Dairy farm industry weighs in on new USMCA trade agreement

Randal Sanchez
October 4, 2018

The United States and Canada forged a last-gasp deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, rescuing the three-country, $1.2 trillion open-trade zone that had been about to collapse after almost a quarter-century.

The United States and Canada reached a deal to update NAFTA and keep it a trilateral pact with Mexico, beating a midnight deadline with agreements to boost US access to Canada's dairy market and protect Canada from possible USA autos tariffs, two Canadian sources with direct knowledge of the talks said on Sunday.

Reuters points out that the clause, which has stirred controversy in Canada, fits in with U.S. President Donald Trump's efforts to isolate China economically and prevent Chinese companies from using Canada or Mexico as a "back door" to ship products tariff-free to the United States. The auto industry welcomed a deal that included all three countries, fearing a breakup of NAFTA would devastate long-built supply chains that cut across borders.

Federal Conservatives say the new North American trade deal holds a poison pill that will make future trade deals more hard for Canada to negotiate.

As part of any agreement, Canada looks set to offer increased access to its highly protected dairy market, as it did in separate pacts with the European Union and Pacific nations.

The USMCA also requires a member country to provide notice and information to the other two partners if it plans free trade talks with a "non-market" economy.

In 2017, the Department of Commerce published a report that concluded that China was a non-market economy.

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Mexico and Canada will also get protections if the USA goes through with plans to impose tariffs on vehicles and auto parts.

Canada's ambassador to Washington says the US and Canada have made a lot of progress in free trade talks but there is no deal.

But the deal is unlikely to lead to a significant boost for American automaker factories, said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research, a nonprofit research group.

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.

The bottom line is that we simply do not have enough information at this time to know whether NAFTA 2018 is in the economic interests of the United States, the AFL-CIO said. The deal is likely to come into force by 2020, as it will have to be approved by Congress which will vote while it is in session next year. Rep. Kevin Brady, R-Texas, said a modernized NAFTA "can be a big win for America's workers, farmers and ranchers". The Washington Post said that, "Many business leaders and legal experts believed these updates were necessary given that the original agreement was negotiated 25 years ago". "They may be willing to do that for political purposes", he said.

The official says the agreement preserves a NAFTA dispute-resolution process that the US wanted to jettison.

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