CPTPP and USMCA: liberalization of Mexico and Canada

Mexico and Canada have similar liberalization processes in CPTPP and USMCA, according to information from the World Trade Organization (WTO).

On the one hand, the USMCA maintained the duty-free treatment granted to goods under the North American Free Trade Agreement (NAFTA), which covered 100% of all tariff lines between Mexico and the United States, and 99% between Mexico and Canada, so that in the case of Mexico the USMCA does not entail new tariff liberalization.

CPTPP provides for a 16-year phase-out period for goods to benefit from duty-free treatment, which will cover 99% of all tariff lines in Mexico.

On the other hand, in the case of Canada, the USMCA also maintained the duty-free treatment granted to goods under NAFTA, which covered 99% of all tariff lines.

Once CPTPP is fully implemented, 99% of tariff lines between the parties to this agreement will be duty-free and 94% of Canada’s agricultural and agri-food exports will have duty-free access to the countries of the bloc.

CPTPP and USMCA

Unlike other free trade agreements signed by Canada, the USMCA liberalized some agricultural tariffs between Canada and the United States.

The USMCA also includes the most comprehensive agricultural biotechnology provisions in Canada’s FTAs.

With regard to the chapters on investment and cross-border trade in services, the level of liberalization in the USMCA is in line with that of other free trade agreements signed by Canada, including CPTPP.

On another front, the USMCA preserves the use of binational panels to resolve countervailing duty and anti-dumping disputes.

However, the USMCA completely eliminates for Canada and the United States what was known as the investor-state dispute settlement mechanism, which allowed companies and investors to sue the governments of either Party if either Party made policy changes that they believed would harm their future profits.

This process was also eliminated for Mexico, except only with respect to certain industries, such as oil, energy and telecommunications.