Wins, losses and question marks abound in NAFTA2
A mixed bag. At first glance, and without the benefit of legions of legal and trade experts, that is the best way to describe the new NAFTA, now horribly renamed the USMCA. USMuhCA — really?
Full credit to Justin Trudeau’s negotiating team, capably led by Foreign Affairs Minister Chrystia Freeland. They were buffeted by Donald Trump’s bombastic instability, his personal attacks, his nonsensical proclamations.
They were side-swiped by Mexico, which at one point promised it would not move forward with anything other than trilateral negotiations and then proceeded to do just that.
This isn’t just nationalistic pride talking. Consider what the prestigious Financial Times said in its editorial:
“... thanks largely to the determined effort by Canada to keep the pact alive and functional, severe damage has been averted.”
And: “Some parts of the agreement are actually positive ... Credit for that goes to Canada . ... Justin Trudeau’s administration secured broad domestic support for taking an uncompromising line and then negotiated hard for its priorities.”
And again, the FT writes: “And the rest of the world should take note. It is possible to get a reasonable trade deal even from the eccentric and irascible Mr. Trump, or at least from Robert Lighthizer, his rather more grounded — if still hard-nosed — U.S. trade representative.”
So good for Trudeau and Freeland. They stayed tough, didn’t get sucked in by Trump’s foolishness and in the end got a deal.
But is it a good deal overall? Given that having a pact between the U.S., Canada and Mexico is better than not having one, yes, it is. Consider some pluses, minuses and unknowns.
Canada and the U.S. have avoided, for now, Trump’s destructive tariffs on automotive imports that would have dealt a serious blow to both countries.
There is new hope for removing steel and aluminum tariffs through a separate process. A resolution within NAFTA would have been better, but this isn’t a bad outcome, especially considering that high prices for steel are temporarily helping Canadian steelmakers and more than counterbalancing the tariffs.
Canada moved on patent protection and will offer enhanced patent protection for drugs, which will make them more expensive to consumers and will hike profits for the drug industry, which is largely housed in the U.S. Hard to see a win here, although some are arguing the change paves the way for national pharmacare.
Canada will open part of its dairy market to the U.S. Trump wanted to kill supply management, but Canada held out. But it remains to be seen how this will impact dairy farmers.
The dispute resolution section has been retained. And Trump’s proposal to renew the deal every five years morphed into 16 years with a review every six.
In general, American observers are unimpressed. The world press is high-fiving Canada for standing up to Trump. It will take some time before Canadian public reaction can be read accurately.
As with all deals, this one is built on compromise, and whether team Trudeau gave up too much in order to get a deal depends on your perspective.
The world press is high-fiving Canada for standing up to Trump. It will take some time before Canadian public reaction can be read accurately. As with all deals, this one is built on compromise.