On October 1st the Canadian federal government announced that an update of NAFTA had been achieved and that trade negotiations with the U.S. and Mexico had concluded.
Caption: Prime Minister Justin Trudeau and Minister of Foreign Affairs Chrystia Freeland arrive to hold a press conference regarding the United States Mexico Canada Agreement (USMCA) at the National Press Theatre, in Ottawa on Monday, Oct. 1, 2018. (Sean Kilpatrick/The Canadian Press via AP)
Uncertainty over the potential dislocation and chaos of a bad deal or a breakdown in talks is now no longer a major concern. So, what happened? What is the new deal? And what did Canada get out of it?
Details About The New NAFTA Deal – Now Called The USMA
The deal was signed at the last possible minute, just meeting U.S. determined timetables. The new deal transforms and ‘modernizes’ NAFTA, now renamed USMCA (US, Mexico, and Canada Agreement). In many ways, Canada netted very few tangible gains from the agreement. The biggest benefit of the deal, as stated by the Prime Minister and his Foreign Minister, is that the deal was signed to begin with and that the trade pact didn’t collapse. The second main benefit was that the potentially devastating Trumpian threat of tariffs on Canada’s auto exports didn’t come to pass. These are not net benefits.
Who Got The Better Deal – Trump or Canada?
Trump’s repeated key goal was to open up Canada’s protected dairy industry to U.S. producers. Canada conceded on this to the consternation of our nation’s agricultural sector. Canada made concessions to its generic pharmaceutical sector which experts say will raise drug prices. We conceded by doing nothing to have newly imposed tariffs on steel and aluminum lifted, which will do long term damage to manufacturing. Gains were few. Duties on internet purchases will be lessened, and Canada kept the dispute resolution mechanism and protections to our cultural sector – two advantages we had with the original NAFTA.
While the end of uncertainty is good for Canada’s economy and real estate sector, the concessions made were disappointing, considerable, and will cost average Canadian consumers.