Commentary

U.S., Canada Clinch New, Rebranded Trade Deal

After down-to-the-deadline negotiations, the United States and Canada announced late Sunday they had hammered out a revised trade agreement after weeks of statements suggesting they were far apart in their efforts to revise the 25-year-old North America Free Trade Agreement. The Trump Administration has insisted on more favorable terms for the U.S.; it reached a deal in late August with Mexico, the third partner in the trilateral pact.

In a joint statement, U.S. trade representative Robert Lighthizer and Canadian foreign affairs minister Chrystia Freeland claimed that the deal “will result in freer markets and fairer trade,” the AP reports. “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,” they said.

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Just don’t call the new deal NAFTA.

“‘NAFTA’ was excoriated during the 2016 presidential campaign, and President Trump, a veteran of marketing and branding, has sought to change the name,” William Mauldin reports for the Wall Street Journal.

Indeed, the President tweeted this morning: “Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico. The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries …”

But “the new agreement, which must be ratified by Congress, isn’t likely to enter into force until next year at the earliest, and Mr. Trump faces an uphill battle in winning support for [it] if Democrats take over the House or Senate in November,” the WSJ’s Mauldin observes.

In the meantime, the deal is being viewed by observers as a “big victory for [Trump’s] agenda to shake-up an era of global free trade that many associate with the signing of NAFTA in 1994,” write Reuters’ David Ljunggren and Roberta Rampton. “… Trump’s primary objective in reworking NAFTA was to bring down U.S. trade deficits, a goal he has also pursued with China, by imposing hundreds of billions of dollars in tariffs on imported goods from the Asian giant,” they continue.

North of the border, it’s apparently a “win,” too.

“It’s a good day for Canada,” [Canadian Prime Minister Justin] Trudeau said as he left a late-night cabinet meeting in Ottawa, declining to take questions. On Twitter, he said, ‘A good day for Canada & our closest trading partners. More tomorrow…,’” Daniel Dale and Tonda MacCharles write for the Toronto Star.

“The new accord will include an ‘accommodation’ to help shield Canada if Trump follows through on a threat to tax imported vehicles. It was not immediately clear what that accommodation would entail, but published reports suggested Canada could be exempt from the auto tariffs if it agrees to limit its auto exports to the U.S.,” Michael Collins reports for USA Today.

“Other new provisions are changes to the so-called auto rules of origin which dictate that, to avoid tariffs, a certain percentage of an automobile must be built from parts that originated from countries within the NAFTA region. Under the new rules, cars must be built with at least 75% of parts made in North America, up from 62.5% under NAFTA. Also, 40 to 45% of an auto will have to be made by workers earning at least $16 an hour,” Collins adds.

“As part of the deal, Canada will ease protections on its dairy market and provide access that is greater than what the United States would have gained through the Trans-Pacific Partnership, a trade treaty that Mr. Trump withdrew from last year,” Alan Rappeport reports for the New York Times.

“The United States also relented on its demands to eliminate an independent tariff dispute settlement system that Canada has said is a red line in negotiations. Keeping that was a major concession for the United States and a change for what was agreed with Mexico,” he continues.

“Trump administration officials hailed the agreement as a big win for all concerned. But some experts questioned whether the changes to NAFTA were worth the strain put on relations with Canada by Trump's threats and brinkmanship during the negotiations,” CNN’s Jeremy Diamond, Kevin Liptak, Paula Newton and Donna Borak report.  

“We have really hurt relationships with our major ally ... for the sake of a few gallons of milk,” said Jeffrey Rosensweig, a business professor at Emory University, they write.

The full text of the deal, which was released just before midnight, can be read here.

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