US, Canada Reach NAFTA Deal

Virginia Carson
October 1, 2018

In a joint statement, issued by Canada's Foreign Affairs Minister Chrystia Freeland and the Office of the United States Trade Representative (USTR), the parties revealed the name of the upgraded trade deal - the United States-Mexico-Canada Agreement or USMCA.

An announcement was "imminent" as of Sunday night, with just hours to go before the US -imposed midnight deadline, the official said.

After a nail-biting weekend of talks, negotiators from both countries managed to hammer out a new deal, dubbed the United States-Mexico-Canada Agreement.

Informed sources told The New York Times that Canada will now ease protections on its dairy market and provide access that is similar to what the USA would have gained through the Trans-Pacific Partnership, a trade treaty that Trump withdrew from previous year.

It also appears to preserve the key dispute-resolution provisions - Chapter 19 - which allows for independent panels to resolve disputes involving companies and governments, as well as Chapter 20, the government-to-government dispute settlement mechanism. The U.S. and Mexico had already reached a deal.

Earlier Sunday, David MacNaughton, Canada's ambassador to the United States, had said there was "lots of progress, but we're not there yet", before heading back to Washington from Ottawa.

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The U.S. senior administration officials told reporters on Sunday night's call that the deal will be signed at end of November and will be submitted to Congress after that for the next Congress at the beginning of 2019.

But the deal failed to resolve U.S. tariffs on Canada's steel and aluminum exports, the Canadian sources said. The Trump administration repeatedly threatened to move forward with the bilateral deal, excluding Canada. "We still have a couple of tough issues, so we're doing our best".

Canada has remained resistant to some of the USA demands including wider access to the Canadian dairy market and eliminating a dispute settlement mechanism. "It's been very bad for the United States, it's been great for Canada, it's been great for Mexico - very bad for us". "NAFTA 2 will give certainty and stability to Mexican trade with its partners in North America".

Keeping chapter 19 will not affect Washington's enforcement of anti-dumping and anti-subsidy laws, said a USA official.

The U.S. source said common ground had been reached on all the most hard issues.

Pierre Lampron, president of Dairy Farmers of Canada, said in a statement.

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The two deals will pave the way for a full overhaul of the 25-year-old NAFTA deal.

USA business groups opposed turning NAFTA into a bilateral deal because the three nations' economies have become closely intertwined since the original pact came into force in 1994.

This will allow them to sign the agreement before Mexico's President Enrique Pena Nieto leaves office December 1, the date that was the cause of the last minute flurry of activity.

Walkom writes, "A trade pact that can be upended on the whim of the USA president is of no use to Canada". Trump wanted Canada to open its dairy market to US farmers, and Canada wanted to preserve a mechanism for resolving disputes.

The deal must clear a series of procedural hurdles to get to Congress for a vote, which is unlikely to come before 2019.

Earlier this summer Lighthizer, the US trade representative, took a different tack by negotiating separately with Mexico and ultimately forging a bilateral agreement, putting pressure on Ottawa to join or face the possibility of being left out.

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When that text is finally released, it would be advisable to evaluate it in relation to the progressive principles outlined in the Trade: time for a new vision The Alternative Trade Mandate report.

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