The U.S. Mexico Canada Agreement (USMCA) was signed on December 2019 and went into effect on July 1,
2020. It revised the NAFTA text on important topics and added new concepts, such as an expiration date, at
the end of its 16th year. Below are some highlights.
In IP, the USMCA requires national treatment for copyrights, procedural safeguards for recognition of new
geographical indications, more enforcement provisions for IP protection, among others. On digital trade, it
prohibits the application of customs duties and other discriminatory measures to digital products distributed
electronically; ensures that data can be transferred across borders; permits the use of electronic
authentication and electronic signatures; cracks down on data localization measures; promotes collaboration
in addressing cybersecurity challenges; and protects against forced disclosure of proprietary computer source
code and algorithms, among others.
Environmental provisions have been incorporated into the core text of the agreement and are now subject to
dispute resolution. The same goes for labor provisions and eleven other chapters of the agreement. While
regional content for most products is set at 60 percent (transaction value method) or 50 percent (net cost
method), for the automotive industry, USMCA increases the regional value content to 75 percent North
American, establishes that 40 to 45 percent of auto content be made by workers earning at least $16 per hour
and stipulates that at least 70 percent of a producer’s steel and aluminum purchases must originate in North
USMCA is now the new starting point, not the template, for trade agreements with the U.S. For countries
outside the agreement, the impact will continue to be negative for exports to USMCA markets, especially in
products where regional content was increased (auto parts, steel and aluminum, for example) and in
agricultural products, where MFN tariff and non-tariff protections in the U.S. are the highest. The full text is
available here.
Section 232
On June 2, 2020, the Department of Commerce initiated a new Section 232 investigation, based on National
Security grounds, adding Vanadium to the list of investigated products (steel and aluminum are others).
Vanadium is a chemical often found with titanium and iron in their ores and that is used in the production of
steel alloys for manufacture of extremely tough plates and tools. According to “Mining Weekly”, in 2019, the
U.S. produced 470 tons of contained vanadium while its apparent consumption was 8,300 tons, making it
almost entirely dependent on imports. Eight countries2 are the main exporters of vanadium in its different
forms to the U.S. market. In the case of Brazil, this investigation adds to steel and aluminum, which have been
It is worth noting that it is unclear whether exporters will choose to export under USMCA provisions, as many economists consider
that these provisions are too cumbersome to avoid a tariff of 2.5%. However, exporting under USMCA would be interesting if the US
eventually applies Section 232 tariffs in auto.
(Ferrovanadium from Austria (48%), Canada (22%), Russia (14%), Korea (11%) and other countries (5%); and Vanadium Pentoxide
from South Africa (44%), Brazil (29%), China (11%), Taiwan (6%) and other countries (10%).
ABCI Board
Aluisio de Lima-Campos, Renata Amaral, Barbara Medrado, Lucas Queiroz Pires, Marcia Pulcherio
under Section 232 sanctions in the U.S. for a while. On August 28, 2020 the White House reduced the import
quota on semi-finished steel from Brazil, scheduling to hold consultations in December 2020.
Biden’s Trade Policy
A potential Biden win in November is not likely to immediately alleviate U.S. trade tensions. An analysis of
Biden’s official campaign promises reveals that U.S. trade policy led by Biden will offer a similar approach in
terms of dealing with China and trade remedies. In trade negotiations, however, a Biden administration will
likely bring environment and labor provisions to a higher priority.
In terms of similarities, Biden promises to strengthen “Buy American” rules. Trade remedies are likely to be
used with the same intensity as the Trump administration. Biden envisions a “future made in America” and
suggests that this “requires fighting back against unfair trade practices.” Regarding China, the friction will
likely remain at similar levels as Biden’s campaign observes Trump did “nothing to curb Beijing’s trade abuses”
and that “China’s government continues its trade abuses and is failing to live up to its commitments.”
Biden’s Tax and Trade Strategy include the following actions: (1) take aggressive trade enforcement actions
against China or any other country that engage in unfair practices (e.g., currency manipulation, dumping,
state-owned company abuses, or unfair subsidies.); (2) confront foreign efforts to steal U.S. intellectual
property; (3) address state-sponsored cyber espionage against U.S. companies. Biden is also likely to stick to
U.S. Trade Representative Robert Lighthizer’s efforts to persuade U.S. companies to reshore. Biden plans to
establish a “claw-back” provision to force a company to return public investments and tax benefits when the
company transfers U.S. jobs to other countries and to reverse tax policies that encourage outsourcing.
Biden program diverges from the Trump administration’s approach to trade in three main issues. First, Biden
proposes to rally U.S. allies in a coordinated effort to pressure the China. Second, Biden proposes to apply a
carbon adjustment fee against countries that are failing to meet their climate and environmental obligations.
Third, Biden proposes to enforce existing labor provisions and aggressively push for strong and enforceable
labor provisions in trade deals his administration negotiates.
US-China Deal and Agricultural Goods
The six-month review of the U.S.-China phase one trade deal was held on August 24, 2020. According, to the
USTR, both sides see progress and are committed to taking the steps necessary to ensure the success of the
agreement. While there was a significant increase of China’s purchases from the United States, particularly of
agricultural products, China’s total imports from the U.S. was $48.5 billion through July 2020, which is less
than half needed to be on track to meet its commitments, as the PIEE points out. The pandemic spread right
after the phase one deal went into effect also contributed to the reduced demand for many agricultural
It remains to be seen whether current U.S. supply of agricultural products will fulfill the ambitious
commitments of the U.S.-China deal and how other major agricultural players like Brazil will be affected.
Through July 2020, China received 40% of the agricultural products from Brazil, the highest share of China in
Brazil’s agricultural exports to date.

ABCI Board
Aluisio de Lima-Campos, Renata Amaral, Barbara Medrado, Lucas Queiroz Pires, Marcia Pulcherio