US, Canada reach trilateral trade pact with Mexico to replace NAFTA
02 October, 2018, 12:38 | Author: Teresa Adams
The U.S. -Mexico-Canada Agreement (USMCA), which will replace the North American Free Trade Agreement if the three countries' legislatures approve it, was finalized late Sunday after a long negotiating process made uncertain by the mercurial nature of the administration of U.S. President Donald Trump.
Foreign Affairs Minister Chrystia Freeland says all farmers in supply management systems will be fairly compensated for the additional market access being given to trading partners in the deal. While the system helped support a wave of new processing capacity that's being built across Canada, U.S. farmers complained it effectively blocked imports and dragged down world prices.
While Peter Navarro, the director of the White House National Trade Council, said the new deal means that "NAFTA is dead", the USMCA still retains large swaths of the original deal.
Trump complained about the behavior of Canadian officials, and said he rejected a meeting with Prime Minister Justin Trudeau, although Trudeau's office said no meeting was planned.
The deal came after a weekend of frantic talks to try and preserve a trade agreement that has stitched together the economies of Mexico, Canada, and the United States but that was in danger of collapsing amid deep divisions between President Trump and Canadian Prime Minister Justin Trudeau.
USA farmers will gain access to 3.5% of Canada's dairy market worth $16bn a year, while another requirement stipulates that 40% of components for vehicles produced in the USMCA area must be made in areas paying wages of $16 an hour.
Trump is claiming a win over an eleventh-hour trade deal with Canada which he has labelled the "most important trade deal we've made".
Commitment to not mess with currency levels: While the US, Mexico, and Canada do not actively intervene to strengthen or weaken their currencies, the pact to "achieve and maintain a market-determined exchange rate regime" could be a model for future agreements with countries that are more active in currency markets. "We don't want to be put up and get cash back for something we're not doing".
Though, one of the senior US administration officials who briefed reporters on background Sunday night described Canada's concessions on dairy as "a big win" for American farmers, which includes Canada eliminating what's known as the Class 7 milk pricing system.
On September 18, Trump announced imposing new tariffs on an additional $200 billion worth of imports from China, escalating the trade war with the Asian giant. (But) It's way too early for me.
Trump said the tariffs would remain in place "until such time as we can do something that would be different, like quotas perhaps, so that our industry is protected".
Several rounds of discussions have taken place, with the U.S. pressing India to lift trade barriers, especially on medical devices and poultry, holding up an American trade promotion programme of zero-import duties for developing nations, of which India has been the largest beneficiary.
President Donald Trump said he plans to sign the updated version of NAFTA by the end of November, which will then be submitted to Congress for approval.
At a news conference on Monday, Freeland said dairy producers will be fully and fairly compensated.
The new U.S. -Canada dairy rules echo what Canada had already offered under the Trans-Pacific Partnership, Martin said. But chamber president Perrin Beatty said the details of the text needed a closer look before a final verdict could be rendered.
The new deal avoids the collapse of the North American Free Trade Agreement or NAFTA.
Trump said the USA was charging China nothing. Voters in Quebec, home to 354,000 dairy cows - the most of any province - head to the polls for provincial elections Monday, which cast a shadow over the last-minute negotiations.
Canada fought hard to retain Chapter 19, a holdover from NAFTA that US trade ambassador Robert Lighthizer worked tooth and nail to eliminate.
To counter China's unfair practices, he had announced on June 15 that the USA would impose tariffs of 25 percent on $50 billion worth of Chinese imports.
Peter Navarro, an adviser to Trump on trade, told Fox News: "Everybody is negotiating in good faith right now as we speak". Most of the "substantive work" has been completed, with a "handful" of details remaining, the newspaper reported .
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