Deal signed, but passage is uncertain
Trump expects approval, but there’s no guarantee Congress will ratify it
The leaders of Canada, the United States and Mexico signed their new trade agreement on Friday, hailing the revised NAFTA as a win for all three countries.
But the signing ceremony at the G20 summit in Argentina is far from the end of the process.
The original 24-year-old North American Free Trade Agreement will remain in place until the new agreement is ratified by all three countries’ legislatures.
Members of the U.S. Congress made clear Friday that there is no guarantee that the new agreement will ever be approved.
Nancy Pelosi, who is likely to return as speaker of the House of Representatives when Democrats take back control in early January, said Friday that the current version of the deal lacks sufficient “enforcement reassurances” on labour standards and on the environment.
Under Pelosi, the Democrats took more than four years to hold votes on trade agreements struck by Republican president George W. Bush. Trudeau signed the new agreement despite Trump’s refusal to eliminate his tariffs on Canadian steel and aluminum immediately. Canada’s ambassador to the U.S., David MacNaughton, had suggested that Trudeau might not attend the ceremony unless the tariff issue was resolved.
Trudeau described last week’s factory cuts by General Motors as a “heavy blow.” Directly addressing Trump, he said, “Donald, it’s all the more reason why we need to keep working to remove the tariffs on steel and aluminum between our countries.” Trudeau and Trump framed the agreement in markedly different terms. Trudeau emphasized continuity, Trump emphasized change.
Trudeau, who has faced Conservative criticism for making concessions to the U.S., said he agreed to the deal to preserve the “stability” of the Canadian economy, which Trump had threatened to “ruin” if Canada did not accept his demands. Trudeau said that the agreement “lifts the risk of serious economic uncertainty that lingers throughout a trade renegotiation process” and ensures most Canadian exports continue to be tariff-free.
Trudeau described the agreement as a “new NAFTA.” He said it would “protect” jobs and strengthen the middle class.
Trump, conversely, hailed the deal as a significant departure from NAFTA, saying it “changes the trade landscape forever.” He vowed that it would raise wages, “bring back” automotive manufacturing jobs and boost American farmers.
“This is an agreement that first and foremost benefits working people,” Trump said.
Trump has argued again this month that his tariffs have fuelled a comeback by the U.S. steel and aluminum industries. After the signing ceremony, U.S. trade chief Robert Lighthizer told reporters that negotiations continue, but that the administration sees the tariffs as successful, CBC reported.
The new agreement is to be known as the USMCA (U.S.Mexico-Canada Agreement) in U.S. law and CUSMA (with Canada first) in Canadian law.
The agreement sets rules governing dozens of industries. Perhaps its most significant changes are related to the auto industry, for which Trump insisted on new protectionist provisions intended to wrest some manufacturing back from Mexico and overseas. The agreement includes a new rule, for example, that a car will only be freed from tariffs if 40 per cent or more of its contents are produced by workers earning $16 (U.S.) per hour or more. Among other things, the agreement also lengthens copyrights for creative works and patent protection for certain sophisticated medicines, raises the amount of U.S. goods Canadian can order online without paying duties.
It opens up slightly the protected Canadian dairy industry to U.S. access. And it eliminates the long-controversial “Chapter 11” provision between Canada and the U.S. allowing investors to sue governments for allegedly violating their rights.
When the three countries reached the deal, Trump said he was not at all confident of obtaining congressional approval.
He struck a more optimistic note on Friday, saying, to the skepticism of independent observers: “It’s been so well-reviewed, I don’t expect to have very much of a problem.”
Relations between the U.S. and Canada took repeated blows during negotiations. “Battles sometimes make great friendships,” Trump said.