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| CUSMA/USMCA replaces NAFTA as the new free trade area made up of Mexico, the US, and Canada. Map by Wikimedia user Heraldry (source; CC BY-SA) |
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NAFTA is No More
On July 1, the North American Free Trade Agreement (NAFTA) - a much-talked-about free trade area including Mexico, the United States, and Canada - was formally retired. The arrangement, in place since 1994, has been replaced by a similar deal, technically called the "Agreement Between the United States of America, the United Mexican States, and Canada". The change was agreed upon last year, but didn't take effect until this month.USMCA or CUSMA?
The short name of the deal depends on who you ask. In the US, it's called the United States-Mexico-Canada Agreement (USMCA), but in Canada it's the Canada-United States-Mexico Agreement (CUSMA). In French (Canada's other official language) the acronym is ACEUM - also placing "Canada" first - and in Mexico it's known by the Spanish acronym T-MEC (placing "Mexico" first).| Full Treaty Name: • Agreement between the United States of America, the United Mexican States, and Canada (English) • Tratado entre los Estados Unidos de América, los Estados Unidos Mexicanos y Canadá (Spanish) • Accord entre le Canada, les États-Unis d’Amérique et les États-Unis Mexicains (French) Official Short Name: • Canada–United States–Mexico Agreement (English - Canada) • United States–Mexico–Canada Agreement (English - US) • Tratado entre México, Estados Unidos y Canadá (Spanish) • Accord Canada–États-Unis–Mexique (French) Abbreviation: • CUSMA (English - Canada) • USMCA (English - US) • T-MEC (Spanish) • ACEUM (French) Implemented: July 1, 2020 |
What is a Free Trade Area?
A free trade area is a group of two or more countries that have signed a treaty making it cheaper and easier to import and export things to each other. The idea is usually to increase the total amount of trade between the member countries, in hopes that it will make the economy better for all of them. That kind of treaty is called a "free trade agreement" (FTA) because it allows people and companies to import and export things more "freely" within that group of countries.The CUSMA/USMCA inherits NAFTA's status as the world's biggest free trade area (besides the WTO) by total economic output of the countries. It's also roughly tied for biggest by land area, but can't compete by population or number of members.
What's the Difference between NAFTA and the USMCA/CUSMA?
The truth is, the new agreement is still largely based on NAFTA. But it does include quite a few new provisions. For example, Mexico has agreed to make sure workers can form unions just as easily as in the US and Canada, copyright protections will be strengthened and unified between the three countries, Canada will make it cheaper to import dairy products from the US than before, and no import taxes will be allowed on music or eBook downloads.The deal also includes some new environmental protection rules agreed upon by all three countries, though environmental activist organizations mostly opposed it, saying the new rules were much too weak.
| Organization Name (Retired): • North American Free Trade Agreement (English) • Tratado de Libre Comercio de América del Norte (Spanish) • Accord de libre-échange nord-américain (French) Abbreviation: • NAFTA (English) • TLCAN (Spanish) • ALÉNA (French) Implemented: January 1, 1994 Retired: July 1, 2020 Headquarters: N/A Website: naftanow.org |
Does the USMCA Include US Territories?
The USMCA/CUSMA agreement covers all of the US, Canada, and Mexico, generally including their land and water territory, airspace, plus any other areas at sea where the countries have economic rights (the EEZ and continental shelf). For Mexico and Canada that's easy to define, since they have no overseas territories. But what about the 14 US dependent territories overseas, which are only partly integrated into the country?Under the general definitions in the new trade deal, Puerto Rico is the only overseas territory automatically treated as part of the US, alongside the 50 states and Washington, DC. Interestingly, the treaty's wording seems to imply that the seas surrounding the other territories would be covered under its definition of the US - which includes all US-administered waters - even though the land territories themselves aren't.
The text of the agreement also clarifies that the hundreds of "foreign trade zones" within the 50 states and Puerto Rico are, by default, considered part of the country. These areas, located at border crossings, seaports, and airports, are normally treated as if they were outside the US for import and export purposes.
Learn More: Full text of treaty in English (French) (Spanish)
Interested in changes to the world's free trade areas? View all free trade area articles on PolGeoNow.