What to Know About USMCA, Trump's New Trade Pact

President Donald Trump is expected to sign his new trade agreement with Mexico and Canada Wednesday morning, following through on a major campaign promise amid his impeachment trial and ahead of the 2020 election.

The United States-Mexico-Canada Agreement (USMCA) is Trump's replacement for the North American Free Trade Agreement and will govern more than $1 trillion worth of trade. The deal is the culmination of two years of ongoing debate between the three nations.

"America's great USMCA Trade Bill is looking good. It will be the best and most important trade deal ever made by the USA. Good for everybody - Farmers, Manufacturers, Energy, Unions - tremendous support. Importantly, we will finally end our Country's worst Trade Deal, NAFTA!" Trump tweeted in December.

House Speaker Nancy Pelosi agreed, saying in her announcement that "there is no question of course that this trade agreement is much better than NAFTA" but Democratic negotiations made it "infinitely better than what was initially proposed by the administration."

Get your unlimited Newsweek trial >

But the key Democrats who helped make the trade deal happen have not been invited to Wednesday's signing ceremony. Around 400 guests are expected to attend the event but not Pelosi or any of the other congressional Democrats who played a big role in negotiations, according to a report from CNN.

The USMCA was overwhelmingly approved by Congress. The Senate voted two weeks ago to pass the legislation by a vote of 89 to 10. The trade agreement received similar bipartisan support in the House of Representatives, where it passed by a vote of 385 to 41.

But according to a new poll from Monmouth University, a significant number of Americans haven't yet formed an opinion on the trade agreement. A third of voters polled approved of the agreement, 5 percent disapproved of it and a majority, or 61 percent, had no opinion of the matter.

Here's everything you need to know about USMCA:

Get your unlimited Newsweek trial >

What It Is:

The USMCA will replace the 25-year-old NAFTA agreement negotiated by President George H.W. Bush and pushed through Congress by President Bill Clinton in the mid-1990s. In his 2016 White House bid, Trump slammed NAFTA and promised to negotiate a better trade agreement.

The USMCA was originally approved by the U.S., Canada and Mexico in November 2018. But congressional Democrats refused to approve of the original deal. After months of negotiations with the White House, during which they secured stronger labor and environmental standards, Democrats officially hopped on board last month.

But, overall, the USMCA is broadly similar to its predecessor. Experts say that the new agreement doesn't start from scratch, but rather modernizes the measures already existing in the NAFTA deal.

USMCA will bind the three countries together with a 16-year "sunset clause" and is subject to review by all the countries every six years.

Who Will Be Affected

The legislation includes major changes for the auto industry and for labor and environmental regulations.

The deal requires more car parts to be manufactured by workers in one of the three countries, which is a 13 percent increase from the current rule. It will also require more parts to be made by employees making at least $16 per hour. According to the International Trade Commission, these changes will add about 28,000 jobs.

Some of the top labor changes include provisions that enshrine the right for workers to organize unions and bargain collectively. The Trump administration pushed for those changes because it should make wages rise in Mexico, which could make it less appealing for companies to move manufacturing factories south of the border. There will also be a formal committee to monitor Mexico on labor issues and harsher penalties for violations of working conditions.

When it comes to intellectual property changes, the biggest will be the online liability protections. Under the new deal, the Trump administration will extend U.S. liability shield for online content to Mexico and Canada. USMCA also includes patent protections and copyright extensions. Under NAFTA, copyright extended 50 years after the life of the author. Now, it will be 70 years after the life of the author.

donald trump USMCA
President Donald Trump speaks on the United States-Mexico-Canada Agreement (USMCA) trade agreement in Milwaukee, Wisconsin on July 12, 2019. Trump will sign his signature trade agreement on Wednesday, January 29, 2020. Mandel Ngan/AFP/Getty Images

Another big win for the Trump administration was that Canada will now be forced to open its dairy market to American farmers. The Canadian government restricts how many dairy products can be imported but under the new agreement, U.S. farmers have more access to the foreign market, especially for "Class 7" products such as milk powder and ice cream.

But the impact of the USMCA on U.S. job creation may not be that big. The International Trade Commission found the initial version of the legislation would create about 176,000 jobs in six years. The report concluded that the USMCA would have a "moderate" positive impact.

When Will It Go Into Effect?

The biggest hurdle for the trade deal is that it still needs to be approved by Canada's legislature. Canada is the only country that has yet to ratify the revised agreement. Mexico signed the deal in December and the U.S. will do so Wednesday.

Canadian Prime Minister Justin Trudeau has voiced his support for the deal. But he lost his legislative majority in the last election cycle, which could stall the passage of the USMCA, although the nation's Conservative Party is expected to give the prime minister enough votes to ratify the agreement.

"I don't think anybody has any intention of dragging anything out. We just want to make sure we do our job...there are some things in this deal that I think the business community isn't aware of that we need to shine a light on," Randy Hoback, the spokesman for the Conservative Party, told Reuters last week.

The trade agreement cannot go into effect until all three nations have ratified it.

What to Know About USMCA, Trump's New Trade Pact | U.S.