Canada, U.S., Mexico to sign new trade deal Friday morning
OTTAWA – Canada, Mexico and the United States will sign the new North American free trade pact Friday morning.
Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland will meet tomorrow morning with U.S. President Donald Trump and Mexico’s Enrique Pena Nieto on the sidelines of the G20 meeting in Buenos Aires to ink the United States-Mexico-Canada-Agreement, the Prime Minister’s Office confirmed Thursday evening.
The deal is expected to be signed at 9 a.m. Argentina time, or 7 a.m. ET.
However, the agreement is not ratified until each country has passed it through their legislative body. And there are early signs that the deal will face resistance from the U.S. Congress.
Many House Democrats, who seized control from Republicans in the November midterm elections, have expressed concerns about the deal, which some say doesn’t go far enough in strengthening protections for U.S. workers.
In the U.S. Senate, Massachusetts Sen. Elizabeth Warren – whose name has been floated as a possible 2020 presidential contender -- is expected to announce her opposition to USMCA in a speech Thursday night.
Signing the deal before December allows outgoing Mexican President Enrique Pena Nieto to pen the signature on the new agreement before his successor Andres Manuel Lopez Obrado takes office in December. USMCA will replace the North American Free Trade Agreement once fully ratified.
Earlier in the day, Freeland was questioned on whether or not it was still Canada's intention to join the U.S. and Mexico in signing the deal, given the outstanding steel and aluminum tariffs.
Freeland said that since arriving in Argentina, she had already spoken with officials from the two countries and they were working to finalize the remaining details in the wide-spanning trilateral trade pact.
"These agreements are massive, and a vast number of technical details need to be scrubbed and wrapped up," Freeland said. "The fact that this is an agreement in three languages adds to the level of technical complexity, and it is on that level that we're just being sure that all the Is are dotted and all the Ts are crossed."
After nearly 14 months of NAFTA renegotiation, the federal government announced a deal was reached in the final hours before the deadline for Canada to come on board a renegotiated trilateral deal at the end of September. Otherwise, Mexico and the U.S. were poised to go ahead with a deal of their own.
The new agreement came with a new name, the United States-Mexico-Canada Agreement, and has been billed by Prime Minister Justin Trudeau and Freeland as a preservation of many aspects of the original NAFTA, that also stabilizes and modernizes the trade relationship for the realities of the times. Though various stakeholder groups, including supply-managed farmers, have been critical of the expanded U.S. access to Canadian dairy, egg, and poultry markets.
Upon announcing the new deal, Trudeau expressed optimism that the exchange of steel and aluminum tariffs between Canada and the U.S. could be lifted before the deal is signed. That has yet to happen.
"Liberals say they’re on track to sign the USMCA tomorrow, but they don’t even know what we're signing on to. Wording is changing and the Canadian interpretation and the U.S. interpretation aren’t lining up," said NDP trade critic Tracey Ramsey in the House of Commons Thursday.
"Canadians know one thing for sure, if we sign with destructive steel and aluminum tariffs in place, we are losing our best chance to eliminate them."
In a statement, Conservative trade and foreign affairs critics called on Trudeau to hold an "emergency meeting" with U.S. President Donald Trump to make sure that the tariffs will be removed before signing the deal.
"Securing the immediate removal of steel and aluminum tariffs should be Justin Trudeau's top priority while in Argentina for the G20 Summit. It is long past time that the Prime Minister stand up for Canadian workers and businesses," the statement said.
A reminder of the key points of the USMCA:
- The Chapter 19 dispute resolution mechanism remains intact, though it has been renumbered in the new 34-chapter agreement. This part of the deal allows for independent panels to resolve trade disputes that arise out of the deal. It was a red line for Canada, which feared not having an objective arbiter, despite the U.S. push for changes.
- American farmers will have increased access to the supply-managed Canadian dairy market. Specifically, Canada has increased the market access to 3.59 per cent, and the federal government agreed to get rid of what was known as Class 7 pricing on some dairy ingredients. The Americans are viewing this as “a big win” for them. It’s a bigger concession than what Canada made in the Trans Pacific Partnership.
- Canada maintained the original NAFTA text related to an exemption for cultural industries, which is aimed at protecting such things as Canadian media and bilingual content.
- Under the USMCA trade deal, online cross-border shipments to Canada worth less than $150 will no longer be subject to duties. The deal raises the minimum purchase price that qualifies for duties and taxes, known as the de minimis threshold, up from $20 to $40.
- The deal includes 12 side letters on issues including wine, water, and cheese names. Eight were posted with the first full text of the deal Sunday night, and four others were published later, regarding the national security provision, aka Section 232.
- The new deal also has new measures the government says will help Canada’s natural resources sector; as well as a new environment chapter with measures related to air quality and marine pollution.
- The deal includes stronger rules of origin for autos, and an “ambitious” slate of other provisions related to the digital age.
- It includes a termination provision aimed at preventing the deal from becoming outdated. It states that the deal is good for 16 years after it comes into force, but within the first six years a mandatory “joint review” will be conducted to determine whether all three countries want to extend the agreement for another 16 years. It maintains the six month opt-out of the deal notice that existed in NAFTA.
- The investor-state dispute settlement process (ISDS) is also being phased out between Canada and the United States, which Freeland said has cost Canadians millions in legal fees.
- The U.S. has given Canada assurance that an exemption — should Trump follow through on a 25 per cent tariff on autos — would be granted for 2.6 million vehicles and US$32.4 billion worth of auto parts.