GBA+ of the Canada-United States-Mexico Agreement

Introduction

On November 30, 2018, Canada, the United States and Mexico signed a Protocol to modernize the North American Free Trade Agreement (NAFTA). The new Agreement is known in Canada as the Canada-United States-Mexico Agreement (CUSMA, or the Agreement).^{Footnote 1} Subsequently, on December 10, 2019, the Parties signed a Protocol of Amendment to modify certain elements of the new Agreement in the areas of state-to-state dispute settlement, labour, the environment, intellectual property, and rules of origin. The final Agreement preserves key elements of NAFTA, modernizes disciplines to address modern trade challenges, reduces red tape at the border and provides enhanced predictability and stability for workers and businesses across the integrated North American market. Overall, the modernization of NAFTA marks an important milestone in Canada’s economic relationship with the United States and Mexico.

The new Agreement preserves important NAFTA provisions and preferential market access into the United States and Mexico, reinforcing the predictability and stability in the integrated North American market. It also modernizes and improves upon the NAFTA in a number of areas, taking into account new developments in the spheres of business and technology since the original agreement entered into force in 1994. CUSMA preserves the Canadian government’s right to regulate in the public interest to achieve legitimate public policy objectives, such as the protection and promotion of public health, safety and the environment, and does not subject Canada to an investor state-dispute settlement (ISDS) mechanism.

From the outset of negotiations, Canada worked to identify opportunities and put forward proposals that advance inclusive trade objectives. Early in the negotiations, Canada stated its goal of advancing the interests of women, Indigenous peoples and small and medium-sized enterprises (SMEs) through the addition of new chapters that would bring together provisions to facilitate access to trading opportunities. While the final Agreement does not include dedicated chapters on Trade and Gender and Trade and Indigenous peoples, Canada was successful in securing support from its negotiating partners for a number of provisions across the Agreement that aim to benefit these and other under-represented groups.

Purpose of the GBA+

Following the conclusion of negotiations, the Government of Canada undertook a gender-based analysis plus (GBA+) process to evaluate the final outcome and its potential effects and opportunities for people in Canada. GBA+ is an analytical tool used by the Government of Canada to understand how diverse groups of women, men and non-binary people across Canada may be affected by domestic and international policies, programs, initiatives, organizations and activities. GBA+ helps deliver on Canada’s inclusive approach to trade, which seeks to ensure that the benefits and opportunities resulting from free trade agreements (FTAs) are more widely shared, including among under-represented groups in Canada’s economy and international trade, such as women, SMEs, and Indigenous peoples.

The GBA+ conducted on CUSMA was the first chapter-by-chapter GBA+ conducted on a concluded comprehensive free trade agreement.^{Footnote 2} NAFTA has been in force for over 25 years, and in many ways CUSMA carries forward the key benefits of the original agreement in terms of tariff elimination. The focus of this report is therefore a qualitative analysis of CUSMA outcomes. For an overview of the economic impact of CUSMA, including impacts differentiated by gender, see The Canada-United States-Mexico Agreement: Economic Impact Assessment.

This GBA+ will help build a better understanding of the potential effects of and opportunities arising from CUSMA on all people in Canada and will seek to identify ways for Canada to continue to address gender and inclusivity once the Agreement has entered into force. Activities may include the development or re-design of programs and policies to address the risks and opportunities identified in CUSMA and the integration of gender and inclusivity considerations into the work of committees established under the Agreement’s chapters (see full list of committees in Annex B).

This GBA+ is complementary to and advances Canada’s Feminist Foreign Policy Framework. It also helps further progress on Goal 6 of the government’s Gender Results Framework—Gender equality around the world—to achieve a more peaceful, inclusive, rules-based and prosperous world by pursuing a feminist international approach to all policies and programs, including trade.

The comprehensive chapter-by-chapter GBA+ builds on and expands the mandatory GBA+ process that is required to seek Cabinet authority to engage in FTA negotiations, which Global Affairs Canada (GAC) has implemented consistently since 2016, including for CUSMA.

Stakeholder engagement

Prior to the launch of formal negotiations and continuing throughout the negotiation process for the new Agreement, the Government of Canada undertook comprehensive consultations with stakeholders and heard from Canadians about their views on NAFTA’s benefits and challenges and what could be done to improve Canada’s trading relationships with the United States and Mexico. Between February 2017 and December 2019, the Government of Canada interacted directly with more than 1,300 stakeholders and partners to hear their views on the modernization of NAFTA and provide updates on the negotiations and next steps. Over this same period, the government received over 47,000 submissions from Canadians on NAFTA modernization. The views heard during this process directly informed proposals brought forward by Canada during the course of the negotiations.

In the course of our consultations, we heard from stakeholder organizations seeking to address sustainability, equality and social justice issues in international trade. A number of stakeholder submissions touched on the importance of making NAFTA more inclusive and encouraged the integration of gender-equality measures into it. Other submissions suggested that market access for women-owned businesses could be enhanced by increasing their visibility to the enterprises of Canada’s trade partners.

