Wholesale Funding and Energy Portfolio Strategy
USMCA: Preserves Access to U.S. Market
Scotiabank is committed to long-term growth across the Pacific Alliance
Key Features of NAFTA 2.0
。 Autos. Maintains integrated supply chains for vehicle and parts manufacturing across North America. Both Canada and
Mexico would be shielded from any US move to impose so-called 'national security' Section 232 tariffs on automobiles.
Mexico has negotiated an additional cushion to the transition to the new tighter auto rules of origin that maintains tariff-
free access for 1.6MM vehicles a year under NAFTA's existing terms
○ Agriculture. Limited increases in bilateral access to specific commodity markets
。 Natural resources. Recent Mexican oil reforms institutionalized in the agreement, while US claims under NAFTA on a
proportionate share of Canadian oil shipments is ended
。 Sunset clause. No automatic expiry. Agreement will be reviewed every six years with 10 ensuing annual reviews to
address outstanding concerns
。 Dispute settlement. Existing state-state dispute-settlement mechanisms under NAFTA's chapters 19 and 20 preserved;
investor protections under NAFTA's chapter 11 maintained between US and Mexico; bilateral Canada-Mexico issues
covered by CPTPP.
。 IP. Extends patent and copyright protections in Canada and Mexico in line with previous understandings under draft TPP
。 Government procurement. No intensification of 'Buy American' rules
。 Visas. No change in NAFTA visa framework
• Next steps
。 Signing expected in late 2018. Side letters that shield Canada and Mexico from Sec. 232 auto tariffs become active
o Ratification process in US could take six months or more. Any demands for changes likely to be handled in side letters
o In Mexico and Canada, the legislative process should be completed within a few months
• Implications for the Pacific Alliance
。 Little impact expected on Peru, Chile, or Colombia
。 Canada and Mexico will continue to pursue their trade diversification agendas with the members of the Alliance. Article
32.10 should not impede negotiation of future trade agreements with so-called 'non-market economies'
Scotiabank®
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