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  • OTVI.USA
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American ShipperShippingTrade and Compliance

Canada pulled into new North American trade pact

In the final run-up to the midnight deadline, Canadian and U.S. trade negotiators reached agreement on the language for a NAFTA replacement.

   With a midnight deadline looming, Canada agreed Sunday night to terms that will ensure its participation in a future North American trade agreement with the United States and Mexico.
   Dubbed USMCA (U.S.-Mexico-Canada Agreement), U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said in a joint statement that the deal “will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region.”
  President Donald Trump said in a Rose Garden press conference Monday morning that the USMCA is “the most modern, up-to-date and balanced” trade deal for the United States, adding that it will replace the North America Free Trade Agreement. He reiterated that NAFTA is “the worst trade deal ever made,” citing the U.S. trade deficit and loss of American jobs. 
   Under USMCA, the Canadian lumber industry reportedly remained untouched by trade negotiators. However, Canada did agree to grant the United States access to its dairy market, in addition to poultry, eggs and wheat.
   The United States, Mexico and Canada agreed to nondiscrimination and transparency commitments regarding sale and distribution and labeling and certification provisions to avoid technical barriers to trade in wine and distilled spirits.
   Trump also pointed out USMCA’s improvements to financial and digital services and patent and intellectual property protections.
   For the region’s automotive sector, USMCA will shield the automotive businesses of Canada and Mexico against the Trump administration’s plans to impose 25 percent on U.S. imports of automobiles and related parts, but will require new U.S. autos to be produced with 75 percent North American-origin content. USMCA also is expected to encourage an hourly wage base of at least $16 per hour for U.S. autoworkers.   
   In addition, the new trade deal promises to “facilitate trade between the parties by promoting efficient and transparent customs procedures that reduce costs and ensure predictability for importers and exporters and encourage the expand of cooperation in the area of trade facilitation and enforcement.”
   The full details of the USMCA is available here.   
   U.S. industry leaders on Monday morning began praising the new trilateral trade deal. 
   “We look forward to reviewing the details with our members to determine next steps, and we commend the negotiators for their commitment to finding a path forward that includes the U.S., Mexico and Canada,” said Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, in a statement.
    National Association of Manufacturers President and CEO Jay Timmons said, “Manufacturers are extremely encouraged that our call for a trilateral agreement between the United States, Canada and Mexico has been answered. We welcome the administration’s efforts to modernize this agreement and to create more opportunities for American manufacturing workers. 
   “As we review the agreement text, we will be looking to ensure that this deal opens markets, raises standards, provides enforcement and modernizes trade rules so that manufacturers across the United States can grow our economy,” he added.
   Rick Helfenbein, president and CEO of the American Apparel and Footwear Association, said, “We look forward to reviewing the text in detail with our members and determining the impact it will have on the highly integrated North American apparel, footwear and textile supply chain. We also remind the administration of the need to seamlessly implement this new agreement so that companies are able to adjust to the new trading rules.”
   Trump said he plans to sign the agreement by the end of November. The negotiations for the updated trilateral trade agreement, which covers $1.2 trillion in trade, began on Aug. 16, 2017.
   President Trump’s trade negotiating team and those of Mexico’s outgoing president Enrique Pena Nieto reached a deal in late August. Mexico’s ncoming president, Andrés Manuel López Obrador, who takes office Dec. 1, was included in the trade agreement negotiations.
   The White House raised the idea of reaching separate trade agreements with Mexico and Canada last month. Although there was “a lot of tension,” Trump said he holds Canada’s Prime Minister Justin Trudeau in the “highest regards.”
   The legislatures of the three of countries must approve the trade deal for it to take effect.
   The Trump administration’s new trade deal may face a hostile Congress after the early November midterm elections, especially if the Democrats retake control of the Congress. However, finalizing a replacement for NAFTA would be viewed as a fulfilled campaign promise for the president.
    Meanwhile, the total value of cross-border trade between the United States and its partners in the North American Free Trade Agreement — Canada and Mexico — has currently remained strong, climbing another 6.3 percent in June to $106.07 billion compared to the same month a year ago, according to the latest data from the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS). Year-over-year growth has been posted in each of the last 20 months for which after-the-fact data is available.

Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.

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