To better reflect the interests of Indigenous peoples in international trade, Canada undertook extensive engagement with Indigenous leaders and Indigenous representatives to inform its negotiating positions. Notably, an Indigenous Working Group was formed to collaborate on elements of importance to Indigenous peoples in the NAFTA modernization process. The Group comprises representatives of the national Indigenous organizations, modern treaties and self-government agreements partners, Indigenous business associations, and legal and policy experts.

Chapter-by-Chapter GBA+

For the purposes of this report, the analysis has been broken down into 4 groups of related chapters as outlined below.

1. Goods-related
2. Services and investment-related
3. Labour and environment
4. Horizontal issues

Group 1: Goods-related

The purpose of the goods-related chapters is to secure improved market access for Canadian-produced goods by eliminating trade restrictions and establishing clear and predictable rules for trade in goods, including manufactured goods, minerals and metals, agricultural, agri-food, fish and seafood, and forestry products. The chapters aim to facilitate trade in goods and cover areas such as tariff and non-tariff barriers and trade facilitation measures.

The goods-related chapters are expected to benefit Canadian workers and business owners, including women, Indigenous peoples and members of other under-represented groups. For example, the provisions in these chapters will help provide predictability, increase transparency and reduce red tape—all of which will make it easier for Canadian companies to access the information they need to do business across borders as well as to reduce costs for Canadian exporters and importers. SMEs, because of their size, stand to benefit more from such a cost reduction on a relative basis as fixed costs account for a higher proportion of their expenditures as compared to large enterprises. Businesses owned by women, Indigenous peoples and members of other under-represented groups stand to benefit to a greater extent as those businesses tend to be smaller in size and may not have the same resources as larger firms to address challenges when operating across borders.^{Footnote 3}

The textiles and apparel goods chapter includes an expanded and amended provision that is intended to benefit Canadian producers of traditional folkloric and Indigenous handcrafted goods. In particular, the provision offers a simplified, alternative path to preferential tariff treatment that could be accessed by Indigenous-owned businesses or other SMEs if their artisanal-type goods meet the conditions specified.

Group 2: Services and investment-related

The purpose of the services and investment-related chapters is to help Canadian suppliers, services providers and investors secure market access and to ensure that the regulatory systems of the CUSMA Parties are predictable and transparent. In general, these chapters are expected to have benefits for SMEs and business owners from under-represented groups as they enhance the predictability and security of existing market access into the U.S. and Mexican markets. In addition, these chapters will provide for improved access to information for companies doing business across borders. This is especially valuable for SMEs, including those owned by women and other under-represented groups that may be limited in their ability to gather the information they need to grow their businesses internationally. Canada has also preserved its ability to adopt or maintain measures needed to protect the rights of Indigenous peoples and to help under-represented groups in the areas of investment and services, the environment, and State-Owned Enterprises (SOEs).

The chapters on investment, services, digital trade and others in this group also integrate gender-responsive and inclusive provisions, which are expected to benefit under-represented groups in particular.

The investment chapter requires that the Parties treat covered investments in accordance with the customary international law minimum standard of treatment (MST), which is broadly understood in international law to include targeted discrimination on manifestly wrongful grounds such as gender, race or religious beliefs. For example, this would protect a women-owned enterprise against wrongful discrimination by a government based on the gender of its owners. The chapter also contains a provision that addresses corporate social responsibility (CSR) and reaffirms the importance of encouraging businesses operating within the territory of a CUSMA Party to voluntarily incorporate into their internal policies standards, guidelines and principles of CSR that have been endorsed or are supported by that Party. These standards, guidelines and principles may address areas such as labour, the environment, gender equality, human rights, Indigenous rights, and corruption.

The cross-border trade in services chapter includes a new provision on SMEs, which stipulates that each Party shall endeavor to support their development and their enabling business models, such as direct selling services. This business model is described as the retail distribution of goods by independent sales representatives who receive compensation for their sales. Women make up 82% of such representatives.^{Footnote 4} The chapter also encourages the Parties to provide further access to resources to SMEs and to protect individuals from fraudulent practices. The provisions also help to ensure that authorization procedures for a service sector do not impose disproportionate burdens on the activities of SMEs.

The digital trade chapter contains a cooperation commitment that promotes access for persons with disabilities to information and communication technologies. Furthermore, the chapter includes an article on Personal Information Protection, which commits the Parties to ensuring that they maintain a domestic legal framework that provides for the protection of personal information of electronic commerce users. This may be of particular importance to the 2SLGBTQI+ communities concerned about discrimination from their employer, state, or the public. The chapter also prohibits governments from requiring that companies store data in markets in which they do business, which could represent a significant cost commitment for SMEs trying to enter different markets. An international study of micro, small, and medium-sized enterprises in 111 countries has found that while only 25% of traditional offline businesses are women-owned, women-owned online businesses represent 50% of the total online firms,^{Footnote 5} so advancing opportunities in the digital sphere could provide greater benefits to women.

Under CUSMA, the government procurement chapter does not apply to Canada. Instead, Canadian businesses across all sectors will continue to compete on a level playing field with domestic suppliers in the United States under the revised WTO Agreement on Government Procurement and in Mexico under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Both of those agreements include exceptions that provide the flexibility for Canada to set aside certain procurements to support the development and growth of SMEs owned by under-represented groups, including Indigenous businesses.

