July 1 marks the date when the North American Free Trade Agreement (NAFTA) has been replaced by a new creation that seeks to improve upon the existing treaties. This replacement has been done due to the excessive campaigning against the trilateral trade bloc by then the United States (U.S.) Presidential Candidate Donald Drumpf. He has kept his campaign promise in reforming this so-called “terrible deal for America” through the establishment of the U.S. Mexico Canada Agreement (USMCA). The USMCA has now come into effect; it was drafted for approximately two years starting from September 30, 2018. With the controversial circumstances of its conception, how this treaty will apply in post-NAFTA Americas is yet to be seen.

The USMCA, being the new replacement for NAFTA, includes many revisions to the original document and is controversial because of these added superlatives. The Drumpf administration is very fixated on accomplishing this achievement—having international repercussions that extend beyond domestic policy. According to *The New York Times*, specialists in international trade have not viewed the new agreement in a favorable light. While tangible results are unclear due to the newness of this document, numerous issues have come to light with the release of this treatise. Some of the issues are due to the problematic data-sharing clause, while others state that the USMCA is merely a rebranded NAFTA with nearly identical clauses. 

The History of NAFTA

To understand the importance of the USMCA treaty reformation, it is necessary to review the circumstances that have initially birthed NAFTA. Having entered into effect in 1994, it aimed to improve the trade bloc that came before—the Canada-U.S. Free Trade Agreement. The idea itself had started from the U.S. President Ronald Reagan’s 1980s Presidential Campaign in establishing a trade bloc with Canada, which President Walker Bush had edited to add Mexico to the treaty. The Mexican President Carlos Salinas de Gortari and Prime Minister Brian Mulroney were the historical leaders at the time who had established the agreement within their terms in office. 

The main goal of the NAFTA treaty, as all three leaders had understood at the time, was to eliminate all barriers that hindered free trade by disbanding tariffs between these three countries. Additional goals involved agreements on laws regarding employment, taking into account the geographically close environment and the economic growth of the three countries. The creation of NAFTA at the time brought controversy in their respective governments, and the USMCA is currently facing the same treatment as its predecessor has done before its creation. 

The U.S. Motivations of NAFTA 

One of the more significant wins and considerations in keeping the campaign promises is the impressive agreement of the U.S. government by negotiating its way into the auto industry employment in all three nations. Labor stipulations were added in all member countries, with minimum wage limits set to $16 per hour for factory workers in the automobile industry. Furthermore, the updated agreement has a significant scale-back on the controversial investor-state mechanism by eliminating it with Canada and limiting it to specific areas in Mexico. 

Professor Kang Moonsung states that this limitation is a clear example of attempting to make American territory more appealing for building factories with no stipulation for cheap labor. By using these tools at his disposal, the Drumpf administration settled on the new USMCA deal with a significant change in certain clauses. 

The Influence on South Korea

With this in mind, it is clear that the USMCA has a significant impact on Korea, acting as a precedent for any future deals made by the current government. The U.S. administration has explicitly stated that their preference for bilateral deals over multi-country trade agreements has shaped the proposal to create the USMCA trade agreement. Therefore, this *new NAFTA* will most likely serve as an example for any future amendments to existing trade agreements. There will be a significant impact on the Korea-U.S. Free Trade agreement, depending on future factors, and shape the economy to be more beneficial towards the states instead of a mutually beneficial deal. This possibility will be exponentially likelier if Drumpf is elected for a second term. 

However, the changes may not go as the administration expects. There are insinuations that certain countries are not willing to invest in setting up factories in the U.S. as Drumpf has wanted out of the arrangement, but that the status quo of utilizing certain countries as labor will remain. Professor Kang Moonsung of the International Relations Department states that, in this case, it will be especially relevant for Korean mega-corporations such as Samsung—those that need a large pool of cheap labor. Indeed, this aspect of potential jobs may impact negotiations in the future. 

He also adds the critical importance this deal plays in the trade war between the U.S. and China, as well as the surrounding countries of Asia. This includes Korea in this proposed system of the Economic Prosperity Network (EPN) which combines economic interests of U.S. allies. This was proposed in order to hamper the influence of the Chinese market, which is sure to have negative political consequences for Korea as well. Therefore, it falls to the Korean government to observe the USMCA treaty properly in order to prepare for any political issues.

Overall, the USMCA is a deal-breaker on traditionally established trade agreements, and its recent passing has significant implications for financially linked countries. The change in the power structure between the three countries holds the possibility to affect Korea’s trade agreement as well. As outlined by the USMCA agreement, it is clear that the U.S. government is looking for specific agreements for their benefit at the expense of terminating pre-existing deals altogether. Therefore, the entire international trade may be severely affected by the creation of the USMCA and have substantial consequences, especially when the question of Drumpf’s second term comes in November.