The federal government in Ottawa announced late Sunday that it had successfully negotiated a tentative new trilateral trade deal with the U.S. and Mexico that is being called the “United States, Mexico and Canada Agreement (USMCA).” The USMCA will replace the North American Free Trade Agreement (NAFTA) that had been in place since 1994.
"?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," Foreign Affairs Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer said in a joint media statement released Sunday evening.
The USMCA was reached following 14 months of difficult negotiations between Canada and the U.S. Prime Minister Justin Trudeau convened a late-night meeting of his cabinet to brief ministers after the trade deal was reached just hours before a U.S.-imposed midnight deadline.
Leaving the cabinet meeting Sunday night, Prime Minister Trudeau said only that it was "a good day for Canada" and added that he'd say more on Monday.
The new deal gives the U.S. more access to Canada's dairy market, which is heavily protected by a system of supply management, while Canadian demands to keep a dispute resolution process have been met.
The U.S. and Canada agreed to keep Chapter 19, NAFTA's dispute resolution mechanism, intact. That's a major victory for Canadian negotiators who have long sought to keep some sort of process to challenge anti-dumping and countervailing-duty cases — which Canada has deployed in the past over the softwood lumber dispute.
In exchange for keeping the trade dispute mechanism, Canada will give U.S. farmers greater access to Canada's dairy market by increasing the quota on foreign imports. Currently, Canada imposes tariffs on dairy imports — which can run as high as 300% — that exceed the established quota.
It remains unclear if this new trade agreement will prompt the U.S. to remove its current tariffs on steel and aluminum imports from Canada. Importantly for Canada though, the Trump administration has agreed that no hard limit will be placed on Canadian auto exports shipped to the U.S.
