WT/REG407/2  
 
26 October 2021  
(21-8102) Page: 1/15 
Committee on Regional Trade Agreements  Original: English /Spanish  
 
 
AGREEMENT BETWEEN THE UNITED STATES, MEXICO AND CANADA 
(USMCA/CUSMA/T -MEC) (GOODS AND SERVICES ) 
QUESTIONS AND REPLIES  
 The following communication, dated 15 October  2021, is being circulated at the request of the 
delegations of  the United States, Mexico and Canada . 
 
_______________  
 
 
Question s from Brazil  
 
1.1.  Regarding section 3.52 of the Factual Presentation, have the Parties already 
discussed or adopted any sector -specific proposal to facilitate the acceptance of 
conformity assessment results?  
Response from the Parties  
 
 The Parties have  bilateral mutual recognition agreements with each other  to accept conformity 
assessment test results .  
 
1.2.  Regarding section 3.4.2.1, how do the Parties understand that the provision to 
exclude partners from the application of global safeguards would be legal under 
multilateral rules?  
Response from the United States and Mexico  
 
 This issue is currently the subject of a claim in a USMCA dispute settlement proceeding, and 
the Parties are accordingly not in a position to comment on it.  
 
Response from Canada  
 
 The exclusion of regional trade partners from the application of global safeguards is consistent 
with multilateral rules including, in particular, Article XXIV of the GATT 1 994. 
 
1.3.  As regards section 3.4.2.1, how did the Parties develop the definitions of "substantial 
share" and "important contribution?  
Response from the United States and Mexico  
 
 This issue is currently the subject of a claim in a USMCA /CUSMA/TMEC  dispute settlement 
proceeding, and the Parties are accordingly not in a position to comment on it . 
 
Response from Canada  
 
 The provisions related to "substantial share " and "important contribution " were developed by 
the Parties in the context of NAFTA neg otiations. They were simply replicated in the new Agreement.  WT/REG407/2  
 
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  1.4.  Concerning section 3.4.2.1, Brazil requests clarification on the obligation not to apply 
safeguards that would reduce imports from the Parties: i) how would the provision work 
in practice? and ii ) how does the provision relate to the rules of the WTO Agreement on 
Safeguards (AS)?  
Response from the Parties  
 
 This issue is currently the subject of a claim in a USMCA /CUSMA/TMEC  dispute settlement 
proceeding, and the Parties are accordingly not in a p osition to comment on it . 
 
1.5.  Regarding section 3.4.2.2, why were not the new commitments on trade 
liberalization accompanied by the provision of bilateral safeguards concerning them?  
Response from the Parties  
 
 The bilateral safeguards provision that existed in NAFTA expired prior to the renegotiation and 
the Parties determined that a new bilateral safeguards provision was not necessary.  
 
1.6.  Relating to section 3.4.2.2, how was the experience of each of the three Parties with 
bilateral safeguards under NA FTA?  
Response from the Parties  
 
 There was only one bilateral safeguards investigation completed under NAFTA. The 
determination can be found at: https://usitc.gov/publications/tariff _affairs/pub2984.pdf . 
 
1.7.  With regard to section 3.4.3, how did the Parties develop the terms of the provisions 
on circumvention?  
Response from the Parties  
 
 In the Trade Facilitation and Trade Enforcement Act of 2015, the U.S. Congress included a 
negotiating  objective for the United States to seek provisions regarding cooperation on preventing 
evasion of the trade remedy laws of the United States and the trade remedy laws of the other 
country. (See 19 U.S.C. sec. 4374 -4375). During the USMCA /CUSMA/TMEC  negoti ations, the United 
States tabled provisions in line with that negotiating objective. In addition, due to the degree of 
integration of the North America region, the Parties noted that circumvention was an area that had 
to be addressed. Therefore, t he Partie s discussed and negotiated the tabled provisions until 
consensus was reached.  
 
1.8.  Concerning section 3.4.3, how is the provision on information sharing regarding 
petitions compatible with multilateral norms, particularly those on confidentiality present 
in th e ADA and the ASCM? Is it possible to open, "ex officio", countervailing duty 
investigations under the FTA?  
Response from the Parties  
 
 The Parties fully intend to act consistently with their respective laws and protect the 
confidentiality of all intereste d parties regarding any information received by the relevant 
administering authorities.  
 
 Yes, it is possible for the United States to self -initiate a countervailing duty investigation when 
the statutory requirements in U.S. law are met (e.g., Common Allo y Aluminum  Sheet (Common 
Alloy Sheet) from the People 's Republic of China).   
 
 In Canada, it is also possible to self –initiate a countervailing duty investigation when the 
statutory requirements of the Special Import Measures Act are met.  
 
 It is possible for Mexico to initiate countervailing duty investigations ex officio . 
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  Response from Mexico  
 
 We see nothing in the information sharing provisions that could be considered as inconsistent 
with the confidentiality obligations provided by the ADA and ASCM as such. Now, in case the question 
refers to the way in which the informa tion sharing provisions will be applied, we will carefully 
implement them in a manner consistent with both our domestic legislation and our international 
obligations.  
 
Questions from China  
 
1.9.  It has been more than one year since the USMCA entered into force on 1 July 2020. 
How do the parties evaluate the implementation effect of the USMCA since its entry into 
force?  
 Which sectors have registered rapid growth on trade in goods, services and 
investment?  
 
Response from the Parties  
 
 USMCA/CUSMA/TMEC carried over the duty -free treatment for goods from NAFTA, which 
covered 99% of the total tariff lines, so there is no new tariff liberalization under the USMCA for 
most goods.  Some agriculture tariffs were liberalized between Canada and t he US in the 
USMCA/CUSMA/TMEC (but not between Canada and Mexico). The USMCA maintains the benefits of 
NAFTA as well as enhanced transparency and predictability for service providers seeking market 
access in Canada, Mexico and the United States in all serv ices sectors.  
 
