CUSMA/USMCA (formerly known as NAFTA)

Written by  //  November 5, 2019  //  Canada, Mexico, Trade & Tariffs, U.S.  //  1 Comment

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

House Democrat Neal talks new NAFTA with Trudeau, Freeland and Hadju
(National Post) Prime Minister Justin Trudeau and his Liberal cabinet will be briefing an influential American lawmaker Wednesday on Canada’s work with Mexico to ease Democrats’ doubts over ratifying the new North American free trade deal.
Richard Neal, the chair of the U.S. House of Representatives ways and means committee, is a key player in bringing ratification of the new United States-Mexico-Canada-Agreement, or USMCA as it is known in the U.S., to the floor of Congress for final legal approval.
Labour Minister Patty Hadju will join an expanded meeting between Neal, Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland to provide an update on how Canada is trying to help Mexico comply with a key USMCA provision — ensuring that measures to improve workers’ rights in Mexico are enforceable, officials say.

2 August
U.S. Democrats want to roll back pharmaceutical protections — but Canada doesn’t want to reopen the USMCA
(G&M) It was one of Canada’s most significant concessions in the renegotiation of NAFTA: Tougher rules protecting big pharmaceutical companies from competition on some of their most expensive prescription drugs. The change, if implemented, will cost Canadians an estimated $169-million annually in additional spending on medications.
But congressional Democrats want the measure rolled back. As part of a push to lower drug costs, they are threatening to refuse to ratify the new NAFTA – dubbed the U.S.-Mexico-Canada Agreement (USMCA) by the Trump administration – unless this tougher pharmaceutical rule is stripped out.
The move puts U.S. President Donald Trump in a difficult position. His own negotiators put pressure on a reluctant Canada and Mexico to accept the provision. But it contradicts his own recent promises to drive down prescription costs, including a plan unveiled this week to allow Americans to import cheaper medications from Canada.
The battle also leaves Canada in an unusual situation. American politicians are inadvertently advocating for Ottawa to win back a point it conceded in last year’s negotiations. But Canadian officials have repeatedly said they do not want to reopen the text of the USMCA and make changes, for fear this would lead to a full-scale renegotiation. Talks lasted for more than a year, causing uncertainty for business and consuming much of the government’s political bandwidth.
Canada and Mexico are aligned with Democrats on the biologics issue, but neither country wants to reopen the USMCA. Foreign Affairs Minister Chrystia Freeland has said Canada has “done our deal” in the negotiations. Still, she has delayed ratification until the deal is passed by the United States, leaving open the possibility of changes.

18 July
If they won’t pass his trade deal, Trump should make Democrats own NAFTA
By Marc A. Thiessen
(WaPo) This week, President Trump appeared to renew his threat to withdraw from the North American Free Trade Agreement (NAFTA) if Democrats do not pass his new United States-Mexico-Canada Agreement (USMCA). His threats may worry pro-trade Republicans, but they are music to the ears of anti-NAFTA Democrats, who would love nothing better than to get rid of NAFTA without giving Trump a trade victory.
Sen. Rob Portman (R-Ohio) has a better idea: Trump should tell Democrats that they will own NAFTA if they oppose his deal to replace it. The message should be “if you’re a Democrat, you essentially are voting for NAFTA if you vote no on USMCA,” Portman explained in an interview on the American Enterprise Institute’s new podcast, , “What The Hell Is Going On,” which I co-host. If the USMCA fails, he says, “you go back to the status quo, which is NAFTA.”
Besides, Portman says, there is no good reason for Democrats to oppose the USMCA because “it is such a much better agreement for Democrats than NAFTA. … It’s everything that they’ve been asking for, in terms of improving the NAFTA accords.” Take the automobile industry for example. America has lost about 350,000 auto jobs since NAFTA was ratified in 1994, which is a third of all jobs in the industry. Meanwhile Mexico has gained hundreds of thousands of auto jobs during that time.

