After intense last-minute discussions ahead of a self-imposed midnight deadline, U.S. and Canadian officials announced late Sunday they reached a trade deal, allowing a modified three-way pact with Mexico to replace the nearly quarter-century old North American Free Trade Agreement.
The U.S.-Mexico-Canada Agreement (USMCA) – underpinning $1.2 trillion in annual trade — is expected to be signed in 60 days by President Donald Trump and his Canadian and Mexican counterparts.
“We think this is a fantastic agreement for the United States,” a senior administration official told reporters on a hastily convened briefing call, adding that it is “a great win for the president.”
Trump had made criticism of the North American Free Trade Agreement (NAFTA) a centerpiece of his successful 2016 election campaign.
“The worst trade deal maybe ever signed anywhere, but certainly ever signed in this country,” Trump had termed NAFTA, blaming it for the loss of American manufacturing jobs since it went into effect in 1994.
The U.S. Congress is likely to act on USMCA next year. Its fate in the hands of American lawmakers remains far from certain, especially if the Democrats would take back control of the House of Representatives in the November midterm elections.
“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,” said U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland in a joint statement. “It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”
The U.S. agreement with Ottawa will boost American access to Canada’s dairy market – with some concessions on its heavily protected supply management system– while shielding the Canadians from possible U.S. auto tariffs.
Steel and aluminum tariffs imposed by Washington, will remain, however. Canada had demanded protection from Trump’s tariffs on imported steel and aluminum.
The metal tariffs discussions are on a “completely separate track,” according to a senior U.S. official.
In a big victory for Canada, NAFTA’s Chapter 19 dispute resolution system will remain intact.
Leaving a Sunday night 75-minute Cabinet meeting, Canadian Prime Minister Justin Trudeau only said it was “a good day for Canada.”
The Trump administration had imposed a midnight Sunday deadline for Trudeau’s government to reach agreement on an updated NAFTA, or face exclusion from the treaty.
“This deadline was real,” according to a senior U.S. official. “We ended up in a good place that we ultimately think is a good deal for all three countries.”
U.S. officials, in recent weeks, had been adamant that the text for a new deal – whether it would only be with Mexico or also include Canada – to be released by September 30 to meet congressional notification requirements and to allow outgoing Mexican President Enrique Pena Nieto to be able to sign the deal before he is succeeded by Andres Manuel Lopez Obrador, a left-wing populist.
Canada’s government had faced strong opposition to elements of the revised pact from the country’s dairy farmers. Voters in Quebec, home to 354,000 dairy cows – the most of any province — head to the polls for provincial elections Monday, which cast a shadow over the last-minute negotiations.
The National Association of Manufacturers (NAM) in the United States declared itself “extremely encouraged” by initial details of the new three-way pact.
“As we review the agreement text, we will be looking to ensure that this deal opens markets, raises standards, provides enforcement and modernizes trade rules so that manufacturers across the United States can grow our economy,” said NAM President and Chief Executive Officer Jay Timmons.
“This administration is committed to strong and effective enforcement of this agreement,” a senior U.S. official told reporters. “This is not going to just be words on paper. This is real.”