1.10.   Could the Canadian and Mexican side introduce the differences of the liberalization 
level between the USMCA and other FTAs signed by Canada and Mexico, such as CPTPP?  
Response from Mexico  
 
 USMCA /CUSMA/TMEC  carried over the duty -free treatm ent for goods from NAFTA, which 
covered 100% of the total tariff lines between México and United State, and 99% between Mexico 
and Canada, so there is no new tariff liberalization under USMCA for goods in the case of Mexico. In 
CPTPP, there is a phase out period of 16 years to reach a duty -free treatment for goods which will 
cover 99% of the total tariff lines of Mexico.  
 
Response from Canada  
 
 The CUSMA carried over the duty -free treatment for goods from NAFTA, which covered 99% 
of the total tariff lines. Once the CPTPP is fully implemented, 99% of tariff lines among CPTPP parties 
will be duty -free and Canada will have duty -free access to CPTPP countries for 94% of Canadian 
agriculture and agri -food products exports. Different to other Canadian FTAs, some agriculture tariffs 
were liberalized between Canada and the US in CUSMA. CUSMA also includes the most 
comprehensive provisions on agricultural biotechnology in Canada's FTAs. With respect to the 
investment and cross -border trade in services chapters, the liberalization level of the CUSMA is 
commensurate to that of other FTAs concluded by Canada, including the CPTPP.  
 
1.11.   As mentioned in paragraph 5.3 3 of the factual presentation, Annex 14 -D of the 
USMCA provides for a mechanism for the dispute settlement of investment between 
Mexico and the US. The text reads  as follows, "Claimant means an investor of an Annex 
Party that is a party to a qualifying inv estment dispute, excluding an investor that is 
owned or controlled by a person of a non -Annex Party that, ... the other Annex Party has 
determined to be a non -market economy..."  
a. Could the US side and Mexican side elaborate what is the consideration of thi s 
provision?  
 
 
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  Response  from the Parties  
 
 Under USMCA /CUSMA/TMEC  Article 14.D.3, a claimant may submit a qualifying investment 
dispute to arbitration on its own behalf or on behalf of an enterprise of the respondent that is a 
juridical person that the claimant owns or controls directly or indirectly.  Under Annex 14 -D, a 
"claimant " is different from an "investor " because the term "claimant " excludes an "investor that is 
owned or controlled by a person of a non -Annex Party that, on the date of signature of this 
Agreement, the other Annex Party has determined to be a non -market economy for purposes of its 
trade remedy laws and with which no Party has a free trade agreement. "  
 
Response from the United States  
 
 For the United States, the process for designation of non -market economies for purposes of 
its trade remedy laws is  set forth in 19 U.S.C. 1677(18) and a listing of the eleven countries so 
designated is available at https://www.trade.gov/nme -countries -list. 
 
Response from Mexico  
 
 Mexico does not have a list of non -market economies nor a legal mechanism to designate 
them.  
 
b. What problems would the Parties like to solve through this provision? Does this 
provision violate the spirit of non -discrimination principle of the WTO?  
Response  from the Parties  
 
 International investment agreements, such as the USMCA /CUSMA/TMEC  investment chapter, 
prescribe specific limits and conditions upon a respondent State 's consent to arbitration.  Each State 
makes a sovereign choice regarding the scope of its consent to investor -State arbitration when 
entering into an international investment agreement. The United States and Mexico take seriously 
their WTO commitments and the USMCA provisions are consistent with those commitments.  
 
1.12.   As mentioned in paragraph 5.35 of the factual pre sentation,  "...Before commencing 
free trade agreement negotiations with a non -market country a Party must inform the 
other Parties of its intentions to do so and shall provide, upon request, as much 
information as possible about the objectives for such neg otiations... If a Party enters into 
an FTA with a non -market country the other two Parties may terminate the Agreement on 
six months' notice..."Could the Parties clarify and explain what is the consideration of this 
provision?  What is the relationship betw een " terminate the Agreement " referred in this 
provision and the Withdrawal procedure under Article 34.6? Will this provision be 
triggered if a Party intends to commence an RTA negotiation in which a "non -market 
country" is a Party?  Is there any practice on this provision ? Does it comply with 
Article  XXIV of GATT  and Article V of GATS ?  
Response  from the Parties  
 
 Article 32.10 (Non -Market Country FTA) of the USMCA /CUSMA/TMEC  requires that any Party 
intending to negotiate  a free trade agreement with a non-market country must inform the other 
Parties  prior to commencing negotiations.  That Party must also provide an opportunity for the other 
Parties to review the text before signing such an agreement.  It also provides that entry into such an 
agreement by one Party allows for the other Parties to terminate the USMCA and replace it with an 
agreement as between those other Parties.  This provision is intended to ensure that the negotiated 
benefits of the USMCA remain with the USMCA Parties and are not diluted by one Party 's agreement 
with a non -market country. If a USMCA Party were to enter into such an agreement, the other Parties 
would review information and ensure that they are not disadvantaged.  
 
1.13.   As mentioned in paragraph 5. 50 of the factual presentation, t he United States and 
Mexico signed a side letter to recognize "prior users" under the Mexico -European Union 
Global Agreement regarding GIs. As far as we know, the EU and Canada also signed a n 
FTA (CETA) in 2017. So, without a side letter, how can the Unite d States and Canada 
coordinate the issue of GIs protection? In addition, given that Canada and Mexico have 
reached agreement with EU respectively on the protection of GIs and have included a WT/REG407/2  
 
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  series of GIs in the appendix, how would Canada and Mexico deal w ith the conflict 
between EU GIs and US GIs?  
Response from the United States , Canada and Mexico  
 
 Section E of Chapter 20 of the USMCA /CUSMA/TMEC  provides important transparency and 
due process safeguards for the protection or recognition of new geographical indications.  In addition, 
Article 20.14.2 establishes a mechanism for consultation among the United States, Canada, and 
Mexico on future reque sts of recognition or protection of geographical indications pursuant to 
international agreements.  
 