20 June
Greg Sargent: The 2020 Democrats just made a move on a big Trump weakness
(WaPo) I have learned that all of the leading Democratic contenders have signed a statement opposing congressional passage of Trump’s renegotiated NAFTA unless major changes are made. This could make it more difficult for Democrats — many of whom have already criticized the deal — to pass it, which could, in turn, end up denying Trump a serious political victory going into the 2020 election.
The top-tier Democratic candidates — Joe Biden, Elizabeth Warren, Bernie Sanders, Pete Buttigieg, Kamala D. Harris, and Beto O’Rourke — have all joined a statement that was written by the Citizens Trade Campaign, a coalition of groups pushing changes to the deal, which is known as the United States-Mexico-Canada Agreement, or USMCA.
That statement, which was sent my way, says Congress should not enact the deal “unless and until stronger labor and environmental terms with swift and certain enforcement are added and language on pharmaceutical monopolies that locks in high medicine prices is removed.”
The USMCA alters the old NAFTA in numerous ways. It requires a higher percentage of automobiles to be manufactured in the three countries to qualify for no tariffs, and it also requires 40 percent to 45 percent of auto parts on such cars to be manufactured by workers making at least $16 per hour by 2023. It also expands patent protections for drugs against generic competition.
As it is, many House Democrats want improvements to this deal, in the form of better labor and wage standards, as well as tougher mechanisms to enforce those standards, and they view the copyright expansion as a giveaway to Big Pharma. House Speaker Nancy Pelosi (D-Calif.), under pressure from labor, recently said the deal won’t get a House vote without changes.

27 May
Liberals will table new NAFTA ratification bill within days but key battles remain
(Global) …there are still some key challenges facing the government in ratifying the renegotiated NAFTA deal including a ticking parliamentary clock and uncertainty over when, how and if the United States and Mexico will also follow suit with their own ratification.

18 May
‘Full steam ahead’ on trade deal now that tariffs are lifted, Freeland says
Foreign affairs minister credits U.S. Senator Grassley with the breakthrough moment
… Freeland said she believes an opinion article written by U.S. Sen. Chuck Grassley — a Republican — tipped the scales in Canada’s favour.
Grassley made clear that the U.S. Senate would not ratify CUSMA until the Section 232 tariffs evaporated. Freeland said she was so happy, she printed out the article and gave copies to each of her cabinet colleagues.
The tariffs are coming off, but it doesn’t mean the new CUSMA deal has an easy road ahead.
While the federal cabinet ratifies trade treaties, it does so only after implementation legislation has passed in Parliament, readying Canadian laws and regulations to comply with the new terms.

14 May
Campbell Clark: Mexico close to deal with U.S. to lift tariffs; waiting for Canada
Mexico is close to a deal with the United States to lift tariffs on steel on aluminum without imposing any quotas on exports, but the country has paused to give Canada an opportunity to work on its own deal with Washington, the chief Mexican negotiator told The Globe and Mail.
The Mexican agreement is largely based on provisions for monitoring and tracking steel and aluminum from other countries to prevent them bypassing U.S. tariffs by shipping products through Mexico, according to Jesus Seade, the country’s chief negotiator on North American trade and its point person on steel talks. He said he’s optimistic Canada can work out a deal with Washington along similar lines.
Crucially, the deal on the table includes no quotas that would restrict Mexican exports of steel or aluminum after tariffs are lifted – a key condition for Canada. The Administration of U.S. President Donald Trump had in past talks suggested that the 10-per-cent tariffs could be lifted if Mexico and Canada agreed to cap their exports at certain levels.

5 May
Trump ‘messed up the clock’ on USMCA, current form ‘dead’: former U.S. ambassador
(CTV) Since the signing, all attention has been focused on ratification given that the existing NAFTA will remain in place until its revamped version is fully ratified. As things stand, time is diminishing on that possibility given the amount of movement that would have to happen across North America over the next six weeks. That’s when Parliament rises for the last time before the October election will be called.
Among the obstacles yet to overcome: In the U.S. Democrats have said that the deal without changes won’t have their vote, nor will they allow a vote in Congress until Mexico changes its labour laws. In addition to these sticking points, Canada will not sign the deal so long as the U.S.-imposed steel and aluminum tariffs are in place.
“Let me be really clear that the USTR [United States Trade Representative] and Donald Trump mishandled this from day one. Had they just quickly passed a deal in 2017, signed an agreement between the three countries… in early 2018, he had the Congress, he had the Senate, he had the Mexican government in place, and there were no elections coming up here,” Heyman said.
“He could have passed it, scored a victory, and it’s done. They messed up the clock. Second, they did not collaborate or communicate with unions, nor did they work with the Democrats. So now they find themselves in a position where the Democrats, and the unions in the United States have a different perspective,” he said.

