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United States-Mexico-Canada Agreement

Economic · USMCA

Goods from outside meet a different tariff in each member's own customs territory. A free trade area drops the duty between its members without merging the wall around them, so origin has to be proved, down to the share of a car's value made inside. The agreement that replaced NAFTA on 1 July 2020 expires on 1 July 2036 unless all three governments extend it.

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Common questions

Questions about USMCA

What does USMCA stand for, and why does the agreement have three names?

United States-Mexico-Canada Agreement, which is what Washington calls it. Article 34.8 makes the English, French and Spanish texts equally authentic, so none of them is a translation of the others and each party names the agreement in its own order and language: CUSMA for the Canada-United States-Mexico Agreement, ACEUM for the Accord Canada-États-Unis-Mexique, and T-MEC for the Tratado entre México, Estados Unidos y Canadá.

Is the USMCA the same agreement as NAFTA?

No. NAFTA entered into force on 1 January 1994 and terminated when this agreement entered into force on 1 July 2020. Much of the machinery carried over, and some of it did not: regional value content for a passenger vehicle went from 62.5% to 75%, a labour value content requirement was added, and investor-state arbitration was dropped for Canada. Claims already running under NAFTA rules could be brought for three years after termination, until 1 July 2023.

Does the USMCA have an end date?

Article 34.7 sets a term of sixteen years, so the agreement expires on 1 July 2036 unless it is extended. The joint review on the sixth anniversary fell on 1 July 2026: Canada and Mexico confirmed an extension for a further sixteen years and the United States did not, which under the same article turns the review into an annual one for the rest of the term. The text also lets a party withdraw on six months' notice, and stays in force for the two that remain.

Why does a car have to prove where it was made?

Because a free trade area is not a customs union. Each party keeps its own tariff on goods from outside, so the duty-free treatment between them belongs to goods that originate inside and origin has to be established rather than assumed. For a passenger vehicle that means 75% regional value content since 1 July 2023, seven core parts that originate on their own account, 70% of the producer's steel and aluminium bought in North America, and the labour value content threshold on top.

Can a member sign a free trade agreement with a country outside the group?

Article 32.10 does not forbid it, and attaches a procedure. Where the other country was designated a non-market economy for trade remedy purposes by one of the parties on the date of signature, and had a free trade agreement with none of them, the party negotiating gives the other two three months' notice and the full text 30 days before signature. If it signs, either of the others may terminate on six months' notice and continue bilaterally.

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