The U.S.-Mexico agreement is based on the North American Free Trade Agreement (NAFTA), which originally came into force on January 1, 1994. The agreement under consideration was the result of more than a year of negotiations including possible U.S. tariffs on Canada, in addition to the possibility of separate bilateral agreements.  Mexico`s first free trade agreement was signed in 1998 in Santiago, Chile, and came into force in 1999. The agreement eliminated virtually all tariffs on trade in goods between the two countries and set conditions for reducing tariffs on the remaining goods. With regard specifically to automotive products, the agreement provides rules of origin and sets quotas for duty-free imports. On June 19, 2019, the Mexican Senate ratified the agreement (114 yes, 3 no, 3 abstentions).  Mexico`s ratification process will be completed when the President announces its ratification to the Federal Register. The two countries reassessed the agreement in 2010 and acknowledged that bilateral trade between the two countries has increased by 133% since 1999. At the time, countries agreed to “redouble their efforts to take full advantage of their benefits,” focusing on areas such as biotechnology and support for small and medium-sized enterprises. The two countries also agreed to increase trade and create new investment opportunities in sectors such as water treatment and irrigation systems, agrotechnologies and information technology.
NAFTA has three primary dispute resolution mechanisms. Chapter 20 is the settlement mechanism for countries. It is often considered the least controversial of the three mechanisms, and has been maintained in its original form from NAFTA to the USMCA. In such cases, complaints filed by USMCA Member States against the duration of the contract would be violated.  In Chapter 19, the justifications for anti-dumping or countervailing duties are managed. Without Chapter 19, the avenue of recourse for the management of these policies would be through the national legal system. Chapter 19 provides that an USMCA body hears the case and acts as an international commercial tribunal to arbitrate the dispute.  The Trump administration has attempted to remove Chapter 19 of the new USMCA text, which until now existed in the agreement.