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Delay Looms in Canada

Trump Signs USMCA; Expert Says July 1 is ‘Absolute Earliest’ It Could Take Effect

The many complicated “provisions” for implementing the U.S.-Canada-Mexico Agreement on free trade plausibly means July 1 is the “absolute earliest” it can “enter into force,” Nicole Bivens Collinson, international trade expert with Sandler Travis, told a Sports & Fitness Industry Association webinar Wednesday. President Donald Trump signed USMCA’s enabling legislation Wednesday, saying the agreement “contains critical protections for intellectual property, including trade secrets, digital services and financial services.”

Though there “had been hopes” that Canada would “move pretty quickly” to ratify USMCA, “it’s not clear Canada’s going to be able to do that,” said Collinson. “While we had hoped that we might see February as the ratification date for Canada, it could be later.” Even after Canada ratifies, “you can’t implement the agreement until all countries have met their obligations,” she said.

Intercountry “notification” procedures built into USMCA would follow, said Collinson. “Then you can anticipate that at the soonest it would be 30 days later that the agreement will actually enter into effect.” The last four free-trade agreements the U.S. entered into took an average of four years to implement after they were signed, she said. She said she doubts USMCA, signed in November 2018, will take that long because it’s not a new trade pact but a modification of the North American Free Trade Agreement it replaces.

When USMCA does finally take effect “will depend on whether Canada moves quickly and countries are able to certify that they have met all their obligations and all the uniform rules are put in place,” said Collinson. “It may be January 2021 before the agreement actually goes into effect.” She has heard that date mentioned among "a few people, even in the administration," she said.

The IP rights protections in USMCA include “certain safe harbors for businesses that are developing online,” said Collinson. The agreement includes “specific procedures and commitments” for taking down counterfeit products sold on the internet, plus criminal penalties that previously didn't exist, she said. One key IP rights provision grants “ex-officio authority" for customs officials to seize counterfeit goods, said Collinson. In the U.S., “we’ve always had that ability,” she said. “But in Canada and Mexico," until USMCA, "we did not have the ability to make them seize those goods.” she said.

USMCA’s signing got the expected praise from tech and business groups that for months clamored for enactment. The Motion Picture Association said it will “help facilitate the growth of the legal digital market for creative content while addressing the multi-billion dollar threat of online piracy.” USMCA “will bring continued decades of economic prosperity,” said the National Retail Federation.

The signing is “a significant step forward for U.S. leadership in innovation and digital trade and sets a global precedent for modern, rules-based trade,” said the Information Technology Industry Council. It's "a win across the board and sets the standard for trade agreements,” said the Computer & Communications Industry Association.