18 April
New NAFTA could add $62B to U.S. GDP, boost jobs, Congress told
The case for ratifying the revised North American trade agreement got a boost Thursday with the release of a new analysis by the U.S. International Trade Commission that predicted economic gains for all three partners if its changes are implemented.
“In light of the size of the U.S. economy relative to the size of the Mexican and Canadian economies, as well as the reduction in tariff and non-tariff barriers that has already taken place among the three countries under NAFTA, the impact of the agreement on the U.S. economy is likely to be moderate,” the ITC concluded in its report.
Still, the ITC’s model suggests the revised trade deal offers both economic growth — a 0.35 per cent boost to U.S. real gross domestic product (GDP), worth $68.2 billion — and employment growth (an estimated 176,000 jobs).
On the politically-sensitive matter of employment, the commission says the greatest gains likely would be for American workers with between 10 and 15 years of education. Workers with all levels of education may see their wages rise by an average of 0.27 per cent, the analysis concluded, with workers in manufacturing and mining benefitting the most.
Canada still enjoys old NAFTA benefits as new deal awaits ratification: Freeland

4 April
Freeland says Canada won’t reopen USMCA trade talks to address Democrat demands
Foreign Affairs Minister Chrystia Freeland says Canada will not reopen trade talks to satisfy the demands of congressional Democrats, putting further pressure on the ratification process of the U.S.-Mexico-Canada Agreement.
President Donald Trump, meanwhile, is throwing another spanner in the works: He is threatening to levy tariffs on Mexican-made cars – despite having explicitly granted Mexico protection from U.S. auto tariffs in a deal last year – suggesting he does not care if such an action causes the USMCA to fail.
These developments cast further uncertainty on an already shaky deal. The three countries agreed on USMCA, a renegotiation of the North American free-trade agreement (NAFTA), last year. But Congress must approve the pact for it to take effect.
Speaking in Washington before a NATO ministerial meeting on Thursday, Ms. Freeland responded to House Speaker Nancy Pelosi’s assertion earlier this week that Democrats would ratify USMCA only if it were reopened to toughen labour and environmental rules and roll back pharmaceutical patent protections.
… In side letters to USMCA last year, the United States agreed to exempt all Mexican and Canadian-made autos from any future Section 232 tariffs. Unlike the main text of the deal, the side letters came into effect immediately. Mr. Trump did not explain on Thursday how he would get around this. He acknowledged that his latest threat could complicate USMCA. “The USMCA is a great deal for everybody. But this is more important to me than the USMCA, so they’re going to have to live with it,” he said.

29 March
Ottawa considering new retaliation to end U.S. tariff fight, source says
Little progress has been made in convincing Trump to kill steel and aluminium tariffs
Canada is considering new ways to retaliate against the United States in hope of getting steel and aluminum tariffs lifted. … Canada has aggressively lobbied the White House, as well as anyone who has influence with U.S. President Donald Trump in the hopes of getting the tariffs lifted. But multiple sources say there has been little progress in that effort, and that Trump is quite pleased with himself and his tariffs.

25 March
Tariffs raise ‘serious questions’ about NAFTA ratification, Freeland says
U.S. Court of International Trade rules use of national security tariffs allowed, but appeal likely
Chrystia Freeland left a meeting with United States Trade Representative Robert Lighthizer Monday sounding like a minister in no hurry to ratify the revised North American trade deal while American steel and aluminum tariffs still apply to Canada–U.S. trade.
“The existence of these tariffs for many Canadians raises some serious questions about NAFTA ratification,” the foreign affairs minister told reporters gathered on the sidewalk outside the USTR’s Washington offices.
“In order to move ahead with that deal, I think Canadians feel the right thing is, there should be no 232 tariffs or retaliatory tariffs between our two countries. That was what I expressed clearly to Ambassador Lighthizer.”
Freeland paused — and appeared to be choosing her words carefully — before saying that steel tariffs were the central topic of her discussion with Lighthizer.

2018

2 December
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?

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