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More Than Just a New Name: USMCA is “NAFTA 2.0”


On September 30th, the United States, Canada, and Mexico agreed upon a new trade deal after more than a year of negotiating. The United States-Mexico-Canada Agreement, or USMCA, will replace the 1994 North American Free Trade Agreement, or NAFTA.

Congress has yet to approve the new deal, though it is expected to take effect in early 2020. The deal’s most notable changes are for cars and trucks, with the goal of increasing the number of car and truck parts made in North America. USMCA, similar to its predecessor, impacts the oil and natural gas industry by locking in Canada and Mexico as the United States’ closest trading partner and supporting U.S. energy.

The American Petroleum Institute (API) applauds this new trilateral agreement and, according to API President and CEO Mike Sommers, “urges Congress to approve the USMCA.”

Sommers went on to say that “Having Canada as a trading partner is critical for North American energy security and U.S. consumers. Retaining a trade agreement for North America will help ensure the U.S. energy revolution continues into the future.” API noted that important provisions to the U.S. oil and gas industry include:

  • Continued market access and no tariffs for U.S. natural gas and oil products.
  • Investment protections for U.S. natural gas and oil companies investing in Mexico.
  • A requirement that Mexico retain at least its current level of openness to US energy investment.
  • Additional flexibility allowing U.S. customs authorities to accept alternative documentation to certify that oil and gas entering the U.S. have originated in Canada or Mexico.

API is keen to point out that “today’s highly integrated and interdependent North American energy markets (oil, natural gas, electricity) benefit the United States by expanding the size of our energy markets which create economies of scale that attract private investment, lower capital costs, and reduce energy costs for consumers.”

Map of North America Energy Flows by Commodity, 2016

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