CANADA REACHES FREE TRADE DEAL WITH US AND MEXICO AT THE ELEVENTH HOUR ECONOMY
Agreement made just before a midnight deadline to be known as USMCA and will replace Nafta
Canada and the United States reached a deal on Sunday night for Canada to stay in a free trade agreement with the US and Mexico.
In a joint statement, the US Trade Representative Robert Lighthizer and the Canadian Foreign Affairs Minister Chrystia Freeland said the agreement “will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home”.
The new deal, reached just before a midnight deadline imposed by the US, will be called the United States-Mexico-Canada Agreement, or USMCA. It replaces the 24-year-old North American Free Trade Agreement, which President Donald Trump had called a job-killing disaster.
The agreement reached on Sunday gives US farmers greater access to the Canadian dairy market. But it retains a Nafta dispute resolution process that the US wanted to jettison and offers Canada protection if Mr Trump goes ahead with plans to impose tariffs on cars, lorries and automotive parts imported into the US.
“It’s a good day for Canada,” Prime Minister Justin Trudeau said as he left his office. He said he would have more to say yesterday.
“We celebrate a trilateral deal. The door closes on trade fragmentation in the region,” Jesus Seade, trade negotiator for Mexico’s incoming president, said via Twitter.
Representatives for the government of Mexican president-elect Andres Manuel Lopez Obrador called a press conference to discuss details of the trade deal yesterday.
Canada, the No 2 trading partner of the US, was left out when the US and Mexico reached an agreement last month to revamp the North American Free Trade Agreement.
The Trump administration officially notified Congress of the US-Mexico trade deal on August 31. That started a 90day window that would let outgoing Mexican President Enrique Pena Nieto sign the new agreement before he leaves office on December 1.
Mr Trump threatened to go ahead with a revamped Nafta – with or without Canada. It was unclear, however, whether Mr Trump had authority from Congress to pursue a revamped Nafta with only Mexico.
Some politicians expressed relief that Canada had been reinstated in the regional trading bloc. “I am pleased that the Trump administration was able to strike a deal to modernise Nafta with both Mexico and Canada,” said Senate Finance Chairman Orrin Hatch. “Nafta is a proven success.”
Nafta tore down most trade barriers between the US, Canada and Mexico, leading to a surge in trade between the three countries. But Mr Trump and other critics said it encouraged manufacturers to move south of the border to take advantage of low Mexican wages, costing American jobs.
Mr Trump campaigned on a promise to rewrite Nafta – or get rid of it. Talks on a rewrite began more than a year ago. To placate Mr Trump, Mexico agreed in August to provisions that would require 40 to 45 per cent of a car be built in countries where automotive workers earn at least $16 an hour to qualify for Nafta’s duty-free benefits.
US-Canada talks bogged down last month, and most trade analysts expected the September 30 deadline to come and go without Canada being reinstated. They suspected that Canada, which had said it was not bound by US deadlines, was delaying the talks until after provincial elections yesterday in Quebec, where support for Canadian dairy tariffs runs high.