Trump Administration Scores New NAFTA Deal with Canada and Mexico

By Catherine Doolan
Staff Writer

On October 1, President Trump announced that a new trade pact with Canada and Mexico has been successfully negotiated to replace the North American Free Trade Agreement (NAFTA), CNN reports. The new trade agreement will be known as the United States-Mexico-Canada Agreement, or USMCA. The trade pact comes after a year of hard-fought negotiations between the three nations.

NAFTA has garnered controversy since its implementation in 1994 but is considered very important, as it governs over $1.2 trillion worth of trade. It established free trade between the three nations, but critics argue that the agreement has ballooned the U.S. trade deficit. It was considered to have outsourced American manufacturing jobs and created unfair trade barriers for U.S. businesses. President Trump has referred to NAFTA as a “disaster,” and his call for newly revised trade agreements was a cornerstone of his 2016 presidential campaign.

According to Bloomberg, USMCA seeks to increase access to Canada’s dairy market for U.S. farmers, strengthen intellectual property provisions, and makes rules of origin for auto production stricter.

Surprisingly, a dispute-resolution will still exist under the new agreement, which U.S. negotiators initially stated they wanted to eliminate. The special dispute process mechanism, known as Chapter 19 under NAFTA, allows Canada, Mexico, and the United States to combat each other’s countervailing duties and anti-dumping acts. In the past, President Trump has characterized Chapter 19 as being biased against the U.S. and therefore harmful towards American businesses.

Intense pressure was placed on Canadian negotiators on August 31, when the White House announced that American and Mexican negotiators had struck a new trade agreement and were willing to pursue it without the participation of Canada.

Fox News reports that in a joint statement, U.S. Trade Representative, Robert Lighthizer, and Canadian Foreign Affairs Minister, Chrystia Freeland, said that USMCA “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.”

Despite optimism about USMCA from the Trump Administration and global financial markets, the new agreement must be ratified by the Mexican, American and Canadian legislatures. USMCA will be debated in the U.S. Congress before being voted on. According to Fox News, President Trump stated on Monday that, “Anything you submit to Congress will be trouble.”

Upon news of USMCA, House Minority Leader, Nancy Pelosi, expressed concern over USMCA’s effects on the welfare of American workers. She stated that, “Any trade agreement proposal must be judged by whether it improves the wages, working conditions and well-being of America’s workers and farmers.” She added that Democrats will analyze the new trade proposal and look forward to conversations with other analysts and stakeholders.

The Washington Post reports that other critics of the agreement have worries over USMCA’s language regarding the free flow of data between the nations, which could spark privacy and security concerns. Some have even characterized the data issue as being damaging to Canadian sovereignty.

USMCA will likely take months to be ratified in America, Canada, and Mexico. Some USMCA mandates will not go into effect until 2020 if the agreement is implemented. Moreover, the proposed accord has lessened worries of a potential trade war in North America, but its effects on consumers and businesses are still seen as uncertain.

USMCA follows a newly revised trade pact with South Korea, and may provide more optimism that international trade agreements between the United States and other partners like China and the European Union are revisable. Many markets and political leaders, such as Senator, Orrin Hatch, are “relieved” and “optimistic” that a deal has been reached. Such lawmakers are hopefully for North America now that Canada, the United States, and Mexico are able to negotiate a new trade agreement that includes full participation for each nation.