NAFTA talks: Where negotiators conceded and where they stood firm on USMCA

Click to play video: 'Trump ‘thrilled’ to announce new NAFTA deal, known as USMCA'
Trump ‘thrilled’ to announce new NAFTA deal, known as USMCA
U.S. President Donald Trump said Monday he was "thrilled" to announce negotiations are complete on a new deal to "terminate and replace" NAFTA, with the U.S.-Mexico-Canada Agreement – Oct 1, 2018

The new trade deal between Canada, Mexico and the United States has been called a “win-win-win” by the leaders of all three countries.

The United States-Mexico-Canada Agreement, or USMCA, will replace NAFTA, which has been under renegotiation for more than a year.

Here’s what Prime Minister Justin Trudeau had to say about securing a deal:

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The agreement touches on many aspects, from intellectual property to agriculture rules. But what exactly is a win for Canada and what is a win for the others?

Win: Getting a deal

The fact that we have a deal is a big win for Canada. The uncertainty over the negotiations held a cloud over the country, including the stock markets.

The loonie rose sharply in the wake of the deal.

Getting a deal is actually a win for all three countries.

“It’s a big win for all three countries because there was a real risk it would not continue,” said Debra Steger, senior fellow at the C.D. Howe Institute and a law professor at the University of Ottawa,

“There’s only downside to a trade war. To the extent we avoided a trade war in this hemisphere at least that is a positive,” David Kelly, Chief Global Strategist at JPMorgan Funds, said.

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But others said the deal wasn’t a win for the U.S.

Robert Bothwell, professor at the Munk School of Global Affairs at the University of Toronto, praised Canadian negotiators for their work in the very tough talks.

“Surely one of the most distasteful negotiations in our history but in trade talks, we are notoriously tough and this time was no different on our side. On theirs …. earlier generations of U.S. trade negotiators must be cringing with embarrassment,” he told Global News.

U.S. President Donald Trump said at a press conference Monday that the biggest concession they made in negotiating the new agreement was simply “making the deal.”

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WATCH: Trump says biggest concession in USMCA was making the deal

Click to play video: 'Trump says biggest concession in USMCA was making the deal'
Trump says biggest concession in USMCA was making the deal

Loss: Dairy industry

While the dairy industry is up in arms over concessions Canada made in the dairy sector, including allowing U.S. milk into the Canadian market, experts say the concessions were expected.

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The Dairy Farmers of Canada issued a terse statement saying the deal will have “a dramatic impact not only for dairy farmers but for the whole sector.”

WATCH: NDP leader Jagmeet Singh says Liberals have ‘betrayed’ dairy sector, ‘eroded’ supply management

Click to play video: 'Singh says Liberals have ‘betrayed’ dairy sector, ‘eroded’ supply management'
Singh says Liberals have ‘betrayed’ dairy sector, ‘eroded’ supply management

Steger said the concessions were similar to those made when negotiating the Trans-pacific Parternship agreement and didn’t go as far as they could have.

“What’s happening on dairy is that there will be a small amount, a tiny amount, of expanded market access for U.S. milk into Canada, but that could have been expected at the beginning of the negotiations,” Steger explained.

“It’s not a huge increase in market access from the U.S., it’s a very small increase. [The U.S. was] talking about … getting rid of the quotas altogether, and they got a little increase.”
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But U.S. dairy officials are lauding the deal.

“Nothing but good news here for the U.S. dairy industry. Class 7 milk pricing in Canada caused problems for U.S. manufacturers in two different ways,” Eric Meyer, president of Highground Dairy in Chicago said.

Win: No auto tariffs

A side letter published along with the main text of the agreement exempts a percentage of eligible auto exports from tariffs. A similar agreement between Mexico and the U.S. preserves duty-free access to the U.S. market for vehicles that comply with the agreement’s rules of origin.

Trump had threatened to impose tariffs on the auto sector, which could have had devastating effects on the Canadian industry.

“The auto sections are hard to assess but they seem to me to leave things effectively as they are,” Bothwell said.

Loss: Steel and aluminum tariffs

The 25 per cent tariffs on steel and aluminum imposed on Canada and Mexico by Trump will continue, despite the new deal.

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“[Steel and aluminum] issues and NAFTA are entirely separate … it has never been part of the NAFTA negotiations,” Foreign Affairs Minister Chrystia Freeland said Monday.

The negotiation on these tariffs are ongoing, Trudeau explained.

Click to play video: 'Trump says steel, aluminum tariffs on Canada will stay in place'
Trump says steel, aluminum tariffs on Canada will stay in place

Win: Dispute resolutions

Keeping Chapter 19 in the agreement is a huge win Canada, Steger explained.

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“We know that their chief negotiator hates Chapter 19,” she said. “He did not want it. President Trump did not want it. But it’s there in the same language [as it was in NAFTA], pretty much.”

She also noted that it appears that Chapter 19 is only for dispute resolution between Canada and the U.S., and not between the U.S. and Mexico.

Mexico gave it up in the bilateral negotiations with the United States,” she said. 

“Trump needed the deal and so the U.S. caved on articles 19 and 20, and culture,” Bothwell said.

Former U.S. State Department lawyer, and current cross-border lawyer, Steve Nelson, called the dispute results the biggest victory.

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“The biggest victory for Canada was retention of the independent dispute-resolution provisions of the old agreement,” Nelson said.

WATCH: Foreign Affairs Minister Freeland outlines what USMCA means for Canada

Click to play video: 'Foreign Affairs Minister Freeland outlines what USMCA means for Canada'
Foreign Affairs Minister Freeland outlines what USMCA means for Canada

“The administration’s position that those provisions somehow impaired U.S. sovereignty was nonsense, and the Canadian desire for remedies for any violations of the agreement was not lessened by recent U.S. trade actions.”

Steger noted that Chapter 20, the state-to-state dispute system, is still in the agreement despite not being effective as a dispute resolution mechanism.

“Even though time was spent trying to fix it, it appears they left it exactly as it is,” Steger said, which she called a “disappointment.” 


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