1.14.   As mentioned in paragraph 5.51 of the factual presentation, Mexico is permitted to 
maintain a system other than judicial proceedings that deal with early re solution of 
potential pharmaceutical patent disputes.  
 Can Mexico provide more information on this system? How does this system work 
as an alternative to the patent linkage system?  
 
Response  from the Parties  
 
 Mexico has in place a coordination mechanism between the authority responsible for granting 
marketing authorisations for pharmaceutical products ( Comisión Federal para la Protección Contra 
Riesgos Sanitarios, COFEPRIS ) and the industrial property authority ( Instituto Mexicano de la 
Propiedad Industri al, IMPI ). As part of the procedure for marketing authorisation, applicants must 
provide COFEPRIS with proof that they have the right to use the patent(s) in question, whether they 
are the patent holder or have a licence contract. COFEPRIS consults IMPI to  determine whether 
applications would infringe current patents. Through this mechanism, patent rights infringements in 
the context of marketing authorisation are prevented.  
 
1.15.   As mentioned in paragraph 5.54 of the factual presentation, Article 20.83 of the 
USMCA provides for ex officio action at the border against suspected counterfeit 
trademark goods or pirated copyright goods under customs control that are imported, 
destined for export, in transit and admitted into or exiting from a free trade zone or a 
bonded warehouse.  
 Could the parties share experience in customs control of suspected counterfeit 
trademark goods or pirated copyright goods, especially those are admitted into and 
exiting from a free trade zone or a bonded warehouse?  
 
Response from the United States  
 
 In the United States, customs officials are able to examine, detain, seize, and forfeit suspected 
counterfeit trademark goods or pirated copyright goods being admitted into, or exiting from, a free 
trade zone or bonded warehouse.  Customs officials also conduct random 'sweeps ' of these areas, 
sampling packages and effectuating detentions and seizures of suspected counterfeit trademark 
goods or pirated copyright goods.  
 
Response from Mexico  
 
 In Mexico, customs officials have the attribution to detain goods suspected of infringing 
intellectual property rights after receiving an order by the competent administrative authority (IMPI) 
or the judicial authority ( Fiscalía General de la República, FGR ) on intellectual property matters. 
Customs officials draw up a detailed record for the identification of the detained goods and place 
them in the location indicated by the authority issuing the detention order. Subsequently, the 
competent authority carries out a procedure to determine if the  goods are indeed counterfeit or 
pirated.  
 
1.16.   With regard to Chapter 22 "STATE -OWNED ENTERPRISES AND DESIGNATED 
MONOPOLIES" of the USMCA, please explain the reasons for not using the concept of 
"public body" under the Agreement on Subsidies and Countervailin g Measures and the 
concept of "benefit" in 1.1 (b) of the Definition of a Subsidy.  WT/REG407/2  
 
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  Response  from the Parties  
 
 In light of the various Appellate Body reports that the Parties consider have incorrectly 
interpreted the phrase "public body, " it was important to the Parties to appropriately define the 
entities covered by the disciplines in the chapter.  The definition of "non-commercial assistance " in 
Chapter 22 is framed to fit within the specific context of assistance provided to SOEs.  
 
1.17.   Artic le 22.4 of the USMCA provides for disciplines of activities of SOEs affecting  
trade and investment of other  Parties' enterprises in the Free Trade Area. H ow can the 
Parties "ensure" the implementation of this  provision ? Is it a procedural obligation  (e.g., 
setting up relevant legislation) or ensured by result ? Is this an obligation of the 
Government s or the SOEs ? What is the remedy procedure if this provision is violated ? 
Response  from the Parties  
 
 The obligations of Article 22.4 are taken by a Party to ensure that its state -owned enterprises 
behave in specified ways without specifying the mechanism by which a Party may effectuate this 
obligation.  Regardless of the mechanism chosen, a Party would not be in compliance with its 
obligations if one of its sta te-owned enterprises was determined to be acting inconsistently with the 
obligations of Article 22.4.  Potential violations of this provision would be subject to consultations 
under the Committee on State -Owned Enterprises and Designated Monopolies establis hed under 
Article 22.12 or to the dispute settlement processes contained in Chapter 31 of the USMCA . 
 
1.18.   As mentioned in paragraph 5.6 4 of the factual presentation, Article 22.4 of the 
USMCA provides for non -discriminatory treatment and commercial considerati ons, Article 
22.6 provides for discipline of non-commercial assistance. Please clarify the relationship 
between the se two Articles. Under what circumstances do SOEs  constitute non -
commercial assistance under Article 22.6?  Is a breach of commercial consider ations under 
Article 22.4 the prerequisite  of non -commercial assistance ? Or would it constitute non -
commercial assistance under Article 22.6 even if the SOEs were to transact on commercial 
grounds under Article 22.4?  
Response  from the Parties  
 
 Article 22. 4 disciplines the activities of state -owned enterprises and designated monopolies 
by requiring that a Party ensure they act in accordance with the article 's obligations on non -
discriminatory treatment and commercial considerations, as defined in the USMCA /CUSMA/TMEC . 
Article 22.6 applies both to the Party in its provision of non -commercial assistance to a state -owned 
enterprise and a state -owned enterprise 's provision of non -commercial assistance to another state -
owned enterprise.  Articles 22.4 and 22.6 are  separate and distinct obligations, and neither is a 
prerequisite for the other.  There may be instances in which a failure to act in accordance with 
commercial considerations on the part of a state -owned enterprise may also constitute a form of 
non-commerc ial assistance.  For example, a loan that is provided by a state -owned enterprise, on 
more favorable terms than those commercially available, to another state -owned enterprise may be 
both inconsistent with commercial considerations and an example of non -commercial assistance.  
 
