How is ‘new NAFTA’ different? A trade expert explains

The existence of NAFTA text that largely satisfied most parties gave negotiators solid ground to build on, but no such ground exists for the USA relationship with China.

Canada, the United States’ No. 2 trading partner, was left out when the US and Mexico reached an agreement last month to revamp the North American Free Trade Agreement. “Because business desperately needs certainty and uncertainty is anathema to getting things done”.

“Part of Canada’s concessions in this deal was to include language that holds Canada hostage to the Americans if we decide to trade with another country”, Ramsey said.

According to Conservative Leader Andrew Scheer, it was little more than “politically correct posturing” that served only to weaken Canada’s negotiating position.

Rather, the new agreement is being widely described as a “NAFTA-minus”: a regime not as free as NAFTA had been, particularly in the automotive sector, but still very much in the interests of all three countries – and definitely better than no deal.

After a year of often heated talks, a new trade agreement has been reached between Canada, the USA and Mexico.

“I have long contended that NAFTA was perhaps the worst trade deal ever made”, Trump said during a Rose Garden ceremony in the White House on October 1.

Negotiations between Washington and Beijing remain deadlocked after the Trump administration followed through with another round of import taxes on Chinese goods last month, leading to retaliatory tariffs and the cancellation of high-level trade talks. Canada agreeing to grade imported wheat with the same requirements as Canadian wheat.

Trump’s hard line on trade is having an impact far beyond North America, with Japanese Prime Minister Shinzo Abe saying more automakers will be moving factories to the United States.

But the president noted that the deal would need to be ratified by Congress, a step that could be complicated by the outcome of the fall congressional elections. Canadian dairy farmers surrendered about 1.5 per cent of domestic market access through the Comprehensive Economic Trade Agreement between Canada and the European Union, 3.25 per cent when the 12-nation Trans-Pacific Partnership was finalized and now about 3.6 per cent in the USMCA. “There’s no doubt about that”. The U.S. failed to achieve its goal of eliminating Canada’s supply-management system for dairy, poultry, and eggs. First, it permits dairy farmers to band together into cartels to artificially limit production and drive up the price, something that is illegal if done by any other industry.

“It’s a big win for the American farmer just to help stabilize the market some and keep that trade open”, said Newby.

“Our supply managed producers will be fully compensated, because that is the fair thing to do”, she said without providing details on planned compensation. The president said the name has a “good ring to it”, repeating U-S-M-C-A several times. Keith Stewart of Greenpeace calls the new pact an about-face from the Liberal government’s promise to fight for progressive trade agreements. Jerry Moran, of Kansas, said he was relieved that the administration finally reached a deal with Canada.

“At a minimum we haven’t lost any ground. That agreement will affect Canadian jobs I think in the long term”. Here’s a look at how the new deal is different from the old one.

The positive initial market reaction to the deal suggests investors like what they see. “Extremely disappointed”, said Henry Wydeven, the regional director for Huron and Perth counties for the Dairy Farmers of Ontario.

“For the most part, this was a defensive deal for Canada”, he said in an interview.

What’s the deal with NAFTA and what’s going on?

The lifted uncertainty could be enough to prompt more business investment, said RBC senior economist Nathan Janzen in a note.

Insiders got wind of a breakthrough after 14 months of tumultuous talks and just hours before US and Mexican trade authorities were set to publish their own trade agreement without Canada as a signatory.