US, Canada reach trilateral trade pact with Mexico to replace NAFTA

Adjust Comment Print

Trump embraced the U.S. -Mexico-Canada Agreement during a Rose Garden ceremony, branding the pact the "USMCA".

The U.S. and Canada on Sunday announced a trade agreement that includes Mexico to replace the North American Free Trade Agreement.

They had said a bilateral agreement would move forward without Canada, which had entered into tough negotiations with the United States in recent weeks.

The U.S. and Mexico hammered out their portions of the trade agreement in late August before the U.S. turned to Canada.

The deal does not, however, address the removal of the steel and aluminum tariffs Trump slapped on Canada last spring or the softwood lumber tariffs imposed in 2017. Starting in 2020, to qualify for zero tariffs, a auto or truck must have 75 per cent of its components manufactured in Canada, Mexico or the United States, a substantial boost from the current 62.5 per cent requirement. Trudeau also spoke with Mexican President Enrique Pena Nieto.

"It's helped our milk futures just in the 14 hours that it's been discussed, so our milk futures have gone up not a lot, but significant enough for us all to notice", she said. "We were not at the table or the deal would have been a little different", Ford says. He's a professional, I'm a professional.

"Canada came in with the position, it was very clear, supported by the entire Parliament, that we wanted to defend our supply management, our supply managed sector", Freeland said.

"The number one thing ... we want to make sure we do now is work with our farmers, with the stakeholders ... to get the federal government to stand up for the cost of what's been negotiated in the trade agreement", Ontario Agriculture Minister Ernie Hardeman told iPolitics.

When the tariffs were first imposed and Trump first made comments against Trudeau, many Canadians began to boycott the president and the country.

"Any trade agreement proposal must be judged by whether it improves the wages, working conditions and well-being of America's workers and farmers", House Democratic Leader Nancy Pelosi said in a statement.

Canada is also reported to have secured some protections for automobile industry against potential USA tariffs.

Even more noteworthy, negotiators agreed to a new requirement that 40 percent to 45 percent of a vehicle's components be made by workers earning at least US$16 per hour, which is about three times more than the average wage now earned by Mexican autoworkers.

"It's super depressing that dairies that were forced out of the market earlier won't get to necessarily reap the benefits of this, but we're super excited for us as individuals, but also because we're a family dairy, there looks to be a future for our children", Elsinger said.

President Trump has long threatened to pull the United States from NAFTA. Then he said that the dispute-resolution mechanism, which sends disputes about the deal to arbitrators, would have to go.

One final note of caution in all this is that the agreement hasn't yet been ratified by either the USA or Mexican congresses, or the Canadian Parliament.

The new trade agreement, Trump asserted, would usher in a new dawn for the country's auto industry and transform North America into a manufacturing powerhouse and allow United States to reclaim the supply chain that went out off-shores.

In addition, by 2020, the pact will require that at least 30 percent of the production of a vehicle or truck be done by workers earning at least $16 an hour, a change that could boost Mexico's middle class. "Our companies won't be leaving the United States, firing their workers and building their cars elsewhere".

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.

Canada had previously offered the US a 3.25-per-cent market share under the old Trans-Pacific Partnership agreement, which Trump also derided - and pulled the USA from - after he took office in 2017.

He said it was too soon to talk to China about trade deal and said it was "privilege" for other countries to trade with the USA and for them "to come in and attack the piggy bank".