President Donald Trump signed the United States-Mexico-Canada Agreement (USMCA), a trade agreement with Mexico and Canada, following its approval by both the House and the Senate. It keeps much of the original NAFTA, while pulling in new provisions from the proposed Trans Pacific Partnership Agreement in areas such as digital trade, regulatory reform, and intellectual property.
According to Reuters, the agreement has been welcomed by “a wide array” of business groups and endorsed by the AFL-CIO union federation. Mexico has approved the deal, but it still needs to be ratified by Canada’s parliament before it can take effect. Reuters notes that Canada’s main opposition Conservative Party has expressed concerns about aspects of the deal, and there is no timeline for ratification there. Further, once Canada ratifies the accord, the three countries must show they are meeting their obligations before the deal is actually implemented.
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The Natural Products Association (NPA) noted on their site that the USMCA will have an impact on trade in natural products in the following ways:
Whey powder: Chapter 4 in the new agreement includes provisions on dairy ingredients. Under the first year of the agreement, the quota for U.S. whey powder will increase to 689 MT; to 1,378 in year two; and increasing from there until it hits 4,135 MT in the sixth year. Import quotas on certain US whey powders will be eliminated by year 10.
Dairy milk constituents: The quota for imports of U.S. natural milk constituents will increase to 460 MT in year one; to 920 in year two; and will continue to increase until it hits 2,760 MT in year six.
De Minimis for customs duties purposes: A provision in the agreement establishes an increased de minimis exemption from customs duties among the three countries. Up to $800 per day to one customer can enter the U.S. duty free; up to $100 per day to one customer can enter Mexico duty free; and up to $150 per day to one customer can enter Canada duty free.
Improved access for US food industry: U.S. dairy, poultry, and pork industries see incremental improved access for exports to Canada with expansion of quotas and reduced tariffs.
US cosmetics industry: The USMCA commits all three countries to good regulatory practices for the cosmetics sector. The US-Canada Appendix to the Cosmetics Annex recognizes the importance of regulatory alignment for OTC-like products, and will have “a significant commercial benefit for cosmetics trade,” NPA says.
Rules of origin: The USMCA includes changes to rules of origin, making them in some cases more flexible. For supplements manufacturing, there is increased de minimis from 7% to 10%, making it easier to use some imports from outside USMCA countries while maintaining USMCA benefits.
Intellectual property: The USMCA strengthens intellectual property protections, in a chapter resembling the provisions in the Trans-Pacific Partnership trade agreement, which the US abandoned when President Trump took office. The provisions strengthen key copyright and patent protections, including giving biologic drugs ten years of data exclusivity protection and lengthening the protection on copyright to the term of the author’s life plus 70 years. The chapter also strengthens provisions for protecting trademarks.
In a press release, Daniel Fabricant, Ph.D., CEO and President of NPA, said: “The Natural Products Association shares the Trump Administration’s commitment to protecting American jobs and growing the U.S. economy. This is a good deal for the small businesses that make up the majority of our industry and the millions of consumers who use nutritional supplements every day to support their healthy lifestyles. We applaud the Administration for reaching this deal and look forward to finding more ways to grow the economy and create jobs together.”