NAFTA to USMCA: What is Gained?

By Mary E. Burfisher, Frederic Lambert, Troy D Matheson

March 26, 2019

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Mary E. Burfisher, Frederic Lambert, and Troy D Matheson. NAFTA to USMCA: What is Gained?, (USA: International Monetary Fund, 2019) accessed December 3, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The United States – Mexico – Canada Agreement (USMCA) was signed on November 30, 2018 and aims to replace and modernize the North-American Free Trade Agreement (NAFTA). This paper uses a global, multisector, computable-general-equilibrium model to provide an analytical assessment of five key provisions in the new agreement, including tighter rules of origin in the automotive, textiles and apparel sectors, more liberalized agricultural trade, and other trade facilitation measures. The results show that together these provisions would adversely affect trade in the automotive, textiles and apparel sectors, while generating modest aggregate gains in terms of welfare, mostly driven by improved goods market access, with a negligible effect on real GDP. The welfare benefits from USMCA would be greatly enhanced with the elimination of U.S. tariffs on steel and aluminum imports from Canada and Mexico and the elimination of the Canadian and Mexican import surtaxes imposed after the U.S. tariffs were put in place.

Subject: Imports, International trade, North American Free Trade Agreement, Revenue administration, Surtax, Tariffs, Taxes, Valuation, origin and classification

Keywords: Aluminum tariff, Apparel trade, Asia and Pacific, Canada, Economic Integration, Global, Imports, NAFTA, North America, North American Free Trade Agreement, Origin and classification, Surtax, Tariff preference levels, Tariffs, Trade, Trade Policy, U.S.-China trade tension, USMCA, USMCA country, USMCA provision, USMCA scenario, USMCA textile, USMCA trade benefit, USMCA vehicle trade, Valuation, Vehicle trade, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/073
Stock No:

WPIEA2019073
ISBN:

9781498303286
ISSN:

1018-5941

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