Intended to replace NAFTA, the US-Mexico-Canada Agreement (USMCA), announced in early October 2018, has two major implications for economic globalization.
First, it sets standards for future US trade deals with other countries. These standards by and large favors the US and developed countries. For example, the rule about requiring manufactured products to be made by workers who are paid set minimum wages will be disadvantageous to developing countries that have so far relied on lower labor costs to stay competitive in the global economic system.
Second, USMCA practices protectionism within North America. The new agreement essentially has made it difficult for Canada and Mexico to enter into free trade agreements with “non-market countries”, requiring that such agreements be reviewed by the other signatories of USMCA. This means it would be difficult for “non-market countries” like China to deepen its trade relations with Canada and Mexico.
In sum, USMCA is based on the America First policy and US protectionism. It is setting new standards for global trade and protecting markets in developed Western countries. As a result, USMCA will shape the contours of future development of economic globalization
“The USMCA explained: Winners and losers, what’s in and what’s out.” Maclean’s, October 1, 2018. Access October 3, 2018.
“Trump’s USMCA delivers big wins to drugmakers, oil companies and tech firms.” Washington Post, October 2, 2018. Accessed October 3, 2018.
“ Chinese, Asean suppliers could face fresh challenges under United States-Mexico-Canada Agreement .” SCMP, October 3, 2018. Accessed October 4, 2018.
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