U.S. reaches new deal to replace NAFTA

“The U.S. could conceivably terminate for Canada engaging in a free trade agreement discussion with China”, said Cyndee Todgham Cherniak, a Toronto trade lawyer on Canada’s roster for settling disputes under NAFTA.

The Trump administration announced Sunday [September 30] that it had reached an agreement with Canada regarding the negotiations to revise the 24-year-old North American Free Trade Agreement (NAFTA).

US and Canadian negotiators worked around the clock this weekend to secure an agreement just before a Sunday midnight deadline, to clear a procedural hurdle so leaders from those nations and Mexico are able to sign the pact by late November. “We are pleased that the agreement is trilateral, as the relationship between our three countries has been extremely beneficial for the steel industry and resulted in robust trade and investment in the region over the past 25 years”.

Now, Canadian officials are engaged in an intense last-minute push to get a NAFTA deal done before the USA -imposed midnight Sunday deadline to work out the final text before presenting the deal to Congress.

Canada will now have to import slightly more US dairy, foreign vehicle companies will need to use a slightly higher percentage of American-made auto parts to be exempt from tariffs, and the countries will now use an updated intellectual property standard that was already in the Trans-Pacific Partnership (TPP) before Trump pulled the USA out of it past year.

For Trump, the agreement offered vindication for his hardline trade policies that have roiled relations with China, the European Union and America’s North American neighbors while causing concerns among Midwest farmers and manufacturers anxious about retaliation.

According to global trade law firm Sandler, Travis & Rosenberg (ST&R), the US-Mexico-Canada Agreement is expected to be signed by 1 December, which could bring it up for congressional consideration in early 2019. Most of the targeted imports, after all, come from US allies — Canada, the European Union and Japan.

AFL-CIO President Richard Trumka was more circumspect, stating, “The text we have reviewed, even before the confirmation that Canada will remain part of NAFTA, affirms that too many details still need to be worked out before working people make a final judgment on a deal”. If Congress-which may look very different after the looming midterms-fails to ratify the USMCA, it can’t enter into force. Canadians were looking for a better deal, and instead, we seem to be getting a new name, but a worse deal.

Alexandre Moreau, a public policy analysts at the Montreal Economic Institute, pointed to another provision in the trade deal that may restrict Canada’s trade options down the road. That is more than the 2 million units now exported.

Canadian sources close to the talks say MacNaughton’s easygoing style and political acumen – honed as co-chair of multiple provincial and federal Liberal election campaigns, and former Ontario premier Dalton McGuinty’s principal secretary – proved invaluable.

But relations between Ottawa and Washington soured.

Commitment to not mess with currency levels: While the US, Mexico, and Canada do not actively intervene to strengthen or weaken their currencies, the pact to “achieve and maintain a market-determined exchange rate regime” could be a model for future agreements with countries that are more active in currency markets.

Trump said last week he didn’t like Canada’s trade negotiator, in an apparent reference to Freeland.

“We want to make Ontario open for business”.

“Both Ontario and our partners to the south succeed when we can trade easily”.

Farmers in the states will have greater access to Canada’s dairy market now that Canada has agreed to drop its Class 7 pricing system, which allowed processors in Canada to buy skim milk from Canadian farmers at lower prices. In March, he began imposing taxes on steel and aluminum imports.

Time will tell to what extent the USMCA helps US workers and boosts our economy.