The U.S. Senate overwhelmingly approved the U.S.-Mexico-Canada trade agreement (USMCA) on Thursday, modernizing the 26-year-old North American Free Trade Agreement (NAFTA) that has been blamed for hollowing out the U.S. manufacturing sector.

The bill is expected to be quickly signed by U.S. President Donald Trump, but the trade deal still needs to be approved by Canada's Parliament before it goes into effect. Mexico has already approved the agreement. Trump made his opposition to NAFTA a centerpiece of his campaign for president in 2016.

The new agreement makes mostly modest changes, and will leave more than 1.2 trillion U.S. dollars in North American trade flows largely unchanged. While the deal has been forecast to create 176,000 U.S. jobs over 15 years, it is not expected to bring lost factory jobs back to the United States from Mexico in coming years.

While the U.S. administration completed its negotiations with Canada and Mexico more than a year ago, Democrats in the House insisted on changes that they said made it more likely Mexico would follow through on its commitments. As part of those negotiations, the administration agreed to drop a provision that offered expensive biologic drugs – made from living cells –10 years of protection from cheaper knockoff competition. Democrats overwhelming opposed that provision.

Auto production

One of the biggest changes requires increased North American content in cars and trucks built in the region from 62.5 percent to 75 percent under NAFTA, with new mandates to use North American steel and aluminum.

And 40 to 45 percent of a vehicle's value must come from "high wage" areas paying workers at least 16 U.S. dollars an hour, namely the United States and Canada.

The rules put some foreign-brand automakers in the United States at a disadvantage, by forcing them to invest in new U.S. or Canadian plants for high-value components such as engines and transmissions.

Labor rights

To encourage Mexican workers to unionize and to drive up wages, the deal allows the United States and Canada to convene panels of international labor experts to hear complaints if Mexican factories are denying them the freedom to organize and collectively bargain.

If such violations are found and remedial actions are not taken, it allows the complaining country to rescind tariff-free access for the offending facility's products, among other penalties.

(With input from Reuters, AP)