As a professional, it`s important to stay up-to-date with current events and developments in various industries. One such development that has been making headlines in recent months is Schedule 2 of the free trade agreement between Canada, the United States, and Mexico.
The new trade agreement, known as the United States-Mexico-Canada Agreement (USMCA), entered into force on July 1, 2020. It replaces the North American Free Trade Agreement (NAFTA) and includes updated provisions to modernize and strengthen trade relations between the three countries.
One key aspect of the USMCA is Schedule 2, which outlines the rules of origin for automotive goods. Under the new agreement, at least 75% of a vehicle`s content must be made in the USMCA region in order to qualify for duty-free treatment. This represents an increase from the 62.5% requirement under NAFTA.
In addition, at least 40-45% of a vehicle`s content must be made by workers earning at least $16 per hour. This provision aims to incentivize production in higher-wage countries such as the US and Canada, and discourage offshoring of jobs to lower-wage countries such as Mexico.
The new rules have been met with mixed reactions. Supporters argue that they will help to revitalize the US auto industry and protect jobs in higher-wage countries. Critics, on the other hand, worry that the requirements will lead to higher costs for consumers and could harm the competitiveness of the North American auto industry as a whole.
Another notable aspect of Schedule 2 is its provisions related to steel and aluminum. Under the new agreement, 70% of the steel and aluminum used in the production of cars, trucks, and other vehicles must be sourced from North America. This represents a significant increase from the 50% requirement under NAFTA and is seen as a win for domestic steel and aluminum producers.
In conclusion, Schedule 2 of the USMCA represents an important development in the ongoing evolution of trade relations between Canada, the US, and Mexico. While the new rules may have both positive and negative effects, it`s clear that they will have a significant impact on the automotive industry and its stakeholders. Stay tuned for further updates as the USMCA enters into full force and effect.