Friday, 15 February, 2019

Canada-US reach deal to stay in trade pact with Mexico

Canada-US reach deal to stay in trade pact with Mexico Canada-US reach deal to stay in trade pact with Mexico
Nellie Chapman | 05 October, 2018, 23:06

It reached a deal with the administration in August that was intended, among other things, to shift some manufacturing and investment away from low-priced Mexico to the United States.

Trump hasn't made his disdain for NAFTA a secret, calling it the "worst trade deal ever made" and a job-killing "disaster" for the United States.

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Kind of. The major USA stock indexes showed gains this morning, with the Dow rising more than 250 points (a gain of almost 1 percent.) But Julia Coronado, an economist and the founder of the company MacroPolicy Perspectives, told us that while this market rally is probably a reaction to the agreement, the pact itself is rather "unimpressive".

"It's a good day for Canada", Prime Minister Justin Trudeau said as he left his office.

However, Mr Trump said it was too soon to talk to China, on which the U.S. has imposed three rounds of tariffs this year, about a trade deal.

On the flip side of Canada's more open dairy market, the country's own farmers may be negatively affected.

In that fiery press conference last week, Trump cast serious doubt on the fate of NAFTA, insulting the Canadian negotiating team, and vowing that even if a trilateral deal is struck, it won't be called NAFTA, because he's "never liked it".

Trudeau noticeably did not mention U.S. President Donald Trump in his opening remarks, saying only in answer to a direct question that the relationship with the president has been challenging during the course of negotiations.

One solution might be to imitate the provisions of the bilateral Mexico-U.S. deal on NAFTA.

A protectionist policy under the Mr Trump has seen the U.S. forge ahead with individual trade deals, rejecting bigger multi-lateral trade agreements and posing a challenge to decades of global free trade.

One of the sources said Canada would take nothing for granted until Trump had signed off on the deal. That didn't happen, and talks have continued.

Flags of the U.S., Canada and Mexico fly next to each other in Detroit, Michigan, U.S. August 29, 2018. Congress was informed, which triggered the current 30-day window to provide US lawmakers with the text of the deal. Trump's advisers view the trade pact as a political victor in battleground states critical to the president's 2016 victory and home to tens of thousands of auto workers and manufacturers who could benefit from the changes.

In Quebec, meanwhile, politicians lamented that its key dairy sector was paying the biggest price in order to get a deal.

The two conceded Canada had been forced to scale back a highly restrictive supply management system created to effectively shield Canadian dairy farmers from USA competition, but said Ottawa was determined to "fully and fairly" compensate Canadian farmers for the loss of market share.

But the ensuing talks to incorporate Canada stumbled.

Other trading partners had been tough on the U.S., he said, including the European Union, which introduced retaliatory tariffs on U.S. goods in June. He threatened tariffs on cars and slapped them on steel.

United States farmers will gain access to 3.5% of Canada's dairy market worth $16bn a year, while another requirement stipulates that 40% of components for vehicles produced in the USMCA area must be made in areas paying wages of $16 an hour.

"Our farmers were not treated properly by Canada", he said.

White House trade adviser Peter Navarro on Sunday said everyone involved was working in good faith and reiterated the Sunday deadline.

US-Canada talks stalled earlier this month, and most trade analysts expected the September 30 deadline to come and go without Canada being reinstated. "Second, the pricing system allowed for Canada to be competitive to export their excess skim milk powder, taking away market share from the U.S".

Collectively, the changes could lessen the non-tariff barriers faced by USA companies that want to export medical devices to Canada and Mexico.