Car quotas and labour rights: Two key changes in the newly signed USMCA
OTTAWA — Initial analysis on the final text of the new North American trade pact Canada signed on Friday is pointing to two changes — one potentially helpful for the auto sector, the other potentially problematic for labour rights.
Cars and Automotive Parts
Canada, just like Mexico, signed what is known as a side letter — a one-on-one provision connected to, but not formally part of the trade deal text — on automotive imports. Canada will be able to export up to 2.6 million passenger vehicles into the United States tariff-free. The limit is well above current levels of about 1.8 million vehicles, and the country isn’t forecasted to reach the quota until at least a decade from now, as vehicle production in Canada declines along with consumer demand, said Juan Manuel Herrera, an economist with Scotiabank Economics.
A change also specifies that tariffs won’t apply to those vehicles even if they don’t meet rules of origin provisions in the trade deal, which lay out continental content and labour requirements to be considered tariff-free.