Group 3: Labour and environment

The labour and environment chapters aim to ensure that high levels of environmental protection are maintained and that international standards on labour conditions and rights are implemented effectively as trade is liberalized. In this regard, these provisions help to level the playing field among Parties with regard to environmental and labour standards. Unlike NAFTA, where labour and environment were covered in side agreements, the labour and environment chapters are fully integrated into the new Agreement and are subject to dispute settlement, meaning that Parties can seek to remedy any violations of binding gender-responsive and inclusive provisions in the chapters.

The CUSMA labour chapter is Canada’s most comprehensive, robust and inclusive labour chapter to date. It is comprehensive and aims to raise and improve labour standards and working conditions in North America by building on international labour principles and rights. While Canada’s labour agreements^{Footnote 6} have a long history of advancing gender equality through non-discrimination provisions, the CUSMA labour chapter, for the first time in a trade agreement, clarifies the nature of the enforceable obligation related to non-discrimination. It does so through a stand-alone provision on discrimination in the workplace, which supports the goals of eliminating discrimination in employment and occupation and promoting equality of women in the workplace. It outlines the obligation for each Party to implement policies that it considers appropriate to protect workers against employment discrimination based on sex (including with regard to sexual harassment), pregnancy, sexual orientation, gender identity, and caregiving responsibilities. It also encourages the adoption of programs and policies that address barriers to the full participation of women in the workforce—such as obligations to provide job-protected leave for childbirth, adoption and family care responsibilities—and protects against wage discrimination. The Agreement also outlines that the Parties may develop cooperation activities to address gender-related issues in the field of labour and employment opportunities for a diverse workforce.

The labour chapter provision on migrant workers recognizes the vulnerability of these workers with respect to labour protections and commits Parties to ensure that migrant workers are protected under their labour laws. This commitment could present gender- and inclusivity-related opportunities, as low-skilled workers active in export sectors, of which a significant portion of workers are young women and migrants, are likely to benefit even more concretely from increased compliance with trade-related labour obligations. This is because more migrant women tend to be in irregular status^{Footnote 7} and tend to be employed in the informal economy, increasing their vulnerability.^{Footnote 8}

It is also possible that the provisions in the labour chapter on violence against workers might have increased benefits for women, as women are disproportionately affected by violence and harassment at work, where unequal power relations, low pay, precarious working conditions and other workplace abuses expose them to violence.^{Footnote 9} This provision also has the potential to protect transgender, gay, lesbian, bisexual, queer, two-spirited and other gender-nonconforming workers, who, globally, are commonly victims of direct and indirect discrimination in employment and occupation. Such discrimination includes bullying and harassment based on sex or gender-stereotypes, reduced job opportunities, reduced work-related benefits and dismissal.^{Footnote 10}

When NAFTA came into effect in 1994, it was the first free trade agreement to link the environment and trade through a historic parallel agreement on environmental cooperation.^{Footnote 11} CUSMA strengthens and modernizes environmental provisions by integrating them into an ambitious, comprehensive and enforceable environment chapter. The chapter includes a number of provisions related to Indigenous peoples, including recognition of the important role that the environment plays in the economic, social, and cultural well-being of Indigenous peoples. The chapter also recognizes the important role of Indigenous peoples in sustainable fisheries and forestry management and biodiversity conservation, and acknowledges the importance of meaningfully engaging with Indigenous peoples in the long-term conservation of the environment.

In addition to a carve-out related to Aboriginal harvesting of natural resources, the environment chapter includes a provision on great whales that takes into account Canada’s legal obligations toward Indigenous peoples in Canada. Together with the general exception relating to the rights of Indigenous peoples under the exceptions and general provisions chapter, these provisions are likely to have a positive impact for Indigenous peoples in Canada by reaffirming Canada’s ability to adopt or maintain measures it deems necessary to fulfill its legal obligations to Indigenous peoples, including with regard to traditional harvesting practices.

As a part of the overall outcome, the CUSMA Parties also agreed to a parallel Environmental Cooperation Agreement (ECA). The ECA ensures that the unique institutions that have existed since 1994 under the North American Agreement on Environmental Cooperation, including the Commission for Environmental Cooperation, are retained and modernized. Through the ECA, a modernized Commission for Environmental Cooperation will continue the legacy of effective trilateral cooperation between Canada, Mexico and the United States, including on global environmental issues of importance to Canada, such as climate change. The ECA encourages public participation that is inclusive and diverse, including with Indigenous peoples, and takes into account gender and diversity effects and opportunities related to the development and implementation of cooperative activities.

Group 4: Horizontal issues

The chapters addressing horizontal issues cover a variety of issues, including the operation of the Agreement and obligations that more indirectly support efforts to ensure Canadians can take advantage of the opportunities created by the Agreement. For those chapters that are administrative in nature, there are limited gender and inclusivity risks or opportunities to address. There are other areas, however, that were identified as opportunities to advance gender and inclusivity provisions.

