-Rest in Peace NAFTA
The new trade agreement to replace the 24-year-old North American Free Trade Agreement (NAFTA) made headlines for multiple days last week.
The U.S.-Mexico-Canada Agreement (USMCA), which will govern more than $1.2 trillion in trade among the three countries, came after long and stiff negotiations.
The business community and markets welcomed the USMCA for ending the uncertainty that began since U.S. President Donald Trump took office in January 2017.
However, the parliaments of the member countries need to approve the new agreement, which will probably not become effective for months.
In comparison to the NAFTA, the main sectors targeted in the USMCA Agreement are the automotive, dairy, and pharmaceutical sectors.
According to the new rules in the USMCA framework, at least 75 percent of auto parts must be produced on the North American continent in order to qualify for zero tariffs, a substantial boost from 62.5 percent under NAFTA.
The new deal also requires at least 40 percent of cars to be produced by workers earning at least $16 per hour.
As a part of the new agreement, Canada agreed to reduce entry barriers for U.S. dairy products. This means American dairy producers will have access to 3.6 percent of the Canadian market when the agreement comes into effect. In addition, Canadian dairy producers will be banned from receiving any incentives from the government.
The new rules added to the USMCA include the strengthening of intellectual property rights. Patents will be extended by 10 years for biological drugs and agricultural chemicals and 15 years for industrial designs. The agreement also makes copyrights no longer valid after 50 years, rather than 50 years after death.
Another important difference between NAFTA and the USMCA is over review terms and the introduction of a new sunset provision. NAFTA, which came into effect on Jan. 1, 1994, did not include any revisions or validity dates. The USMCA gives the three countries the right to revise the rules every six years. The agreement will only be valid for 16 years if not extended.
-U.S. unemployment falls to 49-year low
Another highlight of last week was employment data.
According to official figures released Friday, the U.S. unemployment rate fell to 3.7 percent in September, the lowest level of the last 49 years. Non-farm employment grew by 134K, short of the market forecast of 184K.
Analysts believe Hurricane Florence had a negative effect on hiring in September.
-New week: Fed messages and inflation
The new week in the United States started off calmly with a federal holiday in the observance of Columbus Day.
The big news of the day came from Sweden as William D. Nordhaus and Paul M. Romer won the 2018 Nobel Prize in Economics.
For the rest of the week, the headlines are expected to cover the messages by Fed officials and the CPI inflation data to be announced on Thursday.