1.19.   As mentioned in paragraph 5.8 4 of the factual presentation, there are various 
channels for the settlement of disagreements regarding labour issues. Has such 
settlement of disagreements occurred since the entry into force of the USMCA? If so, how 
has th is settlement been implemented?  
Response from the United States  
 
 There have been no Chapter 31, section A dispute settlement actions regarding Chapter 23. 
The United States has sent to Mexico two requests for review under Annex 31 -A, the United States -
Mexico Facility -Specific Rapid Respon se Labor Mechanism of the USMCA /CUSMA/TMEC . 
 
Adding links to U.S. press releases:  
First RRM request for review:  https://ustr.gov/about -us/policy -offices/press -office/press -
releases/2021/may/united -states -seeks -mexicos -review -alleged -workers -rights -denial -auto-
manufacturing -facility -0  WT/REG407/2  
 
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  Second RRM request for review:  https://ustr.gov/index.php/about -us/policy -offices/pre ss-
office/press -releases/2021/june/united -states -seeks -mexicos -review -alleged -freedom -association -
violations -mexican -automotive -parts 
 
Response from Mexico  
 
 Since the enter into force of the USMCA /CUSMA/TMEC , US had been notified to Mexico two 
request for  review under Annex 31 -A. Both cases are settled. You can see the Mexico press releases 
in the following links:  
 
First request:  
https://www.gob.mx/se/articulos/concluye -con-exito-el-primer -curso -de-reparacion -del-
mecanismo -laboral -de-respuesta -rapida -del-t-mec-283451?idiom=es  
 
Second request:  
https://www.gob.mx/se/articulos/comprometidos -con-el-correcto -funcionamiento -del-t-mec-se-
anuncian -acuerdos -respecto -a-peticion -laboral -de-empresa -de-autopartes -279274?idiom=es  
 
1.20.   As mentioned in paragraph 5.86 of the factual presentation, Article 19.4 of the 
USMCA provides for non -discriminatory treatment for digital products, how could the 
Parties reconcile this provision with those conservations in secto rs of trade in services 
that are exempted from a Party's obligation of market access or national treatment under 
GATS and FTAs ?  
Response  from the Parties  
 
 The flexibilities provided for in the GATS and other FTAs are not relevant to obligations made 
under the USMCA/CUSMA/TMEC.  In some cases, the USMCA provides for similar flexibility; in other 
cases, the same kind of flexibility may not exist, or may be addressed in a different manner.  
 
1.21.   As mentioned in paragraph 5.8 7 of the factual presentation, Article 1 9.11 of the 
USMCA provides for cross -border transfer of information and specifies that a Party may 
adopt exceptions to legitimate public policy objectives, but the Article 19.12 for location 
of computing facilities has no such exceptions. What is the defin ition of "legitimate public 
policy objectives" ? Is there any practice on citing this concept ? The prohibition of  the 
cross -border transfer of information of due to a legitimate public policy objective  may 
result in localization of  computing facilities, which may violate Article 19.12. How would 
the Parties reconcile this contradiction?  
Response  from the Parties  
 
 While there is general understanding of examples of what constitutes legitimate public policy 
objectives, for example the goals referenced in GATT Article XX (incorporated into the 
USMCA /CUSMA/TMEC  in Article 32.1 (General Exceptions)), such as protection of health and safety, 
this term is intended to provide broad scope for governments to define independently. However, 
despite a b road scope for defining what constitutes a legitimate public policy objective, simply citing 
such an objective is not sufficient to demonstrate compliance, given other elements of the provision.  
Furthermore, the GATS general exceptions (Article XIV) are in corporated into the USMCA as it applies 
to Chapter 19: Digital Trade, including with respect to Article 19.12: Location of Computing Facilities, 
which provides for analogous exceptions as provided for under Article 32.1.2  
 
Question s from Colombia  
 
Rules of origin  
 
1.22.   Paragraph 3.27. A good is considered to be originating if it is (a) wholly obtained 
or produced entirely in the territory of one or more of the Parties; (b) produced entirely 
in the territory of one or more of the Parties using non -origina ting materials which must 
satisfy the product -specific rules in Annex 4 -B; (c) produced entirely in the territory of WT/REG407/2  
 
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  one or more of the Parties exclusively from originating materials; or (d) except for a good 
in HS Chapters 61 -63 (i) produced entirely in t he territory of one or more of the Parties; 
(ii) one or more of the non -originating materials used in the production of the good cannot 
satisfy the product specific rules because both the good and the materials used are 
classified in the same sub -heading o r heading that is not further subdivided into sub -
headings or the good was imported into the territory of a Party in an unassembled or 
disassembled form but was classified as an assembled good; and (iii) the regional value 
content (RVC) of the good is not less than 60% under the transaction value method or not 
less than 50% under the net cost method; and that the good satisfies all other applicable 
requirements of Chapter 4.  
 What cases and goods can apply the condition described in the rule of origin cited  in 
literal d (ii) "… the good was imported into the territory of a Party in an unassembled or 
disassembled form but was classified as an assembled good" for? And How often does 
this situation occur?  
 
