11 Dec 2019

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CUSMA Protocol Signed in Mexico City, Paving the Way for Ratification and Implementation Procedures to Continue

On Tuesday 10th December 2019, representatives of Canada, the United States, and Mexico signed a “Protocol of Amendment to the Agreement between Canada, the United States of America, and the United Mexican States” (the Protocol) in Mexico City. As its name suggests, the Protocol serves to amend certain provisions in the text of the Canada, United States, and Mexico Agreement (CUSMA) that was concluded and signed on 30th November 2018 in Buenos Aires. This new trade agreement, which is intended to eventually replace the North American Free Trade Agreement (NAFTA), is referred to as the “USMCA” (United States, Mexico, and Canada Agreement) in the United States, the “T-MEC” (Tratado entre México, Estados Unidos y Canadá) in Mexico, and has also been called the “new NAFTA”, “NAFTA 2.0”, and most recently the “NAFTA 2.1” (with the fractional “1” denoting the amendments made pursuant to the Protocol).

The amendments that the Protocol incorporates into the CUSMA text include changes to certain provisions related to dispute settlement, intellectual property, labour, environment, and product-specific rules of origin for the steel materials used to manufacture passenger vehicles and trucks. These changes were necessary to address concerns raised by U.S. lawmakers and to secure Congressional approval of the agreement in the United States.

The next step is for all three of the CUSMA parties to implement the agreement, as amended by the Protocol, into their domestic laws and regulatory regimes. Canada started this process in May 2019, when the Parliament of Canada began to consider Bill C-100, “An Act to implement the Agreement between Canada, the United States of America and the United Mexican States” (the “CUSMA Implementation Act”). As this implementing legislation was based on the November 2018 version of the CUSMA text, it may need to be tweaked to reflect the changes set forth in the Protocol before the legislative process resumes. There will be limited progress until the end of January 2020, when Canada’s Parliament returns from the winter adjournment. After that, however, steps forward could be swift, with passage of the proposed legislation into law by March 2020. (For example, it took only 37 days, from the date of Second Reading and referral to the Standing Committee on International Trade to the date of Royal Assent, for Parliament to pass the  legislation necessary to implement the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) into law).

The CUSMA will enter into force within 2-3 months after all three of the parties have completed their internal implementation processes. Paragraph 2 of the Protocol replacing the North American Free Trade Agreement with the Agreement between Canada, the United States of America, and the United Mexican States provides that each party shall provide written notification to the other parties “once it has completed the internal procedures required for … entry into force”, and that the agreement will enter into force “on the first day of the third month following the last notification”.

Tereposky & DeRose LLP regularly provides advice on the interpretation, implementation, and application of the provisions of international trade agreements, including the CPTPP, the CETA, the NAFTA, and the forthcoming CUSMA.  Should you have any questions regarding potential opportunities under these trade agreements or any other trade related issues, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Vincent DeRose
613.237.8862
vderose@tradeisds.com