CUSMA/USMCA (formerly known as NAFTA)

Written by  //  December 2, 2018  //  Canada, Trade & Tariffs, U.S.  //  1 Comment

NAFTA Negotiations 2017-2018
AP fact check: New trade deal not as big as Trump claims

Canada ‘not surprised’ Trump taking risky move in order to ratify new NAFTA
U.S. president says he’ll terminate the old trade deal, in a bid to force Congress to accept new pact
(CBC) Any relief Canadian officials felt over Friday’s signing of NAFTA may fade away, as U.S. President Donald Trump announced he’s taking a risky all-or-nothing approach to getting the new trade pact ratified by Congress.
As he left the G20 summit in Buenos Aires, Trump told reporters on board Air Force One that he plans to terminate the current NAFTA agreement, meaning Congress will be forced to make a choice: either ratify the new agreement, or have no agreement with Canada and Mexico at all.
Getting the new NAFTA through Congress may be an uphill battle for the Trump administration, as Democrats won control of the House of Representatives in the fall midterm elections.
Three ways the new NAFTA deal kept changing after it was announced
More than just typos and technicalities were changed before the official documents were released
Several significant changes were made over the last two months during a process officials call a “legal scrub” — a detailed line-by-line review meant to catch technical errors and typos, to ensure the trade agreement could be implemented the way its negotiators intended.

CUSMA: Revised, Signed, & Ratification Coming (November 30, 2018)

Brett House, VP & Deputy Chief Economist, Scotia Bank
Juan Manuel Herrera, Economist
• Today, the heads of government of Canada, the United States, and Mexico signed the successor agreement to NAFTA, following the September 30, 2018 release of the accord’s draft text. The new pact, which will be known as the Canada-United States-Mexico Agreement (CUSMA) in Canada, and USMCA in the US, is set to come into effect on January 1, 2020. The side letters that protect Canada and Mexico from possible US tariffs on the auto sector come into force immediately.
• We anticipate that CUSMA will be ratified by each of three countries’ legislatures around mid-2019 and that any additional demands from the US Congress would be handled in side letters rather than necessitating a re-opening of the Agreement.
• The text of the Agreement released today is mostly unchanged from the initial version published at end-September, though there are two key revisions: (1) the language has been refined in the side letters on vehicles and parts, and in an annex to Chapter 2 of the Agreement, Mexico’s exemption from higher duties on non-originating vehicle exports to the US has been made stricter; and (2) a footnote on labour rights has been added in response to US Congressional Republican opposition to protections for sexual orientation and gender identity in the workplace. There appear to be some additional small changes whose potential import requires further study.
• Canada and Mexico have still not received an exemption from US tariffs on steel and aluminum products as the US presses for binding quotas that would cut imports from the two countries. Talks will continue and we expect that these tariffs will be lifted prior to the formal ratification of CUSMA in both countries.
Link to full Report

‘Battle’ over as Trudeau, Trump, Pena Nieto sign ‘new NAFTA’
USMCA, which Canada will call CUSMA, still not assured as ratification process heads to U.S. Congress
(CBC) The road to rewrite the North American trade agreement was a “battle,” U.S. President Donald Trump said Friday as Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto joined him for a signing ceremony on the sidelines of the G20 summit in Buenos Aires.
Nevertheless, “battles sometimes make great friendships, so it’s really terrific,” Trump said as the other two leaders looked on uneasily from behind podiums with the American presidential seal on the front.
Canada will change the order of the countries in its legal version of the name, putting Canada first (CUSMA). Trudeau referred to the deal Friday morning as the “new NAFTA.”
Trump felt strongly about changing the agreement’s name when his administration reworked the deal. He continued to refer to NAFTA as “terrible” on social media after the signing ceremony, saying “it will soon be gone.”
Canadian party leaders, politicians weigh in on the signing of NAFTA 2.0

