Published: Mon, October 01, 2018
Finance | By Jaime Brady

US, Canada NAFTA trade deal, seals trilateral pact with Mexico

US, Canada NAFTA trade deal, seals trilateral pact with Mexico

Without Canada's signature, U.S. Trade Representative Robert Lighthizer has said he would present a bilateral U.S. -Mexico agreement to Congress and keep talking to Canada.

The United States and Canada reached a deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, beating a midnight deadline with agreements to substantially boost American access to Canada's dairy market and protect Canada from possible U.S. auto tariffs, sources with direct knowledge of the talks said. On dairy the official said Canada essentially gave the USA the same access it offered in the Trans Pacific Partnership trade agreement that President Donald Trump rejected.

The access to Canada's dairy market will closely mirror what was given under recently negotiated agreements between Canada and the European Union and a separate one with Pacific countries, the Canadian official said.

No substantial changes appear to have been made to the chapter 19 trade dispute settlement mechanism, nor the state-to-state dispute settlement.

Last year, the US goods trade deficits with Mexico and Canada were $71.1 billion and $17.5 billion, respectively.

The new NAFTA deal also came on the last day before a Trump-imposed deadline to reach an agreement. Canada could be exempted from the auto tariffs if it agrees to limits on its auto exports to the United States, Ujczo said. He said he didn't know if a deal would be reached Sunday.

Dan Ujzco, an Ohio-based worldwide trade lawyer who'd been briefed on the details, said he expected a detente on the tariff issue to be negotiated separately in the coming days.

Canadian government officials and outside stakeholders from industry and labour groups who were consulted throughout a weekend of intense talks said negotiators had made "progress" Sunday on key points that had been in dispute.

The new agreement will be called the United-States-Mexico-Canada Agreement (USMC).

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Trade officials for the three countries have been at it for more than a year.

Keeping chapter 19 will not affect Washington's enforcement of anti-dumping and anti-subsidy laws, said a US official. To placate Trump, Mexico agreed in August to provisions that would require 40 percent to 45 percent of a vehicle be built in countries where auto workers earn at least $16 an hour to qualify for NAFTA's duty-free benefits.

The Canadian source said Canada had agreed to a cap on its automotive exports to the United States in the event that the Trump administration imposes global autos tariffs on national security grounds.

The three countries began renegotiating NAFTA more than a year ago at the behest of Trump, who savaged the deal as a presidential candidate and says it has been a "rip-off" for the United States that has cost the country manufacturing jobs.

The Trump administration has been working to sign a new trade deal before Mexican President Enrique Peña Nieto leaves office on December 1.

Pierre Lampron, president of Dairy Farmers of Canada, said in a statement.

In this June 8, 2018, photo, Canada's Prime Minister Justin Trudeau meets with U.S. President Donald Trump at the G7 leaders summit in La Malbaie, Quebec.

Lawmakers from the three countries still need to approve the pact.

The deal will preserve a trade dispute mechanism that Canada fought hard to maintain, to protect its lumber industry and other sectors from United States anti-dumping tariffs. Then it's likely to be taken up in Congress next year.

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