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What's in sweeping new NAFTA deal between US, Canada and Mexico

02 October, 2018, 20:59 | Author: Ted Wilson
  • Canadian and US negotiators reached a deal late on Sunday on reforming the North American Free Trade Agreement after more than a year of talks

Critics argue that Chapter 11 was mainly used as a way for big corporations to get taxpayer money, but businesses say it was necessary to ensure they weren't harmed by sudden changes when new governments came into power in Mexico, Canada or the United States.

"When this got started, Canada was the teacher's pet and Mexico was the problem child", said Michael Camunez, president of Monarch Global Strategies and a former U.S. Commerce Department official.

Negotiators from both sides spent two days talking by phone as they tried to settle a range of hard issues such as access to Canada's dairy market and USA tariffs.

Trump said the Nafta rewrite would not have been reached without tariffs, adding that, even though possible tariffs have given the U.S. strong trade leverage, the country may not need to use them. It's less severe than the US's original demand for a sunset clause, which would have forced each side to recertify the deal every five years to keep it in effect.

Canadian dairy farmers are panning the renegotiated trade pact between Canada, the USA and Mexico, saying the deal will undercut the industry by limiting exports and opening up the market to more American products.

Juan Carlos Baker, Mexico's under secretary of foreign trade, is expected to present the details of the agreement to the Mexican senate, according to the Times.

"This is a truly extraordinary agreement for the United States, Canada and Mexico", Trump said in the Rose Garden, surrounded by his trade-negotiating team.

The U.S. agreement with Ottawa will boost American access to Canada's dairy market - with some concessions on its heavily protected supply management system - while shielding the Canadians from possible U.S. auto tariffs.

Mexico's chief negotiator for the North American Free Trade Agreement Jesus Seade speaks during a news conference in Mexico City, Mexico, Oct. 1, 2018.

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The measures in the new deal - which Mr Trump dubbed "US MCA" - "will support many - hundreds of thousands - American jobs".

"In a sense, we look at this as something that does have a constructive message both for North American trade and for fears around trade wars more broadly", Bruce Kasman, a JP Morgan economist, said. If Democratic candidates pick up enough seats in November's midterm elections, Trump could order a withdrawal from NAFTA when he submits the implementing legislation for the deal, forcing lawmakers' hands. "Class 7 milk pricing in Canada caused problems for US manufacturers in two different ways", said Eric Meyer, the president of HighGround Dairy in Chicago.

In Ottawa, PMO officials said there would be another cabinet meeting Monday and a news conference likely as well.

Canadian Prime Minister Justin Trudeau told NBC during an interview in June that the steel and aluminum tariffs were "insulting and unacceptable".

Canada had previously offered the US a 3.25-per-cent market share under the old Trans-Pacific Partnership agreement, which Trump also derided - and pulled the USA from - after he took office in 2017.

"I think it's going to pass with a substantial majority", predicts U.S. Trade Representative Robert Lighthizer.

With the new deal, Canada will increase market access for US dairy, poultry, and eggs. Under the new agreement, three-quarters of a car's parts must originate from North America in order to be exempt from duties. A similar agreement between Mexico and the USA preserves duty-free access to the US market for vehicles that comply with the agreement's rules of origin. Washington has already reached a bilateral deal with Mexico, the third NAFTA member. Additionally, exclusivity for biologic drugs before generics can be produced will be increased to 10 years in Canada from eight years, a win for the pharma industry.

With regards to the European Union, for example, he said the White House would "respectfully" put tariffs on cars if a satisfactory deal can't be reached.

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