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U.S. president cheers new USMCA trade deal, heralds end of NAFTA era

Last Updated Oct 1, 2018 at 10:41 am MST

FILE - President Donald Trump walks across the South Lawn on return from New York City, Thursday, Sept. 27, 2018, at the White House in Washington. (AP Photo/Jacquelyn Martin)
Summary

A marathon that began in summer, 2017 ended in a sprint Sunday night

U.S. administration says USMCA provides icnreased access to Canada's dairy market for U.S. producers

WASHINGTON – U.S. President Donald Trump is taking a victory lap at the White House, cheering Sunday’s last-minute free trade deal, pronouncing the death of the 25-year-old North American Free Trade Agreement — and playing down “tensions” with Justin Trudeau.

Trump acknowledged he and the prime minister have been at odds in recent weeks — but said it was all because of NAFTA, and is over now that the two countries have agreed to a new continental trade pact, christened the U.S.-Mexico-Canada Agreement.

“There was a lot of tension between he and I … but it all ended around 12 o’clock last night” when the new deal was reached, Trump told a news conference in the White House Rose Garden.

“The only problem with Justin is he loves his people, and he’s fighting hard for his people. I think Justin’s a good person who’s doing a good job.”

Trump also refused to be pinned down on whether he intends to ease Section 232 tariffs on Canadian exports of steel and aluminum, saying at once that the tariffs remain in place, but they won’t be necessary as long as Canada and Mexico honour the terms of the new agreement.

The tariff measure “is still staying where it is,” he said, adding, “but I don’t think you will need to use the tariffs.”

Trump, flanked by trade ambassador Robert Lighthizer, adviser and son-in-law Jared Kushner and a who’s who of his inner circle, called the new agreement the most important trade deal the U.S. has ever made.

The deal, reached late Sunday, will govern $1.2 trillion US in trade, making it the biggest agreement in the country’s history, and marks the end of an era during which the U.S. has been “treated so badly” on trade by other countries around the world, the president said.

He said the new deal treats American workers with “fairness and reciprocity,” unlike NAFTA, which he again described as the worst deal ever agreed to by the United States.

And he cheered the fact it will give American farmers and dairy producers greater access to markets in Canada and Mexico, protect auto manufacturing jobs and encourage innovation on U.S. soil.

Trump said he spoke earlier today with Trudeau and outgoing Mexican president Enrique Pena Nieto, and also extended thanks to Pena Nieto’s replacement, Andres Manuel Lopez Obrador.

Like all negotiations, there was horse trading, but for the Canada there were elements of the new pact that could be viewed as victories.

Canada, along with Mexico, took a “do no harm” approach to the talks, and there were early indications the Trudeau government succeeded in preserving the status quo in key areas, even though it faced criticism for giving the U.S. concessions on dairy.

The deal preserved the key dispute-resolution provisions — Chapter 19 — which allow for independent panels to resolve disputes involving companies and governments, as well as Chapter 20, the government-to-government dispute-settlement mechanism.

For Canada, this was a hill to die on — as it was for former prime minister Brian Mulroney during the original 1988 Canada-U.S. free trade deal — because, Trudeau argued, there needs to be some rules for settling disputes when dealing with the current U.S. president.

Other contentious, so-called U.S. poison pills — which would have limited Canada and Mexico’s ability to bid on lucrative U.S. procurement projects — are gone.

The United States “finally came to their senses” and created an environment conducive to reaching an agreement with Canada, said Jerry Dias, head of the major Canadian union Unifor, a key player in the negotiation drama.

“Things started to change when the United States understood that we weren’t moving on the dispute mechanism, Canada’s cultural exemption needed to be in place, we weren’t going to bend on the auto industry,” he said today on Parliament Hill.

Dias said he is not thrilled by what Canada conceded in the dairy sector, but he believes there will be a solution out of discussions between the government and the dairy lobby.

Canadian dairy farmers immediately panned the renegotiated deal, saying it will undercut the industry by limiting exports and opening up the market to more American products.

Dairy Farmers of Canada issued a terse statement saying the deal would grant an expanded 3.6-per-cent market access to the domestic dairy market and eliminate competitive dairy classes, which the group says will shrink the Canadian industry.

It said the measures will have “a dramatic impact not only for dairy farmers but for the whole sector.”

RELATED: Canadian dairy farmers’ group pans new trade pact with U.S., Mexico

 

“This has happened, despite assurances that our government would not sign a bad deal for Canadians,” Pierre Lampron, the organization’s president, said in the statement. “We fail to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood.”

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

Canada also agreed to get rid of its two-year-old Class 7 pricing agreement that has restricted U.S. exports of ultra-filtered milk used to make dairy products. Dairy Farmers objected to this, too, but the once-obscure dairy classification had become a lightning rod of discontent for Trump.

Trump said it was unfair and economically crippling to dairy farmers. U.S. administration officials, speaking on the condition of anonymity, said Sunday night that this was a win for farmers in Wisconsin, New York and elsewhere.

Trudeau would only say it was a “good day for Canada” as he left a late-night cabinet meeting in Ottawa that capped several days of frenetic long-distance talks.

A side letter published along with the main text of the agreement exempts a percentage of eligible auto exports from tariffs. A similar agreement between Mexico and the U.S. preserves duty-free access to the U.S. market for vehicles that comply with the agreement’s rules of origin.

Canada fought hard to retain Chapter 19, a holdover from NAFTA that U.S. trade ambassador Robert Lighthizer worked tooth-and-nail to eliminate.

“USMCA will give our workers, farmers, ranchers, and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region,” Lighthizer and Chrystia Freeland, Canada’s foreign minister, said in a joint statement.

On the matter of Section 232 tariffs, Trump’s trade weapon of choice, U.S. officials told a late-night conference call with reporters that the two sides had “reached an accommodation” on the issue.

The Canadian Chamber of Commerce said it was relieved that an agreement in principle had been reached. But chamber president Perrin Beatty said the details of the text needed a closer look before a final verdict could be rendered.

– With files from Mike Blanchfield, James McCarten and Kristy Kirkup