Trump hails ‘great’ new trade deal with Canada, Mexico

A new US trade pact with Canada and Mexico is a great deal for all three countries, President Donald Trump said on Monday, hailing the replacement of the old Nafta deal which he had railed against and threatened to cancel.

“Late last night, our deadline, we reached a wonderful new trade deal with Canada, to be added into the deal already reached with Mexico,” Trump said on Twitter.

“It is a great deal for all three countries.”

The new pact – known as the United States-MexicoCanada Agreement – “solves the many deficiencies and mistakes” in the 24-year-old North American Free Trade Agreement it replaces, Trump said after accomplishing one of his signature policy initiatives.

The deal “greatly opens markets to our farmers and manufacturers” while reducing trade barriers “and will bring all three great nations closer together in competition with the rest of the world. The USMCA is a historic transaction!” the president said.

The rewritten deal “will result in freer markets, fairer trade and robust economic growth in our region”, a joint statement from US trade representative Robert Lighthizer and Canada’s foreign affairs minister Chrystia Freeland said late on Sunday after six weeks of intense talks and more than a year of fraught negotiations.

In the end, Canada and the US overcame their differences after both sides conceded some ground to reach a deal covering a region of 500-million inhabitants and which conducts about $1 trillion (R14.2 trillion) in trade a year.

“It’s a good day for Canada,” Canadian Prime Minister Justin Trudeau said on Sunday night.

Mexican foreign minister Luis Videgaray tweeted that the deal was good for his country “and for North America”.

The political stakes were high.

Trump, who pursues an “America First” policy on trade, needs to look strong heading into the November midterm elections where his Republican Party is fighting to keep control of Congress.

Trudeau, for his part, did not want to be seen as caving in before 2019’s general election in Canada. But on the other hand, it risked being frozen out of a US-Mexican deal reached in August.

The Canadian dollar jumped to a five-month high in Asian trade after initial reports of the agreement, which also helped Tokyo’s benchmark Nikkei index touch a 27-year high on Monday.

“The news about Nafta gave an extra boost to the market,” Toshikazu Horiuchi, a broker at IwaiCosmo Securities, said.

Early on Monday, a copy of the deal’s 34 chapters was posted on the US trade representative’s website. The pact can now be signed before Mexico’s President Enrique Pena Nieto leaves office on December 1, the date that caused the lastminute flurry of activity.

US law requires the White House to submit the text to Congress 60 days before signing – and officials barely made it by the midnight deadline.

To reach the deal, Canada agreed to open its dairy market further to US producers, and – in return – Washington left unchanged the dispute settlement provisions.

Under Canada’s supplymanaged dairy system, Ottawa effectively sets production quotas, which raises prices to consumers but provides farmers with a stable income.

Tariffs of up to 275% have kept most foreign milk out of the Canadian market.

Canada had opposed US demands to weaken or eliminate Nafta’s dispute resolution mechanism, whose arbitration panels Ottawa used to resolve trade conflicts, particularly concerning its important lumber industry.

Alongside changes to the dairy market in Canada, officials said it includes stronger protections for workers, tough new environmental rules, updates the trade relationship to cover the digital economy and provides groundbreaking intellectual property protections.

One of the most important sectors affected is the auto sector.

The US had sought increased American content for duty-free vehicles.

The new text provides rules to encourage North American supply of components.

Still pending are the duties on steel and aluminum. –