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New NAFTA deal – now what?

Progressive Cattleman Associate Editor Carrie Veselka Published on 24 October 2018

U.S. trade has been at the forefront of concerns as trade negotiations continue with several countries. One concern was put to rest when, just hours before the Sept. 30 midnight deadline, U.S. and Canadian officials signed an agreement on a new trade deal between themselves and Mexico, revamping NAFTA after more than a year of touch-and-go negotiations.

NAFTA, originally instated in 1994, controls more than $1.2 trillion worth of trade among the U.S., Canada and Mexico.

Canadian Prime Minister Justin Trudeau called the agreement “a good day for Canada,” while top NAFTA negotiators U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland, in a joint statement, hailed the new deal, renamed the United States-Mexico-Canada Agreement (USMCA), as a “new, modernized trade agreement.”

“USMCA 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,” the statement continues. “It 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.”

Here are some of the top changes to expect from the USMCA:

  • Dairy – Canada has agreed to drop its complex “Class 7” quota and pricing system, which will allow a bigger market share of U.S. dairy products into Canada. This decision, while a definite win for the U.S., has drawn the ire of Canadian dairy producers and is likely to have political repercussions up North.

  • Chapter 19 – Canada campaigned heavily to keep NAFTA’s Chapter 19, an independent panel set up to resolve special trade disputes among the three countries. Chapter 19 will stay in the new agreement but will, at the least, receive a new title.

  • No auto tariffs – The new deal will require automakers to build a greater portion of a car in North America and with higher-wage workers in order to avoid higher penalties when crossing the border. U.S. automakers can now make investment decisions with more confidence, and the deal is considered a win for U.S. labor unions.

  • “Sunset clause” – The USMCA will expire in 16 years if it hasn’t been actively renewed or renegotiated. The countries will meet again in six years to decide whether to continue to the 16-year mark or renegotiate.

    According to a Wall Street Journal report, Canadian and Mexican officials say the “uncertainty of sunset clauses undermines investment in their countries” but are satisfied that the Trump administration didn’t get the five-year sunset clause it was angling for.

While U.S. and Canadian officials have agreed to the renegotiated trade deal, it still has to be formally approved by both countries. Congress will not be discussing it until 2019. Until the USMCA is ratified by both countries, NAFTA will stay in effect.  end mark

Carrie Veselka
  • Carrie Veselka

  • Associate Editor
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