aluminum alloys, and automotive products. The United States provided gasoline, diesel, and natural gas and created new markets for the agricultural and livestock sectors. Mexico became a supplier to the United States. Trade in electronic and automotive devices was strengthened, to mention the main ones.
However, the purchase at low costs generated that each country experienced unemployment and industrial weakening. It even promoted illegal immigration. The exchange of goods and services requires a common regulation between different countries, needing a legal guarantee. This treaty required many modifications and legal regulations that differed from one country to another.
In Mexico: Many companies were vulnerable to this agreement, resulting in some industries being marginalized, especially the smallest ones, without being able to develop in the same way as the main ones. The State was relegated to the regulations of this treaty. The jobs created were not enough.
T-MEC
Although there are many similarities with NAFTA, this new one includes not only modifications in legal aspects but also in the technology part and the updates necessary for new online digital business relationships and the regulation of knowing where they are stored regarding commercial operations data.
The difference is in the strengthening of labor laws through duly established reforms. The area of pharmacology and biological medicine will be covered in the legal and commercial parts and also the regulation of their prices. This treaty is written in a way that is more equitable, promoting economic growth.
Labor reforms and partner dispute resolution were carried out. The benefit will be to workers and industrialists, farmers, and ranchers. The idea is that the future commercial exchange is at a reduced cost. It also provides protection to intellectual property through patent protection, defending their rights.
The global crisis caused by the COVID-19 pandemic calls for regional economic recovery by boosting the industry, creating new jobs. Manufacturing and commerce must inevitably be reactivated for a resurgence of the economy. The promise of a “glorious future” is tantalizing for this tripartite relationship.
The financial uncertainty that this crisis has left behind will be reduced by the resurgence of trade relations and fostered by the economic momentum of the three countries agreed to in the treaty.
International Business Lawyer
At Markowicz International, we have a team of business lawyers specialized in commercial law and international law with extensive knowledge and experience in the three markets that comprise the T-MEC.
You can contact us at any time, and we will advise you legally.