Revamped NAFTA deal, renamed USMCA, will 'rebalance'
North America trade after Canada reaches 11th hour agreement, by Tom Blackwell,
10/1/18, Financial Post. The
new deal, renamed the United States Mexico Canada Agreement, gives America new
access to our dairy market, but preserves key dispute-resolution system.
Canada and the U.S.
ended weeks of intense bargaining Sunday with a last-minute trade deal that
gives American farmers major new access to the dairy market here, but preserves
a dispute-resolution system the United States wanted killed.
The deal capped a frantic weekend of
negotiations and includes several provisions to “rebalance” the North American
trading relationship, a Trump administration official said in a conference call
shortly before midnight.
It is to be renamed USMCA – United States Mexico Canada
Agreement – after
President Donald Trump said the name NAFTA had “bad connotations.”
Trump wrote:....deficiencies and mistakes in NAFTA, greatly opens markets
to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will
bring all three Great Nations together in competition with the rest of the
world. The USMCA is a historic transaction!
“This is going to be one of the most
important trade agreements we’ve ever had,” said another American official on
the background-briefing call. “We think this is a fantastic agreement for the
United States, but also for Mexico and for Canada.”
The officials highlighted in particular
that the U.S. had won a “substantial” increase in access to the Canadian dairy
market, and that Canada had agreed to end the “class-seven” milk program that
undercut American sales of a special dried-milk product.
That concession is a “big win for
American farmers,” one official said. “We’ve got a great result for dairy
farmers, which was one of the president’s key objectives in these
negotiations.”
But Canada appeared to score a
significant victory, as well, with the U.S. agreeing to keep intact the
chapter-19 mechanism for resolving disputes over anti-dumping and anti-subsidy
duties, which American negotiators felt undermined the autonomy of their
courts.
The U.S. has also agreed to provide an
“accommodation” to protect Canada’s auto industry in case the States decides to
impose tariffs on auto imports, while Canada consented to extend the patent
protection for an important class of prescription drugs – called biologics –
from eight to 10 years, the officials said.
Critics warn the drug provision will
increase health-care costs by delaying the entry of cheaper generic copies of
brand-name medicines onto the market. Generic-industry advocates said recently
that Canadian negotiators told them they were fighting hard against the demand.
In Canada, Prime Minister Justin Trudeau
convened a special federal cabinet meeting at 10 p.m. Ottawa time to approve
the trade accord, which already included Mexico.
Ildefonso Guajardo, the Mexican economy
minister, addressed his country’s senate on the pact at close to midnight.
Canadian officials
divulged little information on the agreement Sunday night, though Foreign
Affairs Minister Chrystia Freeland did release a joint statement with Robert
Lighthizer, the U.S. Trade Representative and Trump’s top negotiator.
“USMCA will give our workers, farmers,
ranchers, and businesses a high-standard trade agreement that will result in
freer markets, fairer trade and robust economic growth in our region,” they
said. “It will strengthen the middle class and create good, well-paying jobs
and new opportunities for the nearly half billion people who call North America
home.”
The agreement ends more
than a year of hard-slogging talks on revamping the North American Free Trade
Agreement, and caps a weekend of last-ditch negotiations designed to meet a
Monday deadline set by the U.S.
Mexico agreed to a
revamped NAFTA last month, triggering weeks of hectic bargaining to try to
bring Canada into the agreement, as President Donald Trump and other
administration officials threatened to go it alone with Mexico if Canada did
not make “concessions.”
The goal is to have the accord signed by
Mexico’s outgoing president by Nov. 30, giving him a political legacy and his
successor someone to blame if there is criticism. But American law requires a
text of any new trade agreement to be released 60 days before it’s signed,
which is why a handshake was needed by Sunday or Monday.
Trump had made renegotiating NAFTA a key
plank of his presidential campaign, and the administration officials said
Sunday the new deal was “a validation for his strategy in the area of
international trade.”
It would also be a template for the
Trump administration in future trade deals, they said.A U.S. source briefed on
the talks said common ground had been reached on all the most difficult issues.
Canada, for instance,
agreed to give the Americans access to five per cent of the Canadian dairy
market, about the same it granted to European and Pacific-Rim nations in the
CETA and TPP accords combined, the source said. Dairy access was a key
U.S. demand, made repeatedly by Trump, though the U.S. already exports about
$500 million of milk products duty-free to Canada every year.
The Trump administration
officials would not specify exactly how much extra access the Americans had
obtained.
The concession is
expected to be an issue in Monday’s provincial election in Quebec, where much
of Canada’s dairy industry is based.
Canada agreed to a cap
on auto exports to the U.S. – of about 40 per cent above current production
levels – that would be free of any auto tariffs Trump might impose, the source
said. And only vehicles that failed to meet the rules of origin for auto parts
agreed to by the U.S. and Mexico would even potentially be subject to the
proposed auto tariffs.
The administration officials also did
not specify the nature of what they called an accommodation on auto tariffs,
but said a side letter detailing it would be released soon.
The source said Canada had also agreed
to increase the “de-minimus” value of goods Canadians can bring into the
country – such as through online shopping – from $20 to at least $100. But the
person said Canada would still be allowed to charge sales tax – though not
duties – on some of that amount.
The question of how to
deal with the hefty tariffs that Trump imposed on Canadian steel and aluminum
earlier this year is still being discussed, the Canadian and American officials
said.
The U.S. source said it
appeared Canada would agree to some kind of quota on how much steel and
aluminum it exports to the States, in exchange for the tariffs being lifted.
The outline of a deal had been reached
by early Sunday evening, leaving both countries’ chief negotiators to brief
their respective leaders and get approval from Trump and Prime Minister Justin
Trudeau, the source said.
“They’re in the final strokes,” said the
person, based on information from U.S. administration officials.
A Canadian official was more circumspect,
suggesting at about 6:30 p.m. that it was too early to say there was an
agreement.
“Making progress, we’ll see where we end
up,” said the official by email, speaking on condition of anonymity.
David McNaughton, Canada’s ambassador to
Washington, also tamped down talk of a deal early Sunday evening, telling
reporters in Ottawa he was “cautiously optimistic” but not sure the discussions
would be resolved Sunday or Monday.
“Lots of progress but we’re not there
yet,” he said. “There are still a couple of tough issues. We’re doing our
best.”
Asked what issues still remained to be
resolved, he suggested “there’s lots of them,” and added that “You never know
with these things. It’s never done until it’s done.”
Read the full
agreement at:
Norb Leahy, Dunwoody
GA Tea Party Leader
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