27 November
With three days to go until signing ceremony, USMCA text still not final
Trump’s economic adviser says revised NAFTA deal to be signed Friday in Argentina
Three days away from the target date for all three countries to officially sign the revised North American trade agreement, Canada and the United States are still haggling over what the deal actually says.
An annex on duties Canada imposes on U.S. dairy, egg and poultry products that was posted online by the Trump administration contained language that differed from what Canadian negotiators believed they’d agreed to at the table. Confronted with the discrepancy, the American side stuck to its guns.
A signing ceremony does not signify that the deal is ratified and ready to take effect. The U.S. Congress has a lengthy ratification process, for example. The outcome of that process for USMCA is far from certain, particularly given the election of a Democratic majority in the House of Representatives earlier this month.
Congressional leaders recently confirmed that the existing U.S. Congress will not vote on the USMCA during its “lame duck” session between now and the end of the year.
… The only link to the full text available on the Global Affairs Canada website links to the USTR’s website.
Although the website refers to the ‘USMCA’, it’s not clear that Canada is completely on board with renaming NAFTA; Trump appeared to unilaterally come up with with title during a media appearance earlier this year. Freeland, for example, said last week that in Canadian documents it’s called “CUSMA”, putting Canada first, so she prefers to call it “the new NAFTA.”

6 October
Having to inform U.S. about possible future trade deals a ‘practical reality’: Morneau
(CTV) Signing on to an article in the new USMCA that requires Canada to consult the agreement’s other signatories when it embarks on a new trade deal with a “non-market” country is the “practical reality” in the business world, says Finance Minister Bill Morneau.
“In the previous agreement of course, the United States had the ability to leave NAFTA on six months’ notice, in the new agreement they have the ability to leave if they don’t like what we’re doing with China, we’re just going to be practical in dealing with this.”
He said that having this new wording in the deal “changes absolutely nothing,” and downplayed the concern voiced by some trade experts.
Seeking to dispel concern over this aspect of the deal in the days following it being announced, Prime Minister Justin Trudeau said Canada still intends to further trade talks with China. Canada has moved towards formally engaging China in free-trade talks, though they stalled late last year, with little movement since. Meanwhile, Trump has engaged China in a trade war, with indications that it’s set to ramp up now that NAFTA talks have wrapped.
If the federal government is serious about following through on a Canada-China trade deal, now’s the time to follow through and prove that the clause is meaningless, said former Canadian ambassador to the U.S. Derek Burney on CTV’s Question Period.

3 October

John Geddes of Maclean’s gives the most comprehensive account of the NAFTA negotiations to date.
How NAFTA was saved: The bitter fight and the final breakthrough
It started with a demand from Donald Trump and seemed like a zero-sum game. John Geddes on the long, divisive fight and the last minute deal.

Geoffrey Gertz: 5 things to know about USMCA, the new NAFTA
(Brookings) 1. Overall, the changes from the old NAFTA are mostly cosmetic. 2. The most revealing change might be the agreement’s new name. 3. The Trump administration got at least part of what it wanted.
4. While this might be a (modest) short-term victory for the U.S., it risks undermining America’s long-term interests….  Since Trump’s election, a number of U.S. allies have already taken steps to balance against U.S. power, and diversify their interests away from America. The U.S. approach to NAFTA’s renegotiation should only accelerate this trend. In other words, the important question was never whether the U.S. could shake down its trade partners to extract some modest gains, but rather whether it should.
5. There’s still a long way to go until USMCA becomes law. … The difficult step will be ratifying the agreement, which in the U.S. will mean a vote sometime in the next Congress. Clearly, how such votes proceed will be significantly influenced by this fall’s midterm elections. Yet whatever happens, there are reasons why both Republicans and Democrats may be reluctant to approve the deal. … (Of course, for their part, neither Canada nor Mexico will likely protest too strenuously if the U.S. fails to ratify the new pact, so long as it allows them to keep the existing NAFTA.)

Canada, U.S. have reached a NAFTA deal — now called the USMCA
Trudeau says it’s ‘a good day for Canada,’ but does not elaborate
Prime Minister of Canada welcomes new United States-Mexico-Canada Agreement
(Canadian Government) “The agreement-in-principle we reached today is good for Canada, good for Canadian businesses, and most importantly, good for Canadian workers and their families. When this improved agreement is implemented, North American trade will be preserved and modernized for the 21st century – just as we set out to do.”

