Published: Mon, October 01, 2018
Money | By Hannah Jacobs

Canada, US reach deal to save NAFTA as trilateral trade pact

Canada, US reach deal to save NAFTA as trilateral trade pact

After more than a year of negotiating a new North American Free Trade Agreement (NAFTA), Canada, the USA and Mexico have finally inked a trade deal.

A new era in North American free trade dawned in the dead of night Sunday as a 14-month NAFTA modernization effort between Canada, the US and Mexico finally came to fruition with just hours to spare before an end-of-weekend deadline.

The rewrite "will result in freer markets, fairer trade and robust economic growth in our region", according to a joint statement from US Trade Representative Robert Lighthizer and Canada's Foreign Affairs Minister Chrystia Freeland. It replaces the 24-year-old North American Free Trade Agreement, which President Donald Trump had called a job-killing disaster.

Canada and the USA reached a tentative NAFTA deal Sunday that one source briefed on talks said would give American farmers major new access to the dairy market here, but preserve the dispute-resolution system the United States wanted to scrap.

The importance of a new U.S. -Mexico-Canada trade deal can not be underestimated: trade between the three partners affects jobs and profits in all three countries and all three wanted to get a deal done before the change of government in Mexico in two months, CBS News' Pamela Falk reports. Canada will continue to impose severe tariffs on any U.S. dairy that exceeds the quota.

"The middle-ground approach looks like when they announce the deal, that the three parties will be meeting at such-and-such a date in the immediate future to resolve the steel and aluminum tariffs", he said.

But concessions on dairy would be politically hard for Trudeau´s government, a matter complicated yet further by elections being held Monday in the key dairy producing province of Quebec. The U.S. had previously negotiated a deal with Mexico in late August.

"It's a great deal and that's why Mexico has already entered into that deal with us", he told Fox News in another interview on September 29.

One of the sources said Canada would take nothing for granted until Trump had signed off on the deal. The two sides were hoping to finalize the pact overnight ahead of an announcement on Monday, The Globe and Mail said.

Though, one of the senior US administration officials who briefed reporters on background Sunday night described Canada's concessions on dairy as "a big win" for American farmers. It will also be called the "United States-Mexico-Canada Agreement", or USMCA.

Canada has agreed to provide US dairy farmers access to about 3.5 percent of its approximately $16 billion annual domestic dairy market.

Dispute resolution: Chapter 19, an extrajudicial trade dispute system that allows NAFTA members to bring grievances against other members over allegedly unfair trade practices, will remain in place as it is under the current NAFTA.

US farmers said those schedules had effectively pushed them out of the Canadian dairy market.

Speaking at a political rally in Wheeling, West Virginia on Saturday night, Trump told supporters: "We´ll see what happens with Canada, if they come along". While TPA gives Trump the ability to send a deal to Congress for a simple majority vote, it also includes a statutory 60-day notification period. Companies and business groups, including the US Chamber of Commerce, have repeatedly called on Trump to ensure Canada remains part of the pact, which has become critical for industries across North America, including automakers, agriculture, and manufacturers.

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