Response from the Parties  
 
 In some cases, both the input and final good may be classified in the same subheading or 
heading  that is not further subdivided into subheadings.  Similarly, a good in unassembled form 
might also be classified under the same subheading or heading as the same good in assembled form . 
In such instances, the good might not undergo a tariff shift during production.  This part of the rule 
of origin text is intended to allow such goods to be considered to be originating if they satisfy a 
regional value cont ent requirement.  
 
Subsidies and s tate aid  
 
1.23.   Paragraphs 3.66 and 3.67 refer to subsidies to fishing activities. Colombia would 
like to obtain more information on how the Parties to this agreement have implemented 
these commitments, and if they have had to adopt internal changes to their res pective 
national legislations and subsidies programs.  
Response from the United States  
 
 The United States implements the commitments referenced in paragraphs 3.66 and 3.67 by 
administering our programs, which are limited to managed fisheries or limited ac cess fisheries, 
consistent with the relevant provisions of the USMCA /CUSMA/TMEC.  This did not require changes to 
our legislation or programs.  
 
Response from Canada  
 
 Canada does not grant or maintain any subsidies that contribute to overfishing, overcapacity, 
Illegal, unreported and unregulated (IUU) fishing, or subsidies that negatively affect fish stocks in 
an overfished condition. Therefore, no changes to national legislation or subsidy programs were 
required.  
 
Response from Mexico  
 
 Mexico 's legislation and programmes were already in line with the commitments referred, as 
no subsidies are granted to vessels or operators determined to be engaged in illegal fishing activities, 
or to overfished fisheries according to Mexico 's fisherie s management regulations. Additionally, 
Mexico notifies subsidies granted –including subsidies to fisheries subsidies - as required by Article  25 
of the WTO Agreement on Subsidies and Countervailing Measures, so complying with this obligation 
did not requir e any changes to the ongoing transparency practice.  
 
1.24.   Colombia would also like to know if the Environment Committee of the agreement 
has met and discussed the implementation of these provisions and the potential future 
treatment of subsidies that contribute to overfishing and overcapacity.  
 
 
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  Response  from the Parties  
 
 The inaugural meeting of the USMCA /CUSMA/TMEC  Environment Committee took place on 
June 17, 2021, the purpose of which was to discuss Parties ' implementation of chapter 24.  The 
fisheries subsidies provisions were not specifically discussed at that time.  
 
 The Joint Statement corresponding to the Environment Committee 's inaugural meeting, where 
information on the matters discussed can be found, is available in the following link:  
 
https://www.gob.mx/se/prensa/declaracion -conjunta -sobre -la-reunion -inaugural-del-comite -de-
medio -ambiente -del-tratado -entre -mexico -estados -unidos -y-canada?state=published  
 
https://ustr.gov/about -us/policy -offices/press -office/press -releases/2021/june/joint -public -
statement -inaugural -meeting -environment -committee -united -states -mexico -canada -agreement   
 
https://www.international.gc.ca/trade -commerce/trade -agreements -accords -commerciaux/agr -
acc/cusma -aceum /2021 -06-17-environ_comm_agree -comite_environ_accord.aspx?lang=eng  
 
Questions from Costa Rica  
 
1.25.   Paragr aph 4.108: Annex 17 -C modifies Annex 14 -D (Mexico -US investment disputes 
in financial services) for the settlement of qualifying investment disputes under 
Chapter  17. 
 Could the countries please provide more information on the mechanisms applicable 
to the settlement of investment disputes in financial services? What are the main 
differences with NAFTA?  
 
Response  from the Parties  
 
 With respect to investor -state disputes relating to financial services between the United States 
and Mexico, as outlined in Annex 17 -C, a claimant from the United States or Mexico, on its own 
behalf or on behalf of a financial institution it owns or controls directly or i ndirectly, may submit to 
arbitration under Annex 14 -D a claim that Mexico or the United States has committed a breach, and 
that the claimant has incurred loss or damage by reason of, or arising out of, that breach, of the 
following USMCA obligations: Artic le 17.3.1 (National Treatment), Article 17.3.2 (National 
Treatment), Article 17.4.1(a) (Most -Favored -Nation Treatment), Article 17.4.1(b) (Most -Favored -
Nation Treatment), or Article 17.4.1(c) (Most -Favored -Nation Treatment), except with respect to 
the esta blishment or acquisition of an investment; or Article 14.8 (Expropriation and Compensation) 
as incorporated into the Financial Services Chapter under Article 17.2.2(a) (Scope), except with 
respect to indirect expropriation. All such claims are subject to t he procedures and limitations 
contained in Annex 17 -C and Annex 14 -D, and all other relevant limitations and exceptions contained 
in Chapter 17, Chapter 14, and the remainder of the USMCA.   
 
 In the North American Free Trade Agreement (NAFTA), with respect to investor -state disputes 
relating to Chapter 14 (Financial Services), involving an investor from the United States, Mexico or 
Canada, a claimant could submit to arbitration a claim that another Party had committed a breach 
of the following NAFTA obligations:  Article 1109 (Transfers); Article 1110 (Expropriation and 
Compensation); Article 1111 (Special Formalities and Information Requirements); Article 1113 
(Denial of Benefits) and Article 1114 (Environmental Measures).   
 
 With respect to state -to-state dispute settlement relating to financial services, both 
agreements  permit state -to-state dispute settlement for a wide variety of USMCA or NAFTA 
obligations, which are also subject to the relevant procedures, limitations and exceptions contained 
in the corresponding agreement. In both cases, several specificities regarding the composition of 
the panel and suspension of benefits apply.  
 
