Revamped NAFTA deal will ‘rebalance’ North America trade after Canada reaches 11th hour agreement | Vancouver Sun
James Alexander Michie
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.”
Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico. The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many……
— Donald J. Trump (@realDonaldTrump) October 1, 2018
….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!
— Donald J. Trump (@realDonaldTrump) October 1, 2018
“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 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.”
Source: Tom Blackwell | Vancouver Sun