Steel tariffs, American dairy and cheaper online shopping; what USMCA means for Sask.

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Steel tariffs, American dairy and cheaper online shopping; what USMCA means for Sask.
WATCH ABOVE: Here in Saskatchewan, Sask Milk and the union representing workers at the Evraz Steel Mill feel their respective industries are taking the new deal on the chin. David Baxter has more on how these and other Saskatchewan sectors are reacting to the new deal – Oct 1, 2018

Canada, the United States and Mexico inked a new trade deal to replace the North American Free Trade Agreement (NAFTA), the United States – Mexico – Canada Agreement (USMCA).

The deal was announced late Sunday night by Canadian Foreign Affairs Minister Chrystia Freeland and United States Trade Representative Robert Lightizer. This happened just before the deadline to reach a new deal that would also include Canada in the agreement.

Here’s what Prime Minister Justin Trudeau said of the deal:

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This agreement is not finalized and still needs to be finalized by all three countries.

“When this agreement is enacted it means NAFTA will be modernized, stabilized and preserved for the 21st century,” Prime Minister Justin Trudeau said Monday.

READ MORE: NAFTA deal reached: Canada, U.S., Mexico reach trade agreement under new name

The dairy industry and supply management became a sticking point between Canada and the U.S. during the negotiations.

Canada has agreed to provide U.S. dairy farmers access to about 3.5 per cent of its approximately $16-billion annual domestic dairy market.

The Dairy Farmers of Canada have said that the new trade deal will shrink the Canadian industry, and they do not see it as a good deal for Canada’s 220,000 families that work in the sector.

SaskMilk general manager Peter Brown said he’s “shocked and dismayed” by the agreement. According to Brown, Saskatchewan has 165 dairy producers.

“We’ve had the Prime Minister and government assure us many times over the last few months, and particularly the last few weeks, that they are behind the dairy industry in Canada and that they would support it and they would fight for it,” Brown said.

“Yet we’ve woken up this morning to an agreement were we feel as though we’ve taken a major hit.”

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On top of other trade agreements, Brown said the United States has about nine per cent market access. Once the system is entrenched, Brown anticipates $200 million of Canada’s dairy industry will flow to the United States annually.

“They are a wash in milk. They have far more than they need, so they’re looking for markets to put it to. But they’re a much, much bigger market place than we are here. In fact, there are more dairy producers in the stat of Wisconsin then there are in all of Canada,” Brown said.

“Taking over our industry wouldn’t even solve their problem. So it’s going to be a very tiny impact for them, but a large impact for us as a smaller country.”

Steel tariff remain

Another key Saskatchewan-centric issue, the 25 per cent steel and 10 per cent aluminum tariffs. President Donald Trump confirmed Monday that the tariffs are not going anywhere for the time being.

United Steel Workers of America local 5890 (USW) president Mike Day said this is disappointing news for the 2,000 members working at Regina’s Evraz steel mill.

READ MORE: Steel tariffs ‘staying’ despite new trade deal: Trump

“We had not necessarily assurances, but there was talk that once there was a deal the steel and aluminum tariffs would be taken care of,” Day said.

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Trump credited tariffs for helping complete the trade deal. With the steel tariffs remaining, Day said neither Trump nor Trudeau are very popular among USW members at the moment.

“You can’t really trust any of them right now. We’ve heard things from [U.S. Secretary of Commerce] Wilbur Ross, the Commerce Department, our government and now we’re being left to the side by both of them,” Day said.

WATCH: Canadian steel, aluminum producers face uncertain future

Click to play video: 'Canadian steel, aluminum producers face uncertain future'
Canadian steel, aluminum producers face uncertain future

“It doesn’t seem to me that, right now in these early stages of it that the deal’s going to benefit Canadians.”

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Freeland said that the steel tariffs are a separate issue from the trade deal due to the United States saying they are in the interest of national security. The minister said that talks between the two nations continue on steel and aluminum tariffs, and Canada has wind in our sails with the new trade agreement.

Evraz is still moving steel from Regina to the U.S. and Day said there haven’t been job losses in Regina yet and they still have Canadian and American pipe orders to fill.

“Most of our orders are for the United States right now, so the sooner something like that gets taken care of, however it gets dealt with, the better it will be for us,” Day said.

For Canadian orders, the Enbridge Line Three order is complete according to Day. They’re working on filling a TransCanada pipe order, and Trans Mountain would also result in steady work once the pipeline moves forward.

Premier Moe “pleased”

Premier Scott Moe said he is pleased with the signing of the USMCA, thanking Trudeau and Freeland for their work on this file. While he does have concerns about the lingering steel tariffs and impact on dairy, Moe said reaching an agreement was a matter of “crucial importance”.

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“We do about 55 per cent of our exports out of this province are with the United States of America and 85 per cent of our imports come from the United States of America. Preserving that kind of trading environment with that kind of partner is of crucial importance,” Moe said.

The premier described the steel tariffs as short term challenges, and will continue to work with stakeholders and the federal government to help ensure competitiveness.

Moe added he was not surprised that an agreement was reached Sunday, given the upcoming end of Mexican President Enrique Pena Nieto’s term.

“Coming to this agreement this weekend speaks to a strong North American economy and a willingness to ensure that we’re able to work towards strengthening that economy into the future,” Moe said.

Business groups like the Regina Chamber of Commerce, Canadian Federation of Independent Business (CFIB) and Grain Growers of Canada released statements saying they are happy to see a new agreement signed.

The CFIB did raise concern about a new provision; allowing Canadians to purchase $150 in American consumer goods online before a duty is applied. The previous amount was $20. The CFIB worries this may hinder the competitiveness of smaller Canadian businesses.

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On this issues, Moe said negotiating is about give and take and in his mind the above change is a situation where Canada gave to the United States.

As part of the deal, Canada also agreed to extend patent protection to biological pharmaceutical drugs for the next eight to 10 years. This may mean more expensive drugs for Canadians. Moe said this is a file the Ministry of Health is watching closely.

“We haven’t done the analysis of it yet, but for all intents and purposes it’s a little bit of a different direction then we’ve been heading here in the province. There will likely be, to some degree, costs associated to that. We don’t know what that will be as of yet, but we will be looking at that,” Moe said.

With files from Rebecca Joseph and Katie Dangerfield

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