1.26.   Paragraph  4.109: Article 17.19 establishes a Committee on Financial Services that 
supervises the implementation of Ch apter 17 and its further elaboration. The inaugural 
Financial Services Committee met virtually on 15  April  2021 to discuss the 
implementation of the agreement and other issues relevant to the financial sector.  WT/REG407/2  
 
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   Could the countries please provide some examples of the kind of "issues relevant to 
the financial sector" that would eventually be addressed by the Committee on 
Financial  Services?  
 
Response  from the Parties  
 
 As noted in Article 17.19.2, the Financial Services Committee shall supervise the 
implementation of the Financial Services Chapter and its further elaboration, including by considering 
issues regarding financial services that are referred to it by a Party.  Each Party may therefore refer 
to the Financial Services Committee an issue regarding  financial services for consideration, with the 
expectation that such referrals will relate to implementation of the Financial Services Chapter and 
its further elaboration.   
 
1.27.   Paragraph  4.118: The Parties agree to establish a Telecommunications Committee, 
which shall meet at times as the Parties may decide (Article 18.27). The functions of the 
Committee include reviewing and monitoring the implementation of the Chapter and 
discussing issues relevant to telecommunications sector.  
 Could the countries please r efer to their practice of creating a 
Telecommunications  Committee in other trade agreements? What kind of issues could this 
Committee address in the future?  
 
Response from the United States  
 
 The United States previously included a Telecommunications Commi ttee in the NAFTA and a 
consultative process on telecommunications and ICT issues in the U.S. -Australia FTA.  It has not 
established a Telecommunications Committee in other Free Trade Agreements.  The USMCA 
Telecommunications Committee may discuss issues rel ated to Chapter 18 of the USMCA and any 
other issues relevant to the telecommunications sector.  
 
Response from Canada  
 
 Canada previously included a Telecommunications Committee in the NAFTA and in the 
Comprehensive and Progressive Agreement for Trans -Pacific Partnership. It has not established a 
Telecommunications Committee in other Free Trade Agreements.  
 
Response from Mexico  
 
 In addition to the Telecommunications Standards Subcommittee in the NAFTA (which is not in 
force) and the USMCA/CUSMA/TMEC 's Telecommunications Committee, Mexico has included a 
Telecommunication Committee in the CPTPP (Comprehensive and Progressive Agreement for Trans -
Pacific Partnership).  About the USMCA/CUSMA/TMEC 's Telecommunications Committee, it may 
discuss issues related to the Chapter 18 and any other issues relevant to the telecommunications 
sector the Parties may decide.  
 
1.28.   Paragraph  5.85: Provisions on electronic commerce are found in Chapter  19 on 
digital trade. It applies to measures adopted or maintained by the Parties that affect trade 
by electronic means but does not apply to government procurement or to information held 
or processed by or on behalf of the Parties or measures relating to that information or its 
collection (except for Article  19.18 on Open Government Data ).1 
Response from the  United States  
 
 We do not understand what question is being asked, if any.  
 
 
1 A measure affecting the supply of a service delivered or performed electronically is subject 
to Chapter  14 on investment, Chapter  15 on cross border trade in services, and Chapter  17 on 
financial services, including any exception or non -conforming measure  in the Agreement that is 
applicable to obligations in these Chapters (Article 19.2).  WT/REG407/2  
 
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  Response from Mexico and Canada  
 
 Affirmative, Chapter 19 applies to measures adopted or maintained that affect electronic 
comme rce, however, Article 19.2: Scope and General Provisions of the chapter, excludes 
government procurement or the information held or processed by or on behalf of the Parties or 
measures relating to that information or its collection, except for Article 19.1 8 on Open Government 
Data.  
 
1.29.   Paragraph  5.89. The Parties shall endeavour to exchange information and share 
experiences on regulations, policies, enforcement, and compliance relating to digital trade 
(Article 19.14) and to build the capabilities of their respective national entities 
responsible  for cybersecurity incident response and strengthen their cooperation in the 
area (Article 19.15). With regard to interactive computer services, the Parties commit to 
not adopt or maintain measures that treat a supplier or user of such a service as an 
information content provider in determining liability for harms related to information 
stored, processed, transmitted, distributed or made available by the service, except to the 
extent the supplier or user has, in whole or in part created, or developed the in formation 
(Article 19.17). Annex 19 -A provides a three -year transition to Mexico to implement 
Article 19.17.  
 Could the countries please explain the difference between the scope of e -commerce 
provisions and those concerning "digital trade"?  
 
Response  from the Parties  
 
 The scope is intended to be the same.  
 
Question s from Japan  
 
Provisions on trade in goods  
 
Rules of origin  
 
Rules of origin for automotive goods  
 
1.30.   Paragraph 3.31: Japanese automotive companies operating in US, Mexico and 
Canada are contributing to the strengthening of the North American supply chain. Some 
of these automotive companies have expressed concerns regarding discrepancy on the 
interpretation among the member countries concerning the 75% regional value content 
(RVC) for pass enger vehicles and light trucks in the automotive rules of origin. The 
discrepancy would seriously affect their operation in the region, as such we would like to 
know when we could find the uniform interpretation on the issue.  
Response from the Parties  
 
 The Parties to the USMCA /CUSMA/TMEC  endeavour to agree on the interpretation and 
application of the Agreement.  However, in the event of a disagreement, Chapter 31 (Dispute 
Settlement) of the USMCA provides an avenue for the Parties to resolve the matter.  
 
 This issue is currently the subject of a claim in a USMCA dispute settlement proceeding, and 
the Parties are accordingly not in a position to comment on it.  
 
