“It’s not Nafta redone, it’s a brand-new deal,” President Trump said.
The United States, and Canada have agreed to a new trilateral agreement with Mexico to replace the North American Free Trade Agreement (NAFTA), a pact that governs more than $1.2 trillion worth of trade among the three nations.
The new deal won’t go into effect right away, it has to be ratified by Congress next year, and Donald Trump acknowledged the tough battle it could face, but the deal is finally done after more than a year of rough negotiations, and all three nations seem satisfied.
For starters, the 1994 deal will be known as the United States-Mexico-Canada Agreement, or USMCA, not NAFTA. Trump had suggested that he might call it the “USMC,” in honor of the U.S. Marine Corps, but USMCA seems to be the final call.
USMCA is set to open up some of Canada’s dairy market to US farmers. The issue was a big sticking point between the two negotiating teams, as Canada limited how much milk, cheese and other dairy products could come in from the United States, but now, Canada will set new quotas for the U.S., increasing market access for US dairy, poultry and eggs.
According to The Washington Post, the new deal is to have more cars and truck parts made in North America. Starting in 2020, to qualify for zero tariffs, a car or truck must have 75 percent of its components manufactured in Canada, Mexico or the United States, a substantial boost from the current 62.5 percent requirement.
Canadian Prime Minister Justin Trudeau insisted that he wanted to keep Chapter 19 in place, and that’s exactly what happened. Chapter 19 allows Canada, Mexico and the United States to challenge one another’s anti-dumping and countervailing duties in front of a panel of representatives from each country. This is generally a much easier process than trying to challenge a trade practice in a U.S. court.
In other outtakes from the new deal, Mexico and Canada get assurance Trump won’t pound them with auto tariffs, and his steel tariffs stay in place, for now, as the two countries are still discussing lifting those tariffs, but a senior White House official has said that this process is on a “completely separate track.”
The USMCA, which will be reviewed every 6 years, also made significant upgrades to environmental and labor regulations, especially regarding Mexico, its going to give investors a special way to fight government decisions, and U.S. drug companies will now be able to sell pharmaceuticals in Canada for 10 years before facing generic competition.
In other key matters, Chapter 11 is eliminated entirely for Canada and mostly for Mexico, except for some key industries such as energy and telecommunications. Chapter 11 gave companies and investors a special process to resolve disputes with one of the governments in NAFTA. According to The Washington Post, critics argue that Chapter 11 was mainly used as a way for big corporations to get taxpayer money, but businesses say it was necessary to ensure they weren’t harmed by sudden changes when new governments came into power in Mexico, Canada or the United States.
Watch LIVE as President Trump delivers remarks on the United States-Mexico-Canada Agreement.
Posted by The White House on Monday, October 1, 2018