By Prarthana Mitra
After an eleventh-hour meeting this weekend, the United States and Canada reached a new North American Free Trade Agreement (NAFTA) on Sunday, despite harbouring immensely divisive ideas about the future of the 25-year-old trilateral.
In the joint statement, both foreign ministries vouchsafed a new deal that they claim “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.”
Here’s what happened
Overcoming a year of inconclusive and tense talks that led to a near-collapse of the treaty, negotiators of both countries were able to preserve free trade among Mexico, Canada, and the US, just hours ahead of the deadline set by the White House.
Matters had reportedly come to a head, especially due to deteriorating relations between US President Donald Trump and Canadian Prime Minister Justin Trudeau of Canada over the last few months. The latest showdown took place at the United Nations General Assembly meeting, where Trump hit back at Canada for mistreating the United States on trade, a tirade that began with calling Trudeau “dishonest” earlier this summer.
Canada took the lead
Canadian leaders led by Trudeau teleconferenced all day with top American officials in Washington. As Trudeau briefed his team at Ottawa, Jared Kushner and Robert E. Lighthizer, Trump’s closest advisors and trade negotiators, finalised the details. The deal was tabled at the Mexican Senate at the stroke of midnight. Canada’s foreign affairs minister, Chrystia Freeland, along with Lighthizer told the press that the trilateral deal will henceforth be referred to as the “United States-Mexico-Canada Agreement.”
Trump, whose economic policies have recently banked solely on coercing trade partners to rewrite agreements in America’s favour, had similar ideas for NAFTA. He has expressed keenness on pulling the US out of the original NAFTA for years, before striking a deal with Mexico and threatening to expel Canada if it refused to increase concessions to the US. One them was to open the dairy market to American farmers.
Both Republican and Democrat lawmakers urged the White House to include Canada in the event of a revised NAFTA, considering it was America’s largest export market and excluding it could disrupt supply chains, cost jobs and slow the United States economy. President-elect Andrés Manuel López Obrador of Mexico also said on Friday that Trudeau had appealed to him to try and ensure that NAFTA remained trilateral.
Cars and cows: What the new deal promises?
The new USMCA deal will grant the US a greater access to Canada’s dairy market than that promised under the Trans-Pacific Partnership which Trump quit last year. Furthermore, the original NAFTA has been updated to timely requirements pertaining to the digital economy, agriculture and labour unions, and rules governing automobile manufacturing, so that car production moves back from Mexico to the US.
Among other demands where both parties met halfway were regarding the elimination of the independent tariff dispute settlement system, and automobile tariffs on Canada and Mexico which will expectedly be relaxed with “accommodations” for their existing car production. However, no such assurances were offered on the subject of steel and aluminium tariffs.
The industrial and manufacturing sectors took the new deal well. The last-minute rush to pull this deal off as early as possible owed itself to the coming polls in the US as well as Mexico. Meanwhile, relations among the three nations remain frayed with Trump’s increasingly protectionist policies with regard to two of his closest and longest-standing allies.
Prarthana Mitra is a staff writer at Qrius.
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