The Preamble, while not creating specific obligations, articulates the broad objectives of the Parties and can help in interpreting the provisions of the Agreement. The Preamble includes language that reaffirms the importance of facilitating equal access to the opportunities provided by CUSMA, making specific reference to supporting conditions for the full participation of women in domestic, regional and international trade and investment. The Preamble also includes a statement that recognizes the importance of increased engagement by Indigenous peoples in trade and investment. These shared value statements help integrate considerations for gender and Indigenous peoples into the implementation of, and potential benefits derived from, and potential benefits derived from, the Agreement. In addition, the Preamble includes language that promotes the protection and enforcement of labour rights, the improvement of working conditions, and the strengthening of cooperation and the Parties’ capacity on labour issues. The inclusion of this statement in the Preamble adds interpretative weight to the provisions of the labour chapter which focuses on eliminating discrimination on the basis of sex, gender, sexual identity and gender identity, as well as promoting inclusivity and equality of women in the workplace.

The exceptions and general provisions chapter includes 2 provisions that enable Canada to continue to advance gender and inclusivity benefits specifically in relation to cultural industries and the rights of Indigenous peoples. The cultural exception preserves Canada’s ability to adopt measures to protect cultural industries. Such measures contribute to the promotion of minority cultures, including Indigenous and Francophone cultures. The cultural exception may therefore have positive effects on women and other under-represented groups by ensuring that the Government of Canada can continue to support, promote and invest in Canada’s creative economy. The general exception on the rights of Indigenous peoples provides greater clarity that the Government of Canada can adopt or maintain measures necessary to fulfill its obligations regarding the constitutionally protected rights of Indigenous peoples in Canada and those rights set forth in self-government agreements. A first for Canada’s FTAs, the provision also specifically references Aboriginal rights as recognized and affirmed by section 35 of the Constitution Act, 1982, as well as those set out in self-government agreements.

As in all of Canada’s FTAs, the government has retained the policy flexibility necessary to provide preferential treatment to Indigenous peoples and Indigenous-owned businesses, including in the areas of services, investment, environment, state-owned enterprises and government procurement. In addition, the small and medium-sized enterprises chapter includes a number of provisions that aim to advance the interests of businesses owned by women, Indigenous peoples and other under-represented groups, such as racialized people, persons with disabilities, minority groups and people of all gender identities. In particular, it encourages Parties to collaborate on activities to enhance commercial opportunities for SMEs owned by these groups and to promote their participation in international trade. It commits the Parties to ensuring that information about the Agreement, its benefits, and other information that may be helpful for SMEs looking to expand into new North American markets is made readily available through a customized website for SMEs. In addition to an SME Committee, the Agreement calls for the creation of a trilateral SME dialogue that may include participants from the private sector, employees, non-governmental organizations, academic experts, SMEs owned by diverse and under-represented groups, and other stakeholders from each Party. The trilateral SME dialogue will provide a valuable mechanism to hear from women, Indigenous peoples and other members of under-represented groups about their experiences in using the Agreement and may provide a forum to discuss how the Agreement might be improved for the benefit of SMEs.

Potential for future action

The outcomes of this GBA+ are expected to inform Canada’s engagement in the ongoing trilateral work conducted under the Agreement. A number of chapters call for the establishment of committees^{Footnote 12} that allow the Parties to continue their engagement after implementation. In preparing for this engagement, Canadian officials have committed to ensuring that they will be informed by gender-responsive and inclusive considerations, such as ensuring that the voices and views of under-represented groups in the economy and trade are actively sought and heard during stakeholder consultations. Care will also be taken to ensure that consultations and engagements will take place in settings conducive to a respectful exchange of views. Canada is also committed to continuing its efforts to integrate gender-responsive and inclusive considerations into the work plans of the committees where relevant.

In evaluating potential actions that the Government of Canada may take to respond to challenges or opportunities identified by the GBA+, it is important to recognize the limitations of the solutions that may be found within free trade agreements. In some instances, the most appropriate mechanism for addressing risks or opportunities identified through the GBA+ may be through domestic policies and programs that fall within the responsibility of different federal government departments.

Canada is already actively engaged in evaluating GBA+ risks or opportunities in trade-related areas when developing and promoting new methods for advancing gender and inclusivity outcomes. A few such examples are listed below.

