## NAFTA to USMCA: What is Gained?

_IMF Working Papers, March 26, 2019_

## Source details

**Canonical URL:** [NAFTA to USMCA: What is Gained?](https://www.imf.org/en/publications/wp/issues/2019/03/26/nafta-to-usmca-what-is-gained-46680)

## Other formats

- [Markdown version](/en/publications/wp/issues/2019/03/26/nafta-to-usmca-what-is-gained-46680/index.md)
- [Structured JSON version](/en/publications/wp/issues/2019/03/26/nafta-to-usmca-what-is-gained-46680/index.json)
- [Bundle manifest](/en/publications/wp/issues/2019/03/26/nafta-to-usmca-what-is-gained-46680/bundle-manifest.json)

## Bibliographic details
- Authors: Mary E. Burfisher, Frederic Lambert, Troy D Matheson
- Published: March 26, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498303286.001

---

### Overview and methodology
- 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).
- Analytical approach: a global, multisector, computable-general-equilibrium model is used to assess five key provisions in the new agreement.
- Key provisions analyzed:
  - tighter rules of origin in the automotive sector,
  - tighter rules of origin in the textiles and apparel sectors,
  - more liberalized agricultural trade,
  - other trade facilitation measures,
  - (implicitly) interactions with U.S. tariffs on steel and aluminum and Canadian and Mexican import surtaxes.

### Key findings
- Aggregate welfare and GDP impacts:
  - The provisions together would generate modest aggregate gains in terms of welfare.
  - The effect on real GDP is negligible.
- Sectoral trade impacts:
  - Provisions would adversely affect trade in the automotive sector.
  - Provisions would adversely affect trade in the textiles and apparel sectors.
- Drivers of welfare change:
  - Welfare gains are mostly driven by improved goods market access.
- Interaction with tariffs and surtaxes:
  - 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.

### Policy implications and recommendations (implicit from results)
- To maximize welfare benefits from USMCA:
  - Consider eliminating U.S. tariffs on steel and aluminum imports from Canada and Mexico.
  - Consider eliminating the Canadian and Mexican import surtaxes imposed after the U.S. tariffs were put in place.
- Be mindful that tighter rules of origin in automotive and textiles/apparel can reduce trade in those sectors despite modest aggregate welfare gains.

### Metadata and publication facts
- Authors: Mary E. Burfisher, Frederic Lambert, Troy D Matheson
- Date: March 26, 2019
- Series: IMF Working Papers, Working Paper No. 2019/073
- DOI: https://doi.org/10.5089/9781498303286.001
- Pages: 34

*Source: NAFTA to USMCA: What is Gained? — IMF Working Paper No. 2019/073.*

---

## Content in this bundle

- **Working Paper**
  - [Working Paper (Markdown version)](/-/media/files/publications/wp/2019/wpiea2019073.pdf.md){rel="alternate" type="text/markdown"}
  - [Working Paper (PDF)](/-/media/files/publications/wp/2019/wpiea2019073.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2019/03/26/nafta-to-usmca-what-is-gained-46680_