Very complete coverage from CTV News:
Trudeau, Freeland herald USMCA as trilateral victory
The federal government is heralding the historic new USMCA trade pact between Canada, the United States, and Mexico as a good deal for all three countries, describing the new agreement in principle as a preservation of many aspects of the original NAFTA, that also stabilizes and modernizes the trade relationship for the realities of the times.
Prime Minister Justin Trudeau was joined by Foreign Affairs Minister Chrystia Freeland, who led the Canadian team of negotiators throughout the often intense and sometimes dramatic talks, that ended with a varying degree of concessions and changes to the trade rules between the three countries.

Astonishing’ clause in new deal suggests Trump wants leverage over Canada-China trade talks: experts
The USMCA includes language that requires signatories to give notice if they plan to negotiate a free trade deal with a ‘non-market country’
(National Post)… the USMCA includes language that requires signatories to give notice if they plan to negotiate a free trade deal with a “non-market country,” and to allow the other two signatories at least a month to review any agreement before it is signed. It explicitly states that if one of the signatories enters into such an agreement, the other two have the right to withdraw from the USMCA with six months’ notice.

USMCA: A trade deal that does no harm, but breaks no ground
Kevin Carmichael: Trudeau and Chrystia Freeland achieved none of the things they identified as Canadian goals with the new pact

Buried behind the cows and cars: key changes in NAFTA 2.0
Higher drug prices, longer copyright terms, no reprieve on Buy America in new USMCA

30 September (10:13pm)

New NAFTA deal reached: Canada, U.S., Mexico finalize trade agreement, sources confirm

(Global news) A midnight deadline was beat (sic) with agreements to boost U.S. access to Canada’s dairy market and protect Canada from possible U.S. autos tariffs, two Canadian sources with direct knowledge of the talks said Sunday.
Reports say that Canada has made concessions on dairy market access that are slightly higher than under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Chapter 19, the dispute resolution mechanism, will be kept.
Word of the deal came as Prime Minister Justin Trudeau convened a 10 p.m. cabinet meeting to discuss NAFTA.
WaPost: Canada agrees to join trade accord with U.S. and Mexico, sending new NAFTA deal to Congress
(Reuters) – The United States and Canada forged a last-gasp deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, rescuing a three-country, $1.2 trillion open-trade zone that had been about to collapse after nearly a quarter century. Since talks began more than a year ago, it was clear Canada and Mexico would have to make concessions in the face of Trump’s threats to tear up NAFTA and relief was palpable in both countries on Sunday that the deal was largely intact and had not fractured supply chains between weaker bilateral agreements.

One Comment on "CUSMA/USMCA (formerly known as NAFTA)"

  1. Diana Thebaud Nicholson October 3, 2018 at 4:18 pm · Reply

    Jeremy Kinsman comments: I see no case for disappointment. It was inconceivable we would give less on dairy than conceded in TPP and, more importantly, CETA. We gave up a bit more than 3% of the protected dairy market. Trudeau managed to keep supply management as a concept and operating system. I and many others, eg John Manley, see it as an anachronistic system – of course, the TV news is headlining what we gave up on dairy – it’s conflict, so it’s news. But it’s a small part of the story. Plus, Canadian consumers?
    Culture was probably a red herring. The exception remains intact.
    The IP provisions were very typically negotiable, as were copyright.
    The big issue is the tariffs. Without a US commitment to end the extortion of unilateral tariffs on fraudulent grounds of “national security” there won’t be a Canadian signature.
    The Trudeau team did very, very well. Scheer got it mostly wrong, as you’ll see in the polls, though I guess he has to oppose – it’s his job. Mulroney’s statement is much more accurate.
    The bigger world issue is the way the US huffed and bluffed and in the end got stared down. Is that what will happen elsewhere, or did it happen here because they realized they couldn’t handle a deep conflict with Canada at the same time as a trade war with China?

Leave a Comment

comm comm comm