• The Safe Food for Canadians Regulations that came into force in 2018 recognize that some small food businesses may need more time and support to understand and prepare to meet the new food safety requirements related to licensing, traceability, preventive controls, importing and exporting. The Canadian Food Inspection Agency has developed tools, fact sheets, and simple guides to help small businesses understand and prepare to meet the requirements.
• The development by Agriculture and Agri-food Canada (AAFC) of a gender strategy addresses gender gaps across the entire agriculture and agri-food value chain. The AAFC is currently conducting research on gender dynamics and actions taken within the sector and will engage with industry and key stakeholders in the development of the strategy over the next 5 years. Understanding how the distribution of the trade gains indirectly achieved through the CUSMA Sanitary and Phytosanitary (SPS) Measures chapter is further affected by such factors as education, income, geography, culture, religion, ethnicity, disability, and race could help promote equality and remove systemic barriers for Canadians trying to succeed in the agriculture, agri-food, fish and seafood and forestry sectors.
• The AAFC offers a series of programs aimed at helping Indigenous entrepreneurs and under-represented groups in Canadian agriculture, including youth and persons with disabilities, to overcome barriers they may face for sector participation and success. The Indigenous Pathfinder service connects Indigenous peoples one-on-one with AAFC staff who will advise on project ideas to help them become a reality. The Indigenous Agriculture Food Systems Initiative supports Indigenous communities and entrepreneurs to increase economic development opportunities. The AgriDiversity Program aims to help under-represented groups in Canadian agriculture fully participate in the sector through capacity and skills development.
• Canada continues to be involved in the Gender Responsive Standards Initiative of the United Nations Economic Commission for Europe (UNECE), the World Trade Organization’s Technical Barriers to Trade Committee and other forums where the issue of gender is raised for consideration.
• Under Canada’s new national Intellectual Property (IP) Strategy, Statistics Canada will conduct an IP awareness and use survey to help identify how Canadians understand and use IP, including groups that have traditionally been less likely to use IP, such as women and Indigenous entrepreneurs. As well, Canada’s IP Strategy includes a Budget 2018 allocation of $1 million over 5 years to support participation by Indigenous peoples in national and international discussions about IP and how IP interacts with traditional knowledge and traditional cultural expressions. This includes support for participation by Indigenous peoples in the World Intellectual Property Organization’s Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore, as well as for domestic engagement, research activities, and capacity building.
• The Competition Bureau is working with the Organisation for Economic Co-operation and Development’s Competition Committee to champion further research into the potential scope for competition authorities to integrate considerations related to under-represented groups in their enforcement, compliance and advocacy activities.
• In the context of CUSMA’s state-to-state dispute settlement, Canada will seek to enhance the diversity of the roster of potential panelists, including with respect to gender, ethnicity, race, age, and geographic representation. Canada is also advancing a policy at the WTO on the selection of women panellists to ensure that at least 1 woman panellist is selected during the panel composition process in WTO disputes involving Canada in order to improve the gender balance of panels adjudicating these disputes.

As GBA+ becomes further integrated into policy and planning following CUSMA’s entry into force, we expect that new avenues for addressing gender and inclusivity, both within FTAs and in domestic policies, will be identified.

Conclusion

During the negotiations on the modernized NAFTA, Canada sought to identify gender and inclusivity issues and to find ways to integrate relevant provisions into the text of the Agreement to address them to the greatest extent possible. In particular, Canada was successful in its efforts to include in CUSMA a number of GBA+ innovations that will advance Canada’s goals of benefiting women, Indigenous peoples and other diverse populations, such as racialized people, persons with disabilities, minority groups and people of all gender identities in Canada across several areas, including in the cross-border trade in services, labour, and environment chapters. In addition, the Agreement provides opportunities for the further integration of GBA+ perspectives through the work of committees and by leveraging other cooperation provisions set out in the Agreement, such as those on consumer protection (competition policy chapter), or increasing trade and investment opportunities under the SME chapter. These are expected to complement Canada’s ongoing efforts to enhance opportunities for women, Indigenous peoples and other under-represented groups to participate in economic development and trade.

The Government of Canada has made achieving gender equality and supporting the empowerment of women and girls a priority for domestic and international policies; conducting a GBA+ of all policies and programs is an important tool to help deliver on that goal. These assessments represent an ongoing learning experience for federal officials engaged in policy development and are expected to inform future discussions on trade policy. Increased use of GBA+ will facilitate inter-governmental cooperation to deliver results for women and other under-represented groups.

Annex A – Background on objectives of CUSMA chapters

Chapter 1: Initial Provisions and General Definitions—Establishes the free trade area and outlines how CUSMA will interact and co-exist with other international agreements. The chapter also defines the terms used throughout the Agreement, although individual chapters may contain definitions that have specific application to the obligations of that chapter.

Chapter 2: National Treatment and Market Access for Goods—Sets out the fundamental disciplines for trade in goods, with the aim to eliminate or reduce barriers to trade in goods. The disciplines in this chapter provide for transparency and predictability in the North American market and open up opportunities for Canadian traders. Most notably, the chapter achieves this through obligations to preserve and expand NAFTA outcomes on tariff commitments, to not apply restrictions or prohibitions on the import or export of goods, and to treat imported products no less favorably than similar domestic products.

Chapter 3: Agriculture—Establishes obligations and commitments on agricultural trade between the Parties. In addition, market access and tariff commitments for agricultural goods are contained in Chapter 2 (National Treatment and Market Access for Goods).

Chapter 4: Rules of Origin—Sets out the general requirements under which a good can qualify as originating in the territory of the Parties to the Agreement and therefore be eligible for preferential tariff treatment. Canada seeks to negotiate rules of origin that reflect Canadian production realities and reduce administrative discretion by customs authorities.

Chapter 5: Origin Procedures—Establishes the procedures used to administer the rules of origin and sets out obligations for importers, exporters, and the customs authorities. The procedures clarify the processes and obligations required for importers and exporters to take advantage of the reduced or free rates of duty and provide the customs authorities with an applicable methodology to ensure that only qualifying goods receive preferential tariff treatment under CUSMA. The main objectives are to ensure that the rules of origin are administered in a fair and transparent manner by the customs administrations and provide the trade community with a facilitative means in which to take advantage of the preferential tariff treatment afforded under the Agreement.

