Canada joins U.S.-Mexico trade agreement meant to replace NAFTA

Jeannie Matthews
October 7, 2018

Chevrolet Equinox SUVs are parked awaiting shipment by CN Rail next to the General Motors Co (GM) CAMI assembly plant in Ingersoll, Ontario, Canada October 13, 2017.

The Canadian auto industry is relieved a side deal in the proposed trade agreement with the United States and Mexico lifts the threat of tariffs, but the steel and aluminum sectors will have to wait as negotiators bargain over removing metal duties imposed by U.S. President Donald Trump.

"We are pleased that the agreement is trilateral, as the relationship between our three countries has been extremely beneficial for the steel industry and resulted in robust trade and investment in the region over the past 25 years". The quotas are significantly above existing production volumes in each country, allowing for some export growth. It also comes ahead of the United States midterm elections next month, which could be challenging for the president.

The second moment when she knew a deal was likely, Freeland said, came in August when she went back to Washington "and it was clear that the auto deal had been concluded by the Mexicans and also that the Americans really wanted us to be a part of it". This means more American products would be the shelves, potentially depressing demand for Canadian dairy products.

The agreement provides extra protection to drug companies in the much larger USA market, as well.

The US and Canada were under pressure to reach a deal by midnight on Sunday.

Mr Trump spoke after earlier posting tweets claiming the new trade pact solved the "deficiencies and mistakes" in Nafta, which has governed trade between the three countries since 1994.

"As we review the agreement text, we will be looking to ensure that this deal opens markets, raises standards, provides enforcement and modernizes trade rules so that manufacturers across the United States can grow our economy", NAM President and Chief Executive Officer Jay Timmons said.

A two-year extension on some drug patents to 10 years will cost Canadians more, but Dias said Ottawa is planning to introduce a nationwide pharmacare plan next year that would mitigate any direct cost increases to Canadians.

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Canada gave up some access to its dairy, egg and poultry industries but will keep its agricultural supply management system and avoid punishing auto tariffs under the new North American trade deal. "It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the almost half a billion people who call North America home".

Ottawa and Washington remained at odds over Canada's subsidized dairy sector, and the dispute resolution provisions in NAFTA.

"The U.S. could conceivably terminate for Canada engaging in a free trade agreement discussion with China", said Cyndee Todgham Cherniak, a Toronto trade lawyer on Canada's roster for settling disputes under NAFTA.

In a joint statement, United States and Canada said USMCA would "result in freer markets, fairer trade and robust economic growth in our region".

But Unifor, Canada's largest union representing auto workers, praised it for safeguarding the nation's top export - cars. "We still have more work ahead of us before anything is final, and I will continue working with the administration as we craft legislation needed to implement an updated NAFTA".

Canadian businesses anxious that ending the independent panel would leave them at the mercy of USA courts when trying to resolve trade disputes.

The agreement was reached late on Sunday and gives U.S. farmers greater access to the Canadian dairy market.

Matt Blunt, president of the American Automotive Policy Council, called the deal "a workable agreement" achieved through a close relationship between the automakers and USA negotiators.

"The agreement will govern almost $1.2 trillion in trade, which makes it the biggest trade deal in the United States' history". "I just don't think it gets wiped away and resolved with an agreement in principle on the trade agreement".

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