Addressing Environmental Protection in the United States-Mexico-Canada Agreement (USMCA)

Abstract

Canada, Mexico and the United States, at the insistence of the Trump Administration, agreed to renegotiate the North American Free Trade Agreement (NAFTA), reflecting the U.S. objectives of reducing the substantial U.S. trade deficit with Mexico, discouraging future U.S. source investment in Mexico and thereby encouraging manufacturing employment in the United States. These negotiations resulted in a revised agreement—the United States-Mexico-Canada Agreement (USMCA)—that was signed by the three Parties on November 30, 2018 and again in revised form December 10, 2019 that is likely to enter into force mid-2020. In the process, while Mexico and Canada made significant concessions, the United States was required to compromise on its initial demands on such issues as automotive rules of origin, government procurement, dispute settlement and a Sunset clause, among others. One major benefit of the renegotiation was the agreement by the Parties on a relatively robust chapter addressing environmental protection (Chapter 24), a major improvement over NAFTA’s side agreement, the North American Agreement on Environmental Cooperation (NAAEC). USMCA’s environmental chapter incorporates many of the features of the Transpacific Partnership (from which the Trump Administration withdrew in January 2017) including making environmental disputes subject to the same dispute settlement mechanism as trade disputes. Moreover, the USMCA environmental chapter and related agreements incorporates some of the best features of the NAAEC as well as the innovations of TPP to create a new high standard of environmental protection for regional trade agreements.