US, Canada, Mexico ink new trade deal
BUENOSAIRES: The US, Mexico and Canada signed a successor deal to the North American Free Trade Agreement (NAFTA) on the sidelines of the G-20 summit on Friday.
US President Donald Trump had long denounced NAFTA, which he claimed was killing US jobs, and demanded a renegotiation.
Controversy has continued even with what to call the new deal. Washington calls it the Us-mexico-canada Agreement (USMCA), although the other two parties have their own names putting their countries first. The revised accord now goes for ratification by the legislatures of the three countries.
Ending NAFTA would have meant tearing up the continent’s closely-integrated auto supply chain. But Ottawa, Mexico City and Washington have now agreed to sweeping changes to manufacturing and labour requirements that US officials say should boost wages and discourage moving production offshore.
The deal will require that 75 percent of auto content be made in the region, increased from 62.5 percent, and that 40-45 percent be made by workers earning at least US$16 an hour.
Mexico also agreed to continue to recognise US auto safety standards, unless Mexican regulators conclude they are inferior to their own standards.
Trump has threatened to use a national security justification to impose steep tariffs on the hundreds of billions of dollars in autos the US imports annually. But the USMCA includes side letters that agree to exempt Mexico and Canada up to a threshold of 2.6 million vehicles a year, as well as an unspecified amount of light trucks, and tens of billions of dollars in auto parts.
However, the new deal does not resolve the punishing steel and aluminium tariffs imposed worldwide earlier this year, and on Mexico and Canada since May.
Canada, which guarantees prices for its dairy producers through its managed supply system, agreed to open its borders a little wider to American milk, cheese, cream, butter and other goods. The concession from Ottawa removed a major sticking point that Trump said was a deal breaker.
Canada will also eliminate categories of low-cost dairy goods, and will allow greater imports of US chicken, eggs and turkey.
The US agreed to Canada’s insistence that the dispute settlement system - formerly known as Chapter 19 - remain in the deal.
Canadian officials resolutely rejected Trump’s demand to scrap provisions to resolve disagreements through international arbitration, something Ottawa has successfully used to challenge US tariffs.
However, the agreement does make some changes to the controversial “Investor-state Dispute Settlement” powers, which critics said had allowed powerful companies and wealthy investors to invalidate local laws and court decisions through unaccountable arbitration.