Chapter 6: Textile and Apparel Goods—Includes rules of origin requirements under which a good can qualify as originating in the territory of the Parties to the Agreement, and therefore be eligible for preferential tariff treatment. It also includes origin verification procedures specific to the textiles and apparel sectors. The objective is to negotiate rules of origin that reflect Canadian production realities while minimizing the opportunity for administrative discretion by customs authorities.

Chapter 7: Customs Administration and Trade Facilitation—Aims to streamline customs procedures, reduce red tape and ensure greater predictability in customs matters. Section A of the chapter establishes obligations that seek to reduce the transaction costs incurred by traders by simplifying, standardizing and modernizing trade-related customs procedures. This section addresses various stages of the customs process with a view to reducing red tape at the border, thereby contributing to greater predictability, consistency and transparency when trading goods. The trade facilitative measures set out in Section A apply to all goods traded among the Parties, not only those that qualify as originating goods under CUSMA. Section B of the chapter provides for cooperation among the Parties to assist each other in the enforcement of laws and regulations related to customs offences in goods traded among the Parties. Section B also requires the Parties to strengthen enforcement efforts, enhance cooperation and assist customs administrations in detecting fraudulent acts in trade.

Chapter 8: The Recognition of the Mexican State’s Direct, Inalienable, and Imprescriptible Ownership of Hydrocarbons—Addresses an issue unique to Mexico and is not included as part of the analysis.

Chapter 9: Sanitary and Phytosanitary Measures—Building on the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (“the SPS Agreement”) and NAFTA, the SPS chapter maintains each Party’s sovereign right to take the SPS measures necessary to protect against risks to human, animal or plant life or health. At the same time, the chapter requires that such measures be science-based, transparent and not applied in a manner that creates unnecessary barriers to trade. The provisions in this chapter will help to ensure that CUSMA’s market access benefits are not undermined by unjustifiable SPS-related trade restrictions in the agricultural, agri-food, fish and seafood, and forestry sectors.

Chapter 10: Trade Remedies—Preserves the binational dispute settlement mechanism from Chapter 19 of NAFTA, thereby providing an impartial and binding mechanism to review anti-dumping and countervailing duty measures imposed by CUSMA Parties. It also retains the NAFTA exclusion of CUSMA partners from global safeguard action, thereby requiring a Party to exclude CUSMA partners from the application of global safeguard under certain circumstances. The trade remedies chapter reaffirms the rights and obligations of CUSMA Parties under the WTO concerning anti-dumping, countervailing and global safeguard measures and includes provisions to strengthen cooperation between CUSMA partners to address the potential evasion of trade remedy duties by third-party countries. Finally, the chapter reinforces certain international best practices related to transparency and procedural fairness in anti-dumping and countervailing duty investigations.

Chapter 11: Technical Barriers to Trade—Building on the WTO Agreement on Technical Barriers to Trade, the provisions in this chapter help ensure that unnecessary or discriminatory regulatory requirements do not erode key market access gains negotiated elsewhere in the Agreement. The chapter promotes the use of internationally accepted standards and acknowledges their role in supporting greater regulatory alignment and good regulatory practice and reducing unnecessary barriers to trade. It also provides national treatment for conformity assessment bodies of CUSMA Parties. The objectives are to reduce testing costs and requirements for Canadian companies and to promote further transparency when developing technical regulations and conformity assessment procedures to provide Canadian exporters with greater predictability regarding foreign regulatory frameworks. The chapter also establishes a mechanism between the Parties to help avoid new barriers and minimize or eliminate the negative impacts of existing barriers.

Chapter 12: Sectoral Annexes—The Agreement incorporates a number of sector-specific outcomes, including those concerning pharmaceutical products, medical devices, cosmetics products, chemical substances, information and communication technology, energy efficiency, alcoholic beverages and proprietary food formulas. These sectoral outcomes build on and complement the obligations in the chapter on technical barriers to trade (Chapter 11) and the chapter on good regulatory practices (Chapter 28), which promote regulatory transparency and predictability while preserving each Party’s right to regulate in the public interest to achieve legitimate public policy objectives, such as the protection and promotion of public health, safety and the environment. In these particular sectors of the North American economy, commitments in the sectoral annexes are designed to promote effective regulation that facilitates trade between the Parties.

Chapter 13: Government Procurement—Provides suppliers of goods and services with secure and guaranteed access to procurement opportunities in a Party’s market. This chapter does not apply to Canada. Canada and the United States will maintain access to each other’s procurement markets through the revised WTO Agreement on Government Procurement (GPA). Similarly, Canada and Mexico will maintain access to each other’s procurement markets through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Chapter 14: Investment—Establishes a framework that provides investors with a predictable, stable, transparent and rules-based investment climate. It is intended to help ensure that Canadian investors are treated fairly and can compete equally with enterprises of the other Parties for business abroad. Obligations in the chapter include national treatment; most-favoured nation treatment; minimum standard of treatment; disciplines on the use of performance requirements; prohibition of expropriation except for a public purpose and with prompt and effective compensation; prohibitions regarding investors’ ability to discriminate on the basis of nationality to hire management and boards of directors; and predictability in terms of transferring capital.

CUSMA does not include a trilateral investor-state dispute settlement (ISDS) mechanism. Under CUSMA, the United States and Mexico have agreed to maintain a bilateral ISDS mechanism for a narrow set of disciplines and sectors. The 3 Parties have also agreed to a transitional period of 3 years, during which ISDS under the original NAFTA will continue to apply only for investments made prior to the entry into force of CUSMA. Under CUSMA, the state-to-state dispute settlement mechanism under Chapter 31 is the only recourse for U.S. and Mexican investors in Canada and for Canadian investors in the United States and Mexico to enforce the obligations of this chapter.

Chapter 15: Cross-Border Trade in Services—Addresses trade in services as supplied on a cross-border basis and aims to promote value-added services trade among CUSMA Parties. As it applies to all services sectors, the chapter contains non-discriminatory provisions as well as provisions that prohibit quantitative limitations on market access. The Agreement preserves predictability, transparency and certainty for the cross-border activities of service suppliers in travel-related, business, as well as transportation services.

Chapter 16: Temporary Entry—Sets out the governing principles and rules under which citizens of each Party may enter the territory of the other Parties on a temporary basis, with the appropriate work authorization, to pursue business opportunities. These temporary entry provisions serve to remove common barriers, including economic needs tests and/or quotas, that can be encountered by business persons when seeking to work abroad.

Chapter 17: Financial Services—Promotes a level-playing field for Canadian financial service suppliers operating in Mexico or the United States through a framework of general trade rules tailored to the unique nature of the financial sector. The chapter ensures non-discriminatory treatment for financial institutions, locks in current levels of market access and any future liberalizations, provides protections for investments in financial institutions, and establishes a framework for regulatory transparency. Importantly, Canada, the United States and Mexico maintain broad latitude for robust oversight and prudential regulation of their respective financial sectors.

Chapter 18: Telecommunications—Seeks to enhance regulatory certainty for telecommunications service suppliers by including disciplines to ensure that telecommunications regulators act impartially, objectively and in a transparent fashion. Moreover, the chapter includes provisions related to the use of public telecommunications networks and services in Canada and the territories of the other Parties. This provides service suppliers with a level playing field, requiring the Parties to treat service suppliers in a fair and objective manner when delivering telecommunications services to and within each other’s markets.

Chapter 19: Digital Trade—Aims to facilitate the use of electronic commerce as a means of trade and builds on Canada’s commitments in its other FTAs. It enhances the viability of the digital economy by ensuring that impediments to both consumers and businesses embracing this medium of trade are addressed, as the successful integration of electronic commerce into the global economy depends upon the level of trust and confidence businesses and consumers have in the digital environment.

Chapter 20: Intellectual Property Rights—Includes provisions in all areas of IP rights protection and enforcement, such as copyright and related rights, trademarks, geographical indications (GIs), industrial designs, patents, pharmaceutical IP, data protection for agricultural chemical products, trade secrets, and civil, criminal, and border enforcement. This chapter builds on the IP commitments of the Parties under the original NAFTA, as well as the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights and certain treaties administered by the World Intellectual Property Organization. This chapter also reflects recent developments in the digital economy, such as with respect to copyright in the digital environment.

Chapter 21: Competition Policy—Promotes open and competitive markets to help ensure that the benefits of trade liberalization are not offset by anti-competitive business conduct. The chapter requires that the Parties adopt or maintain measures to proscribe anti-competitive business conduct and includes specific commitments for transparency and procedural fairness. In addition, the chapter includes consumer protection obligations for fraudulent and deceptive commercial activities. The chapter supports cooperation and coordination between national competition authorities on matters relating to competition policy and law enforcement in the free trade area.

Chapter 22: State-Owned Enterprises and Designated Monopolies—Primarily aims to safeguard a level playing field between SOEs, designated monopolies and the private sector, while at the same time preserving the ability of SOEs (e.g., certain Crown corporations) to provide public services. More specifically, SOEs and designated monopolies are required to purchase or sell goods and services in a non-discriminatory manner; act in accordance with commercial considerations (except to fulfill a public service mandate); operate in the same market incentive structure and regulations as private firms; and provide greater transparency with respect to their operations.

Chapter 23: Labour—Trade and labour protections are mutually supportive, and Canada strives to demonstrate internationally that a competitive economy includes safe, healthy and cooperative workplaces. CUSMA includes a comprehensive labour chapter, fully subject to the dispute settlement provisions of the Agreement that aims to raise and improve labour standards and working conditions in the territories of the 3 Parties by building on international labour principles and rights.

Chapter 24: Environment—Strengthens and modernizes environmental provisions from the North American Agreement on Environmental Cooperation by integrating them into an ambitious, comprehensive and enforceable environment chapter. The objectives of the environment chapter are to promote mutually supportive trade and environmental policies; promote high levels of environmental protection and effective enforcement of environmental laws; and enhance the capacities of the Parties to address trade-related environmental issues. These objectives are supported by substantive commitments requiring the Parties to maintain high levels of environmental protection, effectively enforce their respective environmental laws, and promote public participation, transparency and accountability. The chapter also contains commitments on a broad range of environmental issues and creates a framework for cooperation and consultation on such issues. The chapter is subject to the Agreement’s dispute resolution mechanism under Chapter 31 (Dispute Settlement). Recourse to dispute settlement is available if the Parties are unable to resolve the matter through consultation or cooperation.

Chapter 25: Small and Medium-Sized Enterprises—Reflects the shared interest among the CUSMA Parties in promoting the participation of SMEs in international trade. It also reinforces Canada’s objective to ensure that SMEs share in the benefits and opportunities associated with increased trade and investment.

Chapter 26: Competitiveness—The Parties recognize North America’s unique commercial ties, extensive trade flows and integrated production platform. The chapter provides opportunities for the Parties to maximize regional competitiveness and grow North America’s exports globally through cooperation to harmonize and coordinate activities in key policy areas including infrastructure, education and workforce training, and technological readiness and innovation.

Chapter 27: Anticorruption—Supports Canada’s efforts to combat corruption in international trade and investment and attempts to ensure that firms are not burdened by corruption when they do business in foreign markets. The chapter includes provisions requiring each Party to have in place laws or measures to combat bribery and corruption, to require enforcement of these laws or measures, to provide protection to whistleblowers, to promote integrity of public officials, and to encourage the private sector and civil society to be active in combatting corruption. The chapter also recognizes the importance of cooperation, including between law enforcement agencies and internationally, and encourages the Parties to deepen their level of cooperation.

Chapter 28: Good Regulatory Practices—Focuses on promoting enhanced transparency and good regulatory practices, with a view to improving governance while taking into account the legitimate policy objectives of each Party. The chapter includes commitments regarding mechanisms to facilitate inter-agency coordination; obligations involving the implementation of good regulatory practices (e.g. the use of regulatory impact assessments; public consultation and transparency; ensuring new regulatory measures are easy to understand and publicly available where appropriate; the review of existing regulatory measures; and public notice of future regulatory measures); and obligations concerning cooperation with other Parties and interested persons of other Parties (e.g. information exchanges).

Chapter 29: Publication and Administration—Divided into two sections. Section A addresses the publication and administration of laws, regulations, measures and administrative proceedings, ensuring that they are developed and applied in an open, transparent and consistent manner. Section B outlines principles of relevance to the pharmaceutical products and medical devices sectors, such as the importance of innovation and the need to promote timely and affordable public access to these products.

Chapter 30: Administrative and Institutional Provisions—Sets out the framework for the overall management and administration of the Agreement, including the establishment of the Free Trade Commission and the Secretariat. It outlines the structure, functions and procedures of the Commission, which will oversee the implementation and operation of the Agreement with the support of the Secretariat.

Chapter 31: Dispute Settlement—Establishes a state-to-state dispute settlement mechanism that provides for an effective means to resolve disputes between CUSMA Parties regarding the interpretation or application of the Agreement. The chapter provides Parties with the ability to resolve disagreements through cooperative means such as consultation and mediation. If cooperative means fail, the chapter provides for the creation of panels to assess whether a Party has violated its obligations. If a Party is found to have failed to implement its obligations under the Agreement, the chapter also requires the offending Party to bring itself into compliance or have some of its benefits suspended.

Chapter 32: Exceptions and General Provisions—Sets out commitments made between the CUSMA Parties to exclude certain areas from the Agreement or to set out obligations that apply more generally across the Agreement. Some of the exceptions are applicable to the entire Agreement while others only apply to certain chapters. Generally, these exceptions are designed to ensure that CUSMA Parties maintain the right to take action in the public interest, including with respect to health, the environment and national security. The chapter also sets out where Parties may impose measures that would otherwise be inconsistent with obligations, including to pursue certain policy objectives or to protect confidential information.

Chapter 33: Macroeconomic Policies and Exchange Rate Matters—Establishes commitments for all CUSMA Parties to maintain market-determined exchange rates and refrain from competitive devaluation. This includes non-binding commitments on exchange rate policy and continued dialogue between all CUSMA Parties on macroeconomic policies and exchange rate matters, as well as enforceable commitments for a high level of transparency and public reporting on exchange rates and other macroeconomic issues.

Chapter 34: Final Provisions—Includes the entry into force provisions of the Agreement as well as an article that is aimed at ensuring a smooth transition from NAFTA to CUSMA. The chapter also outlines how the Agreement can be amended or terminated, as well as outlining a new process for the regular review and ongoing modernization of the Agreement.

Annex B: List of Committees created under the Agreement

Committee on Trade in Goods

Committee on Agriculture Trade

Consultative Committees on Agriculture

Working Group for Cooperation on Agricultural Biotechnology

Committee on Rules of Origin and Origin Procedures

Sub-Committee on Origin Verification

Committee on Textile and Apparel Trade Matters

Trade Facilitation Committee

Sub-Committee on Customs Enforcement

Committee on Sanitary and Phytosanitary Measures

Committee on Technical Barriers to Trade

Committee on Transportation Services

Professional Services Working Group

Temporary Entry Working Group

Committee on Financial Services

Committee on Telecommunications

Committee on Intellectual Property Rights

Committee on State-Owned Enterprises and Designated Monopolies

Environment Committee

Committee on SME Issues

North American Competitiveness Committee

Committee on Good Regulatory Practices

Advisory Committee on Private Commercial Disputes

Macroeconomic Committee