General provisions of the agreement  
 
Dispute settlement  
 
1.31.   Paragraphs 5.31 -32: USMCA has strengthene d the labour -related rules and 
Japanese companies operating in three countries are working hard to be in line with the 
new requirements. On the other hand, there are uncertainties within those Japanese 
companies regarding when and how the newly established  Facility -Specific Rapid WT/REG407/2  
 
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  Response Labour Mechanism (the Mechanism) would be applied to individual cases. 
Information on the procedure with which a case is initiated would be appreciated.  
Response from the United States and Canada  
 
 USMCA /CUSMA/TMEC  Article  31-A.4.2 provides in the annex for the United States - Mexico 
Facility -Specific Rapid Response Labor Mechanism:  
 
 If a complainant Party has a good faith basis to believe that a Denial of Rights is occurring at 
a Covered Facility, it shall first request t hat the respondent Party conduct its own review of whether 
a Denial of Rights exists and, if the respondent Party determines that there is a Denial of Rights, it 
shall attempt to remediate within 45 days of the request. The complainant Party shall provide 
sufficient information for the respondent Party to conduct its review. The respondent Party shall 
have 10 days to notify the complainant Party as to whether it intends to conduct a review. If the 
respondent Party does not choose to conduct a review or does  not notify within the 10 -day period, 
the complainant Party may request the formation of a Rapid Response Labor Panel (the "panel ") to 
conduct a separate verification and determination pursuant to Article 31 -A.5. 
 
 Please see Article 31 -B.4.2 in the annex for the Canada -Mexico Facility -Specific Rapid 
Response Labor Mechanism  for a similar provision.  
 
Response from Mexico  
 
 In addition to US responses, as set out in article 31 -A 4.1 provide and purpose as follow:  
 
1. The United States and Mexico are agreeing to this Annex pursuant to Article 31.5.1 (Good Offices, 
Conciliation, and Mediation).  
2. The purpose of the Facility -Specific Rapid Response Labor Mechanism (the "Mechanism "), 
including the ability to impose remedies, is to ensure remediation of a Denial of Rights, as defined 
in Article 31 -A.2, for workers at a Covered Facility, not to restrict trade. Furthermore, the Par ties 
have designed this Mechanism to ensure that remedies are lifted immediately once a Denial of Rights 
is remediated.  
3. The Parties shall make every attempt to cooperate and arrive at a mutually acceptable solution 
with respect to matters that can be ra ised through the Mechanism.  
4. This Annex applies only as between Mexico and the United States.  
 In regard of the last provision above, the USMCA Article 31 -A.4.2, footnote 4 establishes the 
following:  
 
 With respect to the United States, a claim can be br ought only with respect to an alleged 
Denial of Rights owed to workers at a covered facility under an enforced order of the National Labor 
Relations Board. With respect to Mexico, a claim can be brought only with respect to an alleged 
Denial of Rights unde r legislation that complies with Annex 23 -A (Worker Representation in 
Collective Bargaining in Mexico).  
 
Electronic commerce  
 
1.32.   Paragraph 5.86: What is the difference between "customs duties, fees, or other 
charges on or in connection with the importation or  exportation of digital products" in 
Article 19.3 and "customs duties on electronic transmissions" which not to be imposed 
under the WTO multilateral moratorium on customs duties on electronic transmissions? 
More specifically, what is the difference betwee n "digital products" in this Article and 
"electronic transmissions"?  
 
 WT/REG407/2  
 
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  Response from the Parties  
 
 The formulation used in the WTO moratorium is drafted in a broad and general manner, and 
in our view is meant to cover the same elements addressed in the USMCA /CUSMA/TMEC . The 
USMCA 's focus on digital products, rather than transmissions, was intended to focus on the clearest 
example of how duties might be imposed, but again, is intended to cover the same cases.  
 
Question s from the Separate Customs Territory  of Taiwan, Penghu, Kinmen and Matsu  
 
Provisions on trade in goods  
 
Regulatory p rovisions on trade in goods  
 
Technical barriers to trade  
 
1.33.   Paragraph 3.5: To facilitate the acceptance of conformity assessment results, 
Article 11.9 goes beyond the WTO TBT Agreement by requiring the Parties to give 
consideration to a request by another Party on any sector -specific proposal for 
cooperation. The Parties also recognize mechanisms to support greater regulatory 
alignment and eliminate unnecessary technical barrie rs to trade in the region such as 
through regulatory dialogue and cooperation, facilitation of the greater use and alignment 
of standards, technical regulations and conformity assessment procedures with 
international standards, guides and recommendations a nd promotion of equivalence of 
other Parties' technical regulations. Article 11.10 sets up a framework for information 
exchange and technical discussions between the Parties to address trade concerns. A 
Committee on Technical Barriers to Trade as well as c ontact points are established 
(Articles 11.11 and 11.12). The Committee shall meet at least once a year unless 
otherwise determined by the Parties.  
a. Please explain the mechanisms of the USMCA concerning policy dialogues on TBT 
issues, such as their frequenc y and the discussion topics.  
Response from the Parties   
  
 The USMCA /CUSMA/TMEC  has been in force for a little over a year. The Parties convened one 
trilateral TBT Committee, and have met on a bilateral basis to discuss WTO and USMCA specific trade 
concern s on the margins of each of the three annual WTO TBT Committees, and conducted 
videoconference s on several ad hoc USMCA topics of bilateral and trilateral interest, such as national 
quality infrastructure, standardization, and particular regulatory schemes . 
 
 On the frequency, besides the one established for the T -MEC TBT Committee, meetings can 
take place upon request from one of the Parties.  
 
b. Could the U.S., Canada, and Mexico provide information on which countries 
currently have similar mechanisms?  
Response from the Parties   
 
 The Parties have similar bilateral mechanisms with several of their bilateral free trade 
agreement partners.  
 
Provisions on trade in goods  
 
Sector -specific provisions on trade in goods  
 
Agriculture  
 
1.34.   Paragraph  3.82: In Section B of Chapter 3 the Parties confirm the importance of 
encouraging agricultural innovation and facilitating trade in agricultural biotechnology 
products, while fulfilling legitimate objectives, including by promoting transparency and 
cooperation a nd exchange of information. The Parties are not required to mandate WT/REG407/2  
 
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  authorization for agricultural biotechnology products to be on the market. Paragraph 4 of 
Article 3.14 includes actions to reduce the likelihood of disruptions to trade in agricultural 
biotechnology products such as encouraging the submission of timely and concurrent 
applications to the Parties and measures to be taken by a Party related to the 
authorization of such products.  
 The USMCA addresses agricultural biotechnology specifically in S ection B of 
Chapter  3, encouraging agricultural innovation and facilitating trade in agricultural 
biotechnology products. Nevertheless, Mexico published a decree in 2020 announcing its 
intention to phase out the use of important agricultural technologies, such as GMO corn 
for human consumption by 2024 . Are there any provisions or mechanisms available in the 
USMCA for the Parties to constructively settle dispute s arising from such kind of issues ? 
 
Response  from the Parties  
 
 The Parties have no comment on th e specific issue raised by TPKM.  We note that the 
USMCA /CUSMA/TMEC  includes formal dispute settlement mechanisms as well as various fora to 
discuss issues that may arise between the Parties.  
 
General provisions of the agreement  
 
Electronic commerce  
 
1.35.   Paragraph  5.87: Article 19.4 ensures non -discriminatory treatment by the Parties 
of digital products created, produced, published, contracted for, commissioned or first 
made available on commercial terms in the territory of another Party, or digital produc ts 
of which the author, performer, producer, developer or owner is a person of another Party.  
Except for a subsidy or grant provided by a Party, including a government supported loan, 
guarantee or insurance.  
 How does Article 19.4 "Non -discriminatory Treat ment of Digital Products" relate to 
Annex 15 -D Programming Services and Annex 15 -E Cultural Exceptions under Chapter 15 
"Cross -border Trade in Services," as well as to Cultural Industries under Chapter 32 
"Exceptions and General Provisions"? How will Artic le 19.4 be applied?  
 
Response from Canada  
 
 Canada 's commitments pursuant to Annex 15 -D apply to the supply of broadcasting services 
in Canada and are not related to Article 19.4: Non -Discriminatory Treatment of Digital Products. 
With some specified except ions (see Article 32.6.2), Article 32.6: Cultural Industries applies to the 
CUSMA Agreement, including with respect to Article 19.4: Non -Discriminatory Treatment of Digital 
Products.  
 
Response from Mexico  
 
 Article 19.4: Non -Discriminatory Treatment of Dig ital Products is directly related to Annex 15 -
E Cultural Exceptions according to Article 19.2: Scope and General Provisions, where is stablished, 
for greater certainty, that a measure that affects the supply of a service delivered or performed 
electronical ly is subject to Chapter 15 (Cross -Border Trade in Services), including any exception or 
non-conforming measure set out in this Agreement that is applicable to the obligations contained in 
that Chapter.  
 
Schedule of the Unite d States  (Market Access)  
 
1.36.   Based on the USMCA, we noted that the United States made no commitments 
regarding public education. Under Annex II Schedule of the United States, it inserted new 
commitments on higher education services, except for the flying instructions.  
 Under the USMCA , public education in the U.S. is not open to Canada and Mexico. Is 
it open to  countries other than Canada and Mexico?  WT/REG407/2  
 
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  Response from the United States  
 
 For the United States, public education refers to education services supported by public funds 
of the U nited States, and is therefore only supplied by the United States. The rest of the education 
market is considered to be private education services, for which the United States has an open 
market and has taken extensive commitments under the USMCA.   
 
Questi ons from Switzerland  
 
Rules of origin for automotive goods  
 
1.37.   Paragraph 3.32:  
a. Why have such rules of origin also linked to a minimum wage been adopted in 
the automotive sector specifically?  
Response from the United States and Canada  
 
 The North American auto industry is highly integrated and USMCA 's labor value content rules 
for autos are designed to support better paying jobs by requiring that significant portion of vehicle 
content be made with high -wage labor and incentivize new investments wit hin the region.   
 
Response from Mexico  
 
 The LVC requirements in conjunction with the other components of the USMCA /CUSMA/TMEC  
automotive rule of origin, are intended to incentivize investment and strengthen the automotive 
industry. Hence the importance of maintaining the delicate balance reached during the negotiations 
to achieve the objectives for this specific sector  
 
b. How has the minimum wage of $16 per hour been defined?  
Response from the United States, Canada, and Mexico  
 
 The production wage rate is the average hourly base wage rate, not including benefits, of 
employees directly involved in the production of the part or component used to calculate the LVC, 
and does not include salaries of management, R&D, engineering, or other workers who are not 
involved in the direct production of the parts or in the operation of production lines. (Chapter 4, 
footnote 77).  
 
c. How are thes e rules implemented, namely how is the evidence of their respect 
provided and how is it checked, if necessary?  
Response from the United States  
 
 For the United States, producers must certify to the U.S. Department of Labor that production 
of covered vehicl es meet the labor value content requirements.  The U.S. Department of Labor has 
the authority to verify producer compliance with the requirements.  
 
Response from Canada  
 
 For Canada, vehicles that benefit from preferential tariff treatment under the CUSMA m ay be 
subject to an origin verification by the Canada Border Services Agency during which compliance with 
the labor value content and other requirements must be demonstrated.  
 
Response from Mexico  
 
 For Mexico, vehicles that benefit from preferential tarif f treatment may be subject to an origin 
verification by the competent authority during which compliance with the labor value content and 
other requirements must be demonstrated.  
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