New Trade Deal to Replace NAFTA After Canada Joins the U.S. and Mexico in Last Minute Agreement
On the night of Sunday, September 30th, a new trade deal was born in fevered negotiations between representatives for the nations of Canada, the United States, and Mexico. The North American Free Trade Agreement (NAFTA) is being renamed the United States-Mexico-Canada Agreement (USMCA) to find common ground between the three countries.
The plan is a major success for President Donald Trump, who made renegotiating NAFTA a mainstay of his 2016 campaign. The day after, on Twitter, the President declared, “we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico.”
The trade agreement will be voted on as soon as possible in the U.S. Senate, as well as the equivalent legislative bodies of both Canada and Mexico. It is hoped that the deal will begin to take effect in around three months time, providing an immediate replacement to the expiring NAFTA treaty.
The USMCA differs from the previous NAFTA agreement on numerous major issues. Most notably, the United States has gained access to the heavily protected dairy markets of Canada, a longtime point of contention in the negotiations. The trade deal now allows for the United States to export a large quantity of dairy products to Canada without facing the protectionist tariffs that are usually leveled on foreign dairy.
Another significant policy shift within the treaty is on the subject of automobile production. The new trade agreement protects over 2.6 million vehicles imported from Mexico and Canada into the U.S. from the harsh tariffs that the Trump Administration was preparing to impose. Additionally, the deal requires that companies who wish to avoid these protectionist measures must contain 75% parts made within North America, and pay their workers more than a $16 an hour minimum wage.
In return for these highly conciliatory provisions on both automobiles and dairy, the United States has also made some key concessions to Canada and Mexico. In a victory for the Canadian administration, the USMCA will carry over the international settlement dispute system from NAFTA. The settlement dispute system is an independent review board that rules on complaints between nations in the treaty, something which the Trump Administration sought to disband.
Leaders from all three nations seemed to be pleased with the USMCA and the negotiations. Canadian Prime Minister Justin Trudeau declared that the agreement will be “good for Canadian workers. Good for Canadian business. And good for Canadian families.”
Even the Mexican President-Elect, Mr. López Obrador, who ran on a campaign decrying U.S. President Donald Trump, supported the deal. His trade representative said that the agreement, “looks to be very good for Mexico.”
However, uncertainties remain on the future of trade between the United States, Mexico and Canada. No clear resolution was determined for President Trump’s plan for extensive steel and aluminum tariffs on both Mexico and Canada. The only definitive information is that negotiations on this touchy subjects will be pushed back to a later date.
For many who supported the deal, the prospect of further tense negotiations was the subject for another day. The moment was better spent celebrating a successful resolution to a problematic trade conflict.