NAFTA DEAL GETS DONE
U.S., Canada finally agree on pact
Canada and the U.S. reached a last-minute trade deal Sunday that would give American farmers major new access to the dairy market here, but preserve a dispute-resolution system the United States wanted to scrap.
The deal capped a frantic weekend of negotiations and includes a “host of 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 U.S. President Donald Trump said the name NAFTA had “bad connotations.”
“This is going to be one of the most important trade agreements we’ve ever had,” said another American official on the call.
“We think this is a fantastic agreement for the United States, but also for Mexico and Canada.”
The officials highlighted in particular that the U.S. had won increased 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.
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 and had wanted gone.
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 agreed to extend the patent protection for an important class of prescription drugs by two years, the officials said.
In Canada, a special federal cabinet meeting was convened at 10 p.m. ET to discuss the trade accord, which already included Mexico.
Ildefonso Guajardo, the Mexican economy minister, was scheduled to address his country’s senate at 11:30 p.m. ET on the pact.
A Canadian official confirmed late Sunday night there had been an agreement, subject to final approvals, though the federal government had released little information on the deal by midnight.
The agreement would end more than a year of hards logging talks on revamping the North American Free Trade Deal, and cap 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 with the U.S. to try to bring Canada into the agreement, as Trump and other administration officials threatened to go it alone with Mexico if Canada did not make “concessions.”
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 did not specify how much extra access the Americans had obtained.
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 separate letter detailing it would be released soon.
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 official said.