The USMCA – Impact on the financial services sector

Global Publication October 2018

On September 30, 2018, Canada and the United States announced they had reached a resolution on certain trade issues and agreed on the text of a new trilateral trade agreement with Mexico to be called the United States-Mexico-Canada Agreement (USMCA). Once ratified, the USMCA will replace the longstanding trilateral North American Free Trade Agreement (NAFTA). 

NAFTA renegotiations commenced in August 2017, over 20 years after the agreement first took effect in 1994. The USMCA concludes that renegotiation process, although the agreement will not take effect immediately as each country will need to sign, ratify and implement it.  The USMCA is expected to take effect on January 1, 2020.  NAFTA, in the interim, will continue to apply to trade between the three countries.

The USMCA is not entirely dissimilar in substance to NAFTA, but it introduces some changes to the rules governing trade between the three parties.

Below is a high-level summary of how some of these changes affect the financial services sector. 





Parties recognize the importance of regional macroeconomic stability and agree to:

1) maintain a market-determined exchange rate regime,

2) refrain from competitive devaluation and

3) strengthen economic fundamentals (Chapter 33).

USMCA countries must publicly report their monthly interventions each month, as well as their foreign exchange reserves and other data. The chapter also imposes the following additional requirements:

  • All parties must consent to public disclosure by the IMF;
  • The USMCA establishes a macroeconomic committee composed of principal representatives of each party that will consider exchange rate policies, issues and additional undertakings at annual meetings; and
  • The chapter establishes systems for senior representative consultations and a system for dispute settlement.

NAFTA does not contain a similar chapter concerning macroeconomic policies and exchange rate matters.


Parties must grant financial institutions of another party established in its territory access to payment and clearing systems operated by public entities (Article 17.15).

However, parties are not required to provide access to the party’s lender-of-last-resort facilities.

NAFTA does not have any comparable provisions relating to payment and clearing systems.


The USMCA has modified NAFTA’s previous transfer of information provisions by stating that no party may prevent a covered person from transferring information into and out of the party’s territory when the activity is within the scope of its license (Article 17.19).

Parties can still adopt or maintain measures to protect personal data, personal privacy and confidentiality subject to the provisions in Chapter 17.

NAFTA contains provisions permitting regulated financial institutions from other NAFTA countries to transfer information for data processing into and out of the host country’s territory, if the transfer is required for the ordinary course of business.


The USMCA has introduced provisions concerning the use and location of computing facilities by financial institutions (Article 17.20).

Computing facilities references computer servers and storage devices necessary to process or store information relevant to the business of “covered persons” subject to exceptions listed in the Definitions.

Parties have agreed that:

  • Parties cannot require covered persons to locate computing facilities in the party’s territory as a condition for conducting business in its territory, provided regulatory authorities have access to the information;
  • Parties must allow for a reasonable time to fix access issues before requiring covered persons to use facilities in their territory; and
  • Parties can adopt measures to protect personal data and individual records subject to USMCA provisions.

NAFTA contains provisions permitting regulated financial institutions from other NAFTA countries to transfer information for data processing into and out of the host country’s territory, but does not have any provisions creating specific rules related to the location of computing facilities.


The USMCA has introduced new provisions to ensure market access for new financial services (Article 17.5).

No party will be able to adopt or maintain measures placing limitations on:

1) the number of financial institutions, cross-border financial service suppliers, financial service operations or number of natural persons employed or

2) the total value of financial service transactions or assets. Parties may require the registration of a cross-border financial service supplier or financial instrument.

NAFTA countries must permit other NAFTA financial service providers to establish financial institutions in their territory. 

While parties cannot require a minimum level of equity in an enterprise in the territory of the party (Article 1102) and Chapter 3 concerns general market access, there are not similar quantitative market access provisions relating to financial services. 


The USMCA has revised NAFTA’s previous provisions on new financial services (Article 17.7).

Parties must allow other USMCA countries’ financial institutions to supply new financial services within their territories if their own financial institutions would be allowed. Parties may require authorization subject to the new financial services provisions.

To ensure the process is transparent, according to Article 17.13:

  • Any measures a party implements with respect to another party’s financial institutions must be reasonable, objective and impartial.
  • When proposing a new measure, parties must: publish proposed regulations in advance, provide an opportunity to comment, address comments, allow for a reasonable time before the measure enters into effect and establish mechanisms for responding to interested persons.
  • Further steps are required for financial regulatory authorities if the party chooses to require authorization for supplying a financial service.

Parties must permit other NAFTA countries’ financial institutions to provide new financial services of a type similar to services that country permits its own regulated institutions to supply, unless it refuses to authorize based on prudential grounds.

NAFTA contains similar requirements to the USMCA regarding proposing new measures. NAFTA country governments are obligated to make transparent and public regulatory requirements and procedures in the financial field and to move without undue delay on regulatory matters that affect financial entities in other NAFTA countries. Regulatory authorities must make administrative decisions on completed applications of a financial institution within 120 days.


The USMCA proposes certain limitations to the Financial Services chapter obligations (Article 17.2) The Financial Services chapter will not apply to measures adopted or maintained by a party relating to: 1) government procurement of financial services, and 2) subsidies or grants provided by a party, regarding the cross-border supply of financial services by another party.

NAFTA contains general provisions relating to government procurement of services and investment subsidies and grants, but does not contain specific provisions relating to the application of the Financial Service’s chapter on government procurement of financial services and subsidies provided by a party.


The USMCA encourages parties to develop regulatory procedures that expedite the offering of insurance services by licensed suppliers, such as:

1) allowing the introduction of products unless they are disapproved,

2) not requiring product approval for certain types of insurance lines or

3) not imposing limitations on the number of product introductions (Article 17.16 ).

NAFTA contains general provisions that parties will consult on liberalizing cross-border trade with regard to insurance by considering:

1) allowing a wider range of cross-border insurance services to be provided and

2) whether Mexico’s limitation regarding insurance needs to be modified.

 Special thanks to Alison FitzGerald, Erin Brown, and Abigail Court for their contribution to this article.


Senior Associate

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