On January 29, 2020, President Trump signed the U.S.-Mexico-Canada Agreement (USMCA) into law, with key commitments impacting the personal care products sector.

The 2,082-page pact, which updates the 26-year-old North American Free Trade Agreement (NAFTA), comes after more than two years of negotiations, and was overwhelmingly ratified by the U.S. Senate on January 16, 2020.

Significantly, the USMCA contains a new Cosmetic Products Annex, which promotes greater regulatory compatibility and shared best regulatory practices in the personal care products sector.

Key commitments include:

  • Adopting a “risk-based regulatory approach to cosmetic products,” which does not require prior market authorization unless there is a human health or safety concern, and a less restrictive alternative is not reasonably available;
  • Avoiding any animal testing requirements unless no validated alterative test method exists;
  • Considering relevant scientific or technical guidance developed through collaborative efforts, as well as good manufacturing guidelines, in developing and implementing regulations;
  • Sharing post-market surveillance on cosmetics and ingredients; and
  • More closely aligning cosmetic ingredient labeling and notification requirements.

Eased Restrictions for OTC Products

The USMCA goes beyond commitments that were achieved in the Trans-Pacific Partnership (TPP) in relaxing restrictions on cross border trade in certain personal care products.

Specifically, the USMCA permits direct U.S.-to-Canada shipments of products that sit at the interface of cosmetics and over-the-counter (OTC) products, such as skin cleansers, sunscreens, anti-dandruff shampoos, and acne products, without requiring border quarantine or re-testing.

Canada also has committed to allowing the distribution of OTC-product samples in line with Canadian laws and regulations, and cooperating with the U.S. in aligning regulatory requirements for tamper-proof packaging and facts table information.

Expanded Protection for IP Rights

The USMCA expands other protections for intellectual property rights. The USMCA extends copyright protection from 50 years under the existing NAFTA framework to a minimum of 75 years beyond publication or 70 years beyond the life of the author, and enhance protections for trademarks, including scent marks.

Additionally, the USMCA grants ex officio authority for law enforcement officials to stop suspected counterfeit or pirated goods at each phase of transit through a party country, and establishes broad protections against trade secret theft, including against state-owned enterprises.

Widespread Support for Ratification

Mexico has already ratified the USMCA, and the Canadian Parliament is expected to vote on ratification in the coming weeks. The USMCA will take effect following ratification by all three partners.

The USMCA was strongly supported by the leading trade associations in all three participant countries, namely the Personal Care Products Council, Cosmetics Alliance Canada (formerly the Canadian Cosmetic, Toiletry, and Fragrance Association), and the Mexican Cámara Nacional de la Industria de Productos Cosmeticos y la Asociación Nacional de la Industria del Cuidado Personal y del Hogar (CANIPEC).