Real deal or raw deal: What we got in USMCA
We measure the agreement against Canada’s own objectives
OTTAWA— From the get-go, the Liberal government’s goal in rewriting NAFTA was to get a “progressive” trade deal for Canada that was “free and fair.” So did it? While there are lots of ways to tally the winners — and losers — in the new United States Mexico Canada Agreement, or USMCA, one is to look at the six objectives that Foreign Affairs Minister Chrystia Freeland herself articulated on the eve of the renegotiation.
Freeland defined what a “good deal” would look like, and pretty specifically, in August 2017.
A look at how or whether the deal struck earlier this week achieves those ambitions, using Freeland’s own words as the measure, seems to reveal Canadian victories and frustrations both: 1. “To modernize NAFTA to ensure ... we continue to have a vibrant and internationally competitive technology sector and that all sectors of our economy can reap the full benefits of the digital revolution.”
Michael Geist, who holds the Canada research chair in internet and e-commerce law at the University of Ottawa, says the digital trade chapter “locks in rules that will hamstring online policies for decades by restricting privacy safeguards and hampering efforts to establish new regulation in the digital environment.”
2. “To make NAFTA more progressive … by bringing strong labour safeguards into the core of the agreement,” “by integrating enhanced environmental provisions … that fully support efforts to address climate change,” “by adding a new chapter on gender rights,” and “by adding an Indigenous chapter.” Finally, “by reforming the Investor-State Dispute Settlement process, to ensure that governments have an unassailable right to regulate in the public interest.”
The USMCA includes a chapter on labour in the main agreement, not as a side letter as it was in NAFTA, which makes it subject to the same enforcement provisions as other parts of the deal.
It enshrines collective bargaining freedoms for Mexican workers. In addition, new provisions on the auto sector require that, to be eligible for tariff-free sales treatment, 40-percent of autos and auto parts must be made in factories where workers earn at least $16 (U.S.) an hour.
Unifor president Jerry Dias said in a letter to union members, “It is not an ideal trade agreement by any stretch, nor is it a model of the sort of progressive trade we need in Canada,” but he welcomed provisions that promote free and independent trade unions in Mexico.
The deal puts the environment in the main agreement, not in a side agreement. As with the labour chapter, it is, in theory, enforceable. It recognizes the need to address ozone-depleting substances, marine litter, ship pollution, invasive species, overfishing, and forestry management and air pollutants and air quality.
But it has no mention of “climate change,” “global warming” or “greenhouse gas emissions.”
And it contains a big caveat: while the parties recognize the need for sustainable development and cooperative efforts to protect the environment, they only “support implementation of international environmental agreements to which they are a party.”
The United States is no longer a party to the Paris Accord on global warming under U.S. President Donald Trump. The USMCA has no new chapter on gender rights. The labour chapter does, however, promote “the goal of eliminating sex-based discrimination in employment and occupation, and support the goal of promoting equality of women in the workplace.”
It says each party to the agreement “shall implement policies that protect workers against employment discrimination on the basis of sex, including with regard to pregnancy, sexual harassment, sexual orientation, gender identity, and caregiving responsibilities, provide jobprotected leave for birth or adoption of a child and care of family members, and protect against wage discrimination.”
The word “shall” is strong legal language, but the Council of Canadians says these protections are “weak” and more “style than substance.” The USMCA has no new chapter on Indigenous people. It does include a reference within a chapter on “exceptions and general provisions,” which allows any party to the agreement to adopt or maintain measures “necessary to fulfill its legal obligations to Indigenous peoples.
The new deal also includes recognition that the environment “plays an important role in the economic, social and cultural well-being of Indigenous peoples and local communities, and acknowledges the importance of engaging with such groups in the long-term conservation of our environment.”
In a first for a Canadian trade agreement, it includes a special process by which hand-crafted Indigenous textiles and apparel can be eligible for duty-free treatment.
The new agreement ditches the Investor-State Dispute Settlement process altogether. Freeland hailed it as a win, saying “In removing it, we have strengthened our government’s right to regulate in the public interest to protect public health and the environment.” The Canadian Centre for Policy Alternatives and the Council of Canadians agree.
3. “To make life easier for business people on both sides of the border by cutting red tape and harmonizing regulations.”
It’s unclear to what extent the new deal really cuts red tape, although Freeland and her U.S. counterpart Robert Lighthizer insisted they’d made progress. Many experts say the new NAFTA is not that different from the old NAFTA in many respects.
4. “Canada will seek a freer market for government procurement, a significant accomplishment in CETA (the Canada-European Union trade agreement).”
The Canadian team went into NAFTA talks seeking more access for companies and suppliers here to American federal, state and municipal contracts. The U.S. team wanted to gain more access to the procurement conducted by Canada and Mexico, but to restrict Canadian and Mexican access further to its government procurement at the state and municipal levels. In the end, both sides gave up on their respective positions.
5. “To make the movement of professionals, which is increasingly critical to companies’ ability to innovate across blended supply chains, easier. NAFTA’s Chapter 16, which addresses temporary entry for businesspeople, should be reviewed and expanded to reflect the needs of our businesses.”
Immigration lawyers say the new USMCA leaves unchanged the old NAFTA provisions, and grants no new or expanded rights for professional workers.
6. “Canada will uphold and preserve the elements in NAFTA that Canadians deem key to our national interest, including a process to ensure anti-dumping and countervailing duties are only applied fairly when truly warranted (Chapter. 19); the exception in the agreement to preserve Canadian culture; and Canada’s system of supply management.”
The Trudeau government can claim it mostly met those objectives. The new USMCA retains the Chapter 19 binational dispute settlement panels that are used by countries to challenge what they see as unfair trade rulings or measures against a partner’s industrial sector.
Prime Minister Justin Trudeau said it was a “red line,” and in the end, the U.S. gave in and allowed it to stand.
On cultural industries, Freeland says NAFTA’s exemption from the freer trade rules for Canadian cultural industries remain, “including in the digital space.”
Only in the case of Canada’s tightly regulated supply-management system does it appear one of Canada’s no-go zones was breached.
Canada agreed to grant U.S. producers access to 3.59 per cent of its dairy markets, and on top of concessions in the Canada-European Union trade deal and the Trans-Pacific trade deal, it all adds up to nearly 10 per cent of the dairy sector now being opened to foreign producers. That’s a big slice that suddenly leaves farmers holding much less valuable quotas for dairy production.
On Thursday, Trudeau met with dairy farmers in Quebec and promised his government will provide compensation for their expected losses under the new United States-MexicoCanada trade agreement.