The new deal, formally called the United States-Mexico-Canada Agreement, came together in the final hours before the deadline for Canada to come on board a renegotiated trilateral deal. Otherwise, Mexico and the U.S. were poised to push ahead without them on a bilateral agreement. It will replace the North American Free Trade Agreement once fully ratified.
The pair spent the morning briefing Canada’s premiers about the details of the deal which are still emerging after the announcement late Sunday night. The new agreement will have an impact across industries and regions of the country.
On Sunday, all three countries were heralding the agreement as a win-win-win, though reaction is pouring in from various industries and stakeholder groups, who have a mixed reaction to the news of a new agreement after nearly 14 months.
Trudeau touted it as a good deal for the Canadian economy, businesses, and families.
The prime minister is set to hold another cabinet meeting this afternoon. This will be the second cabinet meeting in less than 24 hours after Sunday night’s 10 p.m. gathering of the federal ministers when news began to break of a new deal on the table.
Trump trumpets fair deal
U.S. President Donald Trump, who triggered the NAFTA renegotiations, heralded the new USMCA as “a wonderful new trade deal.”
“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, solves the many deficiencies and mistakes in NAFTA,” Trump tweeted.
Speaking with reporters at the White House Rose Garden on Monday, Trump touted the benefits of the new agreement, as several high-profile members of his administration including U.S. Ambassador to Canada Kelly Craft and U.S. Trade Representative Robert Lighthizer clapped behind him.
Trump also referenced the drama that was laced throughout the negotiations, including what he called the “difficulty” between himself and Trudeau. At one point in the talks Trump called Trudeau “very dishonest and weak,” though now Trump seems hopeful the relationship is on the mend.
“The only problem with Justin is he loves his people and you know he’s fighting hard for his people,” Trump said. “This is good for everybody.”
The U.S. president called it the most important trade deal his administration has signed, and expressed satisfaction that the pact is a fair one. He also stated that if Canada did not open up its dairy market, it would have been a “deal breaker.”
Lighthizer also spoke, and thanked by name Freeland, as well as other senior officials including Trudeau’s top two aides: Gerald Butts and Katie Telford.
Monday morning, Trudeau spoke with both Trump and Mexican President Pena Nieto.
In both talks — according to the PMO readouts — Trudeau and his North American counterparts welcomed the deal, and stressed how the deal will bring the countries closer together and enhance North American competitiveness.
Trudeau described the call with Trump as “very positive.”
The leaders of all three countries are expected to convene before the end of November to sign the deal, which will allow the outgoing Nieto to sign the new agreement before his successor Andres Manuel Lopez Obrado takes office in December. It will then begin its winding journey through each country’s legislative body.
Political, stakeholder reaction
Both Conservative Leader Andrew Scheer and NDP Leader Jagmeet Singh will share their reaction to the news of the major new trade pact later this afternoon in Ottawa.
In a statement, Brian Mulroney, the former Canadian prime minister who signed the original NAFTA deal 25 years ago, said the agreement was “a highly significant achievement for Canada.”
Mulroney said that, while he has not yet had an opportunity to read the details, “Canada appears to have achieved most if not all of its important objectives in this lengthy and challenging set of negotiations.”
The key points of the
new USMCA:
- The Chapter 19 dispute resolution mechanism remains intact, though, it has been renumbered in the new 34-chapter agreement. This part of the deal allows for independent panels to resolve trade disputes that arise out of the deal. It was a red line for Canada, which feared not having an objective arbiter, despite the U.S.’s push for changes.
- American farmers will have increased access to the supply-managed Canadian dairy market. Specifically, Canada has increased the market access to 3.59 per cent, and the federal government agreed to get rid of what was known as Class 7 pricing on some dairy ingredients. The Americans are viewing this as “a big win” for them. It’s a bigger concession than what Canada made in the Trans Pacific Partnership.
- Canada maintained the original NAFTA text related to an exemption for cultural industries, which is aimed at protecting such things as Canadian media and cultural content.
- Under the USMCA trade deal, online cross-border shipments to Canada worth less than $150 will no longer be subject to duties. The deal raises the raises the minimum purchase price that qualifies for duties and taxes, known as the de minimis threshold, up from $20 to $40.
- The deal includes 12 side letters on issues including wine, water, and cheese names. Eight were posted with the first full text of the deal Sunday night, and four others were published later, regarding the national security provision, aka Section 232.
- The deal includes stronger rules of origin for autos, and an “ambitious” slate of other provisions related to the digital age.
- It includes a termination provision aimed at preventing the deal from becoming outdated. It states that the deal is good for 16 years after it comes into force, but within the first six years a mandatory “joint review” will be conducted to determine whether all three countries want to extend the agreement for another 16 years. It maintains the six month opt-out of the deal notice that existed in NAFTA.
- The U.S. has given Canada assurance that an exemption — should Trump follow through on a 25 per cent tariff on autos — would be granted for 2.6 million vehicles and US$32.4 billion worth of auto parts.
- The exchange of steel and aluminum tariffs between Canada and the U.S. remain in place for now.