U.S., Canada agree on free trade pact

02 October, 2018, 12:39 | Author: Salvatore Jensen
  • Shares of US automakers rallied after the US Canada and Mexico reached a new trade agreement

Canada, the United States' No. 2 trading partner, was left out when the USA and Mexico reached an agreement last month to revamp the North American Free Trade Agreement. "We don't require government subsidies, so we don't know why we should be allow more market access of a subsidized product into our market".

He withdrew the U.S. from the TPP within days of taking office, and over the weekend announced a new deal, called the U.S. -Mexico-Canada Agreement, or USMCA, to replace NAFTA.

Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland are championing the deal, calling it a victory for the middle class and for Canadian businesses.

Referring to his trade war with China, Trump told reporters at a White House news conference that China wanted to talk to the U.S. very badly, but he was not ready yet.

Canada, for instance, agreed to give the Americans access to five per cent of the Canadian dairy market, about the same it granted to European and Pacific-Rim nations in the CETA and TPP accords combined, the source said.

Building on a previous agreement between the US and Mexico, USMCA also revamps production standards for automakers across the three countries.

Tariff side deals: The US came to side agreements with Mexico and Canada that would largely protect the two countries from tariffs on imported autos and auto parts.

While understanding the deal is still preliminary, Canadian dairy farmers will still feel the pinch from losing more market access, said a Dairy Farmer of Ontario representative.

Other contentious, so-called USA poison pills - which would have limited Canada and Mexico's ability to bid on lucrative US procurement projects - are gone.

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

The US is already fighting a major trade battle with China, with both imposing tariffs and counter-tariffs on a range of high-volume goods.

"I promised to renegotiate NAFTA", Trump said in the White House Rose Garden Monday.

In the end, Trudeau made a concession on Trump's biggest demand, agreeing to ease barriers to entry in Canada's protected dairy market.

In 2012, Manila complained that Beijing had stopped buying bananas from the Philippines, following the maritime dispute over the Scarborough Shoal in the South China Sea, while a year ago, South Korea's decision to install the US Terminal High Altitude Area Defence (THAAD) anti-missile system also elicited an economic response from China.

Trump had made criticism of NAFTA a centerpiece of his successful 2016 election campaign, terming it the worst trade deal in history and blaming NAFTA for the loss of American manufacturing jobs since it went into effect in 1994.

It was also "the biggest trade deal in the United States history", he told a press conference.

We also remain concerned about the remaining steel and aluminum tariffs. The US president has regularly called it a "disaster" for American workers and manufacturers.

More pointedly, the university report said, previous trade battles such as the Russian grain embargo of the 1980s and the 2009 dispute with China (tyres versus chickens), show that "once trade market share is lost, it is hard for markets to return to the previous relationships".

However, the deal still needs to be ratified in Congress, which President Trump noted could be a challenge.

Bruce Ralston, the B.C. minister responsible for trade, said Monday his government will move to comply with the agreement.

Then there's the potential inelasticity of U.S. demand for Chinese goods.



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