CANADA, U.S. SEAL TRADE DEAL
Ottawa to provide American dairy farmers access to its domestic market, among others
THE United States and Canada forged a lastgasp deal on Sunday to salvage the North American Free Trade Agreement (Nafta) as a trilateral pact with Mexico, rescuing a three-country, US$1.2 trillion (RM4.97 trillion) open-trade zone that had been about to collapse after nearly a quarter century.
In a big victory for his agenda to shake-up an era of global free trade that many associate with the signing of the Nafta in 1994, President Donald Trump coerced Canada and Mexico to accept more restrictive commerce with their main export partner.
Trump’s primary objective in reworking Nafta was to bring down US trade deficits, a goal he has also pursued with China, by imposing hundreds of billions of dollars in tariffs on imported goods from the Asian giant.
While the new US-MexicoCanada Agreement avoids tariffs, it will make it harder for global carmakers to build cars cheaply in Mexico and is aimed at bringing more jobs into the US.
Since talks began more than a year ago, it was clear Canada and Mexico would have to make concessions in the face of Trump’s threats to tear up Nafta and relief was palpable in both countries on Sunday that the deal was largely intact and had not fractured supply chains between weaker bilateral agreements.
“It’s a good day for Canada,” said Prime Minister Justin Trudeau after a late-night cabinet meeting to discuss the deal, which triggered a jump in global financial markets.
In a joint statement, Canada and the US said it would “result in freer markets, fairer trade and robust economic growth in our region.” The US and Mexico had already clinched a bilateral agreement in August.
Canada has agreed to provide US dairy farmers access to about 3.5 per cent of its approximately US$16 billion annual domestic dairy market.
The deal also requires a higher proportion of the parts in a car to be made in areas of North America paying at least US$16 an hour, a rule aimed at shifting jobs from Mexico.
Canada and Mexico each agreed to a quota of 2.6 million passenger vehicles exported to the US in the event that Trump imposes 25 per cent global autos tariffs on national security grounds.
But the deal failed to resolve US tariffs on Canada’s steel and aluminium exports.