Canada, U.S. reach deal to save NAFTA as trilateral trade pact

Kenny Grant
October 4, 2018

The main areas of contention that have arisen through the deliberations have been: rules of origin for autos, the Chapter 19 dispute resolution mechanism, more USA access to Canada's supply managed dairy sector, the prospect of the deal including a sunset clause, and protecting Canadian cultural industries.

The officials declined to say how large a share of the Canadian market would be open to US dairy products.

China has been "ripping us for so many years" with its "theft of intellectual property" and through a $375bn trade deficit, by which China sells more laptops, clothes and other goods to the U.S. than America exports in the other direction, Trump said.

The deal was reached after Prime Minister Justin Trudeau called a meeting with his cabinet late Sunday, following a breakthrough in negotiations.

The clause, which has stirred controversy in Canada, fits in with U.S. President Donald Trump's efforts to isolate China economically and prevent Chinese companies from using Canada or Mexico as a "back door" to ship products tariff-free to the United States.

That has begun to change with a revamped NAFTA deal the Trump administration named the USMCA, which stands for the U.S. -Mexico-Canada Agreement.

The North American Free Trade Agreement (NAFTA) is no more.

The deal, announced on Sunday, is a reworking of the 1994 North American Free Trade Agreement, which underpins US$1.2 trillion (S$1.6 trillion) in trade between the three countries.

The $1.2tn (£920bn) open-trade zone had been on the verge of collapse after 24 years - with Canada facing the prospect of being left out of a deal between the U.S. and Mexico.

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"It's definitely a waiting game to see how things will pan out but I do think it's going to be very promising for the dairy producers in Iowa" he said.

President Donald Trump retained the so-called "Section 232" national security tariffs that he has used to impose tariffs on cars built in Asia and Europe.

Canadian sources say the deal will preserve a trade dispute settlement mechanism, to protect its lumber industry and other sectors from United States anti-dumping tariffs. However he says "it's all worked out" and calls Trudeau a "good man". The quota would increase current exports, safeguarding Canadian plants.

"And I'm not talking about Mexico, Canada".

However, the deal has failed to resolve U.S. tariffs on Canada's steel and aluminium exports. Not so in recent years when it comes to trade agreements between the United States and other countries.

The President said he plans to sign the deal by the end of November. A White House official said the negotiations over the steel and aluminum tariffs are being handled on a "completely separate track", according to the Washington Post.

The lobby group says the measures will have "a dramatic impact not only for dairy farmers but for the whole sector", adding that it fails "to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood".

The Canadian dollar jumped to a four-month high in response to the deal.

Canada also agreed to get rid of its two-year-old Class 7 pricing agreement that has restricted US exports of ultra-filtered milk used to make dairy products.

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