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Reactions to USMCA trade deal criticize Trudeau government's concessions

03 Octobre 2018

Just a few days ago Trump attacked Canadian Prime Minister Justin Trudeau and his negotiating team, and had demanded major changes to NAFTA.

The agreement allows the retain the right to impose up to 25-percent emergency tariffs on cars and auto parts on the basis of national security.

The U.S. and Canada squeezed out a last-minute deal to revamp the North American Free Trade Agreement with a pact expected to affect prices on cars and dairy products across North America and allowing President Trump to deliver on one of his go-to campaign promises.

Trump's September 30 deadline approached, it seemed less likely the US would be able to keep Canada in the trilateral pact with Mexico.

"It's the best [Trudeau] could get in the time available", he said.

However, a few issues like USA tariffs on steel amd aluminum imports, along with retaliatory tariffs were left out of the USMCA deal. Christine Loh, an adjunct professor at the Hong Kong University of Science and Technology, said the US' move to form a new trade alliance during its heated trade war with China would "change supply chains all over the world".

Political deadlines are often fuzzy but Canada and the United States appear to be working towards some major compromises and a NAFTA deal.

But Canada has been obliged to make concessions, in particular allowing USA dairy farmers access to about 3.5 percent of its $16 billion (13.8€ billion) domestic market. The province of Quebec, a powerful dairy center, said it was examining its options amid speculation it might sue to block the deal. "So much for the "win-win-win" deal promised by this government", said Ken Neumann, Canadian director of the union. "We never believed that it would be easy, and it wasn't, but today is a good day for Canada".

Washington has more than 450 dairy farms, with about 2,200 jobs created by of dairy exports. "The American farmer is good at what they do", said Newby.

The President said he plans to sign the deal by the end of November. The negotiated export cap may be objectionable to committed free traders, but it leaves a lot of room to build more low wage assembly plants in Mexico at the expense of both American and Canadian auto workers.

"Without tariffs we wouldn't be talking about a deal", Mr Trump said. That was something the Canadians had insisted on in NAFTA 1.0, so Trump put that on the table. The deal is subject to approval by the three parties, and in the case of the US, a Congressional vote.

"The U.S. could conceivably terminate for Canada engaging in a free trade agreement discussion with China", said Cyndee Todgham Cherniak, a Toronto trade lawyer on Canada's roster for settling disputes under NAFTA.

The clause stipulates that the other two nations in the pact have the option of pulling out of the deal if any one of them signs a free trade deal with a "non-market" country.

Phasing out conflict resolution tools: The mechanism known as Investor-State Dispute Settlement, which helps resolve investment conflicts between companies and governments, will be phased out in Canada and largely watered down for most investors in Mexico. Meanwhile, Bloomberg reports that Canada also agreed to give US businesses greater access to its dairy market and consumers, to the tune of 3.59 percent-which is higher than the 3.25 percent it conceded to the countries in the Trans-Pacific Partnership. "Sources close to the action say the 11th-hour deal came together as a result of deadline pressure, willingness to compromise, and Trump's constant threat of hitting Canada's extensive auto industry with tariffs if it didn't agree to a new deal", Politico reported, saying the latter was "the last detail to be nailed down". The deal sets new protections for labor, the environment, and intellectual property. Back in the 1980s, America's trade deficit was climbing due to an overly strong dollar.

Reactions to USMCA trade deal criticize Trudeau government's concessions