TDM Special Issue on "The United States-Mexico-Canada Agreement (USMCA)" - Introduction
Article from: TDM 3 (2020), in Editorial
After many years of intense negotiations conducted under close media scrutiny, the United States Mexico Canada Agreement (USMCA) was finally signed by all three parties on the last day of November 2018 on the sidelines of the G20 Leaders Summit in Buenos Aires. This was followed by many more months of internal political discussions in the three countries through which the agreement would receive formal ratification. Mexico was the first to do so in late 2019, followed by the US, despite resistance from House Democrats, and finally the Canadian parliament, which rushed the deal through in mid-March 2020, just before the coronavirus pandemic engulfed the world. As things stand, the USMCA may go into effect as early as June of this year, although that timeframe is in doubt given other more pressing priorities.
Famously labelled 'the worst deal ever made' by US President Donald Trump because of its alleged harmful impact on US manufacturing in the vote rich mid-west, the USMCA's predecessor, the North American Free Trade Agreement (NAFTA) was long due for an upgrade, the world having moved on from the early 1990s when the original tri-party agreement came into being. Chief among these changes is the rise of electronic commerce, with the internet having transformed the way business is done beyond recognition, in no small part by enabling SMEs to exploit markets further afield than in previous decades. Supply chains are also more global than they were twenty five years ago, with China's manufacturing behemoth having sprung into action in the early years of this century, followed by many other emerging markets, much as automation has changed the landscape of employment across much of the west, in many cases negatively so. Our sensibilities too have changed - social values have become more embedded into our understanding of how governments and businesses should behave, with climate change and diversity foremost on the agenda of many organizations. Some of the legal institutions which we took for granted in the latter years of the 20th Century are now also regarded with more apprehension, notably trade remedies and the much maligned arbitration for investors against states, criticism of which has given birth to an entire sub-discipline of international economic law and political science. Yet as the World Trade Organization (WTO)'s mission of multilateral trade liberalization has faltered in recent years, with limited progress on matters such as agricultural subsidies and digital trade, as well as an unfolding crisis in its dispute settlement system, the importance of regional economic integration has perhaps never been clearer. This has become even more self-evident in recent weeks as the coronavirus emergency has laid bare the fragility of global supply chains. If globalization is wavering, good neighbours have never been more important.
It can be asserted with a reasonable degree of certainty that the USMCA, like NAFTA before it, will be essential to the economic welfare of all three of its parties. By many accounts NAFTA has been responsible for millions of jobs, billions of dollars of investment and trillions of dollars of merchandise trade across North America, raising the standard of living across the continent in a manner seen scarcely elsewhere. Renamed and (slightly) reconstructed, it is no surprise that President Trump now considers the USMCA one of the signature achievements of his presidency, much as Prime Minister Justin Trudeau of Canada and President Obrador of Mexico can take some credit for ensuring that free trade with their largest trading partner was not setback, or at least not lost, on their watch.
Whether the USMCA is truly much different than NAFTA, let alone an improvement on it, is a matter of much debate and this special issue of TDM has sought to shed some light on these questions by bringing together contributions from leading legal academics and practitioners. Contributions consider various aspects of the 34 chapter agreement, drawing attention to features which depart or mimic NAFTA, as well as brewing controversies and missed opportunities. Posner and Cunningham offer an insightful critique of NAFTA's trade remedies regime, retained in the USMCA at the behest of Canada despite much resistance from the US which viewed the system of review of anti-dumping and countervailing duties with much distrust, having been on the losing end of a fair share of disputes with their northern neighbours. Alschner and Walsh highlight the perplexing similarities between the USMCA and the Comprehensive Progressive Trans Pacific Partnership (CPTPP) an 11-nation mega-regional trade agreement signed by both Canada and Mexico from which the US withdrew on President Trump's first day in office. Chijioke-Oforji narrows his focus to the USMCA's anti-corruption provisions, observing that the new treaty reflects an encouragingly cooperative approach to tackling this pressing global issue. In the first of two articles on the USMCA's controversial and innovative rules of origin, van den Broek, Sprinkle, and Forrest consider the implications of these provisions on the North American automotive sector as well as the Trump Administration's approach to international manufacturing more generally. In the second, Reynolds, Coleman, O'Donnell, Marmolejo, and Toman-Miller caution that the USMCA's tight rules of origin may be expected to result in more litigation on regional value content than had occurred under the looser NAFTA system, perhaps a telling prediction that many battles over the USMCA have yet to be fought. The investment chapter of the USMCA, as with NAFTA's before it, has rightly attracted much commentary, since it is the foreign company which is often viewed as the most intrusive form of economic integration and therefore suspicion by the electorate. In this regard, Gantz offers an assiduous analysis of the USMCA's investment chapter alongside that of several other recent FTAs including the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU and the CPTPP, noting policy justifications for many of the USMCA's final provisions. Franzetti and Defriez add to this discussion with a close investigation of investor's rights of their own, drawing attention to a narrower understanding of national treatment among other standards of protection alongside a broader notion of investor. Alvarez explores the USMCA's truncated treatment of investor-state dispute settlement, omitted except for a narrow range of disputes between the US and Mexico, arguing that this may be indicative of a broader collapse of this regime around the world. Likewise, Kulaga views the USMCA's disdain for investor state dispute settlement as representative of a broader transformation in international law in favour of domestic courts, suggesting that what happens in North America may resonate well beyond its shores.