Canada joins US-Mexico trade deal in NAFTA replacement

World Today

Donald Trump,Robert Lighthizer,Jared KushnerU.S. Trade Representative Ambassador Robert Lighthizer, center, gestures while speaking after President Donald Trump, left, announced a revamped North American free trade deal, in the Rose Garden of the White House in Washington, Monday, Oct. 1, 2018. (AP Photo/Pablo Martinez Monsivais)

U.S. President Donald Trump appeared vindicated in his approach to trade negotiations with the announcement, Monday, that Canada had agreed to join the trade agreement reached last month between Washington and Mexico City.

“It’s my great honor to announce that we have successfully completed negotiations on a brand-new deal to terminate and replace NAFTA and the NAFTA trade agreements with an incredible new US-Mexico-Canada agreement called USMCA,” Trump said in Rose Garden ceremony.

Late Sunday, Canadian and American trade negotiators resolved two remaining sticking points. Washington wanted greater access to Canada’s dairy market. American farmers got that in exchange for Washington’s concession on Ottawa’s main demand. It will keep the dispute-resolution process that Canada wants. This preserves a means to challenge U.S. anti-dumping and anti-subsidy tariffs—a provision often used by the Canadian lumber industry. USMCA approves a possible 25 percent U.S. tariff on autos. If it is imposed, the agreement will exempt a quota of 2.6 million Canadian and Mexican-made passenger vehicles. The agreement does not lift U.S. tariffs on Canadian steel and aluminum.

The American Farm Bureau Federation said via statement, “The elimination of Canada’s Class 7 dairy pricing program is a clear victory for our farmers.  We also now have access to an additional 3.6 percent of Canada’s dairy market, which is even better than what we would have achieved under TPP.”  TPP refers to the Trans-Pacific Partnership trade agreement, which Trump scrapped early in his presidency.

A senior administration official said this deal’s provisions “will become the template for the new Trump administration playbook for future trade deals.” Those areas, according to the official, are “stronger intellectual property provisions,” new rules of origin for vehicles, which “will encourage more auto production and truck production here in the United States and throughout North America,” and “new and stronger labor provisions.” 

American equipment manufacturers voiced their encouragement at the deal.

“Nearly 30 percent of all equipment produced in the U.S. is intended for export and Canada and Mexico are the first and second-largest export markets for both U.S. construction and agricultural equipment,” wrote the Association of Equipment Manufactures in a statement.

FILE – In this June 8, 2018, file photo, President Donald Trump talks with Canadian Prime Minister Justin Trudeau during a G-7 Summit welcome ceremony in Charlevoix, Canada. Canadians were stunned by the repeated broadsides from what had long been their closest ally and some had even begun boycotts. (AP Photo/Evan Vucci, File)

The USMCA will be subject to review every six years, according to officials. It can be extended at that time. The text is expected to be signed by Canadian Prime Minister Trudeau, Mexican President Pena Nieto and U.S. President Trump by the end of November.

Canadian Prime Minister Justin Trudeau says his country is in a more stable place now that it has completed a renegotiation of a free trade deal with the United States and Mexico.

Mexico’s future foreign minister, Marcelo Ebrard, said at a news conference in Mexico City that “the culmination of this process of renegotiation provides certainty for financial markets, investment and job creation in our country.”

But lawmakers in all three countries must still approve the agreement. If the November midterm elections changes the balance of power in the U.S. Congress, passage could become more difficult—a possibility that Trump acknowledged in his Rose Garden remarks.

“I can’t tell you whether they will” approve it, said Trump.

“Well, let’s wait and see. I don’t know that they’re (Democrats) going to control the House. I’m not a political forecaster,” added Larry Kudlow, White House economic adviser, head of the National Economic Council.

“The economy is very strong, that’s going to help the GOP. But let’s just wait and see on that. By the way, there